Bill Text: IL HB5013 | 2017-2018 | 100th General Assembly | Introduced


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: (Failed) 2019-01-08 - Session Sine Die [HB5013 Detail]

Download: Illinois-2017-HB5013-Introduced.html


100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB5013

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.
LRB100 16930 RPS 32073 b
FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

A BILL FOR

HB5013LRB100 16930 RPS 32073 b
1 AN ACT concerning public employee benefits.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 5. The Illinois Pension Code is amended by changing
5Sections 1-109.3, 1-113.1, 1-113.2, 1-113.3, 1-113.4,
61-113.4a, 1-113.5, 1-113.6, 1-113.7, 1A-112, 1A-113, 3-125,
73-127, 3-132, 3-135, 4-118, 4-120, 4-123, and 4-128 and by
8adding Sections 1-101.6, 1-101.7, 1-113.05, 1-136, 3-135.1,
93-135.2, 4-128.1, and 4-128.2 and Articles 22B and 22C follows:
10 (40 ILCS 5/1-101.6 new)
11 Sec. 1-101.6. Eligible pension fund. "Eligible pension
12fund" means a pension fund established pursuant to Article 3 or
13Article 4 of this Code that has net assets in trust that exceed
14the threshold amount defined in Section 1-101.7 of this Code.
15The status of "eligible pension fund", once established,
16continues in effect without regard to subsequent variations in
17the net assets of the pension fund.
18 (40 ILCS 5/1-101.7 new)
19 Sec. 1-101.7. Threshold amount. "Threshold amount", when
20used in relation to the financial assets of a pension fund
21established under Article 3 or Article 4 of this Code, means an
22amount equal to 3 months of current liabilities of the pension

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1fund, including benefit payments owed to annuitants and
2beneficiaries of the pension fund and reasonable operational
3expenses.
4 (40 ILCS 5/1-109.3)
5 Sec. 1-109.3. Training requirement for Article 3 and
6Article 4 pension trustees.
7 (a) All elected and appointed trustees under Article 3 and
84 of this Code must participate in a mandatory trustee
9certification training seminar that consists of at least 8 32
10hours of initial trustee certification at a training seminar
11facility that is accredited and affiliated with a State of
12Illinois certified college or university or approved by the
13Department of Insurance. This training must include, without
14limitation, both all of the following:
15 (1) Duties and liabilities of a fiduciary under this
16 Article 1 of the Illinois Pension Code.
17 (2) Duties of a pension board trustee under Article 3
18 or Article 4, as applicable, of this Code. Adjudication of
19 pension claims.
20 (3) Basic accounting and actuarial training.
21 (4) Trustee ethics.
22 (5) The Illinois Open Meetings Act.
23 (6) The Illinois Freedom of Information Act.
24 The training required under this subsection (a) must be
25completed within the first year that a trustee is elected or

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1appointed under an Article 3 or 4 pension fund. The elected and
2appointed trustees of an Article 3 or 4 pension fund who are
3police officers (as defined in Section 3-106 of this Code) or
4firefighters (as defined in Section 4-106 of this Code) or are
5employed by the municipality shall be permitted time away from
6their duties to attend such training without reduction of
7accrued leave or benefit time. Active or appointed trustees
8serving on the effective date of this amendatory Act of the
996th General Assembly shall not be required to attend the
10training required under this subsection (a).
11 (b) In addition to the initial trustee certification
12training required under subsection (a), all elected and
13appointed trustees under Article 3 and 4 of this Code,
14including trustees serving on the effective date of this
15amendatory Act of the 100th General Assembly this amendatory
16Act of the 96th General Assembly, shall also participate in a
17minimum of 4 16 hours of continuing trustee education each year
18after the first year that the trustee is elected or appointed.
19The continuing trustee education training must include,
20without limitation, both of the following:
21 (1) Duties and liabilities of a fiduciary under this
22 Article.
23 (2) Duties of a pension board trustee under Article 3
24 or Article 4, as applicable, of this Code.
25 (c) The training required under this Section shall be paid
26for by the pension fund.

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1 (d) Any board member who does not timely complete the
2training required under this Section is not eligible to serve
3on the board of trustees of an Article 3 or 4 pension fund,
4unless the board member completes the missed training within 6
5months after the date the member failed to complete the
6required training. In the event of a board member's failure to
7complete the required training, a successor shall be appointed
8or elected, as applicable, for the unexpired term. A successor
9who is elected under such circumstances must be elected at a
10special election called by the board and conducted in the same
11manner as a regular election under Article 3 or 4, as
12applicable.
13(Source: P.A. 96-429, eff. 8-13-09.)
14 (40 ILCS 5/1-113.05 new)
15 Sec. 1-113.05. Transfer of investment authority of certain
16pension funds established under Article 3 or 4.
17 (a) Upon receiving a certified investment asset list from
18the Department of Insurance pursuant to Section 3-135.1 of this
19Code, the board of trustees of an eligible pension fund
20established under Article 3 of this Code shall cease investment
21activities and shall transfer all investment assets of the
22pension fund to the Downstate Police Officer Pension Investment
23Board in the manner prescribed by rules adopted by the
24Downstate Police Officer Pension Investment Board. Upon
25completion of that transfer, the investment authority of the

HB5013- 5 -LRB100 16930 RPS 32073 b
1board of trustees shall terminate.
2 (b) Upon receiving a certified investment asset list from
3the Department of Insurance pursuant to Section 4-128.1 of this
4Code, the board of trustees of an eligible pension fund
5established under Article 4 of this Code shall cease investment
6activities and shall transfer all investment assets of the
7pension fund to the Downstate Firefighter Pension Investment
8Board in the manner prescribed by rules adopted by the
9Downstate Firefighter Pension Investment Board. Upon
10completion of that transfer, the investment authority of the
11board of trustees shall terminate.
12 (40 ILCS 5/1-113.1)
13 Sec. 1-113.1. Investment authority of certain pension
14funds established under Article 3 or 4.
15 (a) Beginning 18 months after the effective date of this
16amendatory Act of the 100th General Assembly or when the
17transfer of investment authority is made pursuant to Section
181-113.05, whichever occurs first, subsection (b) of this
19Section does not apply to any pension fund that is an eligible
20pension fund as defined in Section 1-101.6.
21 This Section continues to apply to any pension fund
22established under Article 3 or 4 that is not an eligible
23pension fund as defined in Section 1-101.6.
24 (b) The board of trustees of a police pension fund
25established under Article 3 of this Code or firefighter pension

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1fund established under Article 4 of this Code shall draw
2pension funds from the treasurer of the municipality and,
3beginning January 1, 1998, invest any part thereof in the name
4of the board in the items listed in Sections 1-113.2 through
51-113.4 according to the limitations and requirements of this
6Article. These investments shall be made with the care, skill,
7prudence, and diligence that a prudent person acting in like
8capacity and familiar with such matters would use in the
9conduct of an enterprise of like character with like aims.
10 Interest and any other income from the investments shall be
11credited to the pension fund.
12 For the purposes of Sections 1-113.2 through 1-113.11, the
13"net assets" of a pension fund include both the cash and
14invested assets of the pension fund.
15(Source: P.A. 90-507, eff. 8-22-97.)
16 (40 ILCS 5/1-113.2)
17 Sec. 1-113.2. List of permitted investments for certain all
18Article 3 or 4 pension funds.
19 (a) Beginning 18 months after the effective date of this
20amendatory Act of the 100th General Assembly or when the
21transfer of investment authority is made pursuant to Section
221-113.05, whichever occurs first, subsection (b) of this
23Section does not apply to any pension fund that is an eligible
24pension fund as defined in Section 1-101.6.
25 (b) Except as provided in subsection (a), any Any pension

HB5013- 7 -LRB100 16930 RPS 32073 b
1fund established under Article 3 or 4 may invest in the
2following items:
3 (1) Interest bearing direct obligations of the United
4 States of America.
5 (2) Interest bearing obligations to the extent that
6 they are fully guaranteed or insured as to payment of
7 principal and interest by the United States of America.
8 (3) Interest bearing bonds, notes, debentures, or
9 other similar obligations of agencies of the United States
10 of America. For the purposes of this Section, "agencies of
11 the United States of America" includes: (i) the Federal
12 National Mortgage Association and the Student Loan
13 Marketing Association; (ii) federal land banks, federal
14 intermediate credit banks, federal farm credit banks, and
15 any other entity authorized to issue direct debt
16 obligations of the United States of America under the Farm
17 Credit Act of 1971 or amendments to that Act; (iii) federal
18 home loan banks and the Federal Home Loan Mortgage
19 Corporation; and (iv) any agency created by Act of Congress
20 that is authorized to issue direct debt obligations of the
21 United States of America.
22 (4) Interest bearing savings accounts or certificates
23 of deposit, issued by federally chartered banks or savings
24 and loan associations, to the extent that the deposits are
25 insured by agencies or instrumentalities of the federal
26 government.

HB5013- 8 -LRB100 16930 RPS 32073 b
1 (5) Interest bearing savings accounts or certificates
2 of deposit, issued by State of Illinois chartered banks or
3 savings and loan associations, to the extent that the
4 deposits are insured by agencies or instrumentalities of
5 the federal government.
6 (6) Investments in credit unions, to the extent that
7 the investments are insured by agencies or
8 instrumentalities of the federal government.
9 (7) Interest bearing bonds of the State of Illinois.
10 (8) Pooled interest bearing accounts managed by the
11 Illinois Public Treasurer's Investment Pool in accordance
12 with the Deposit of State Moneys Act, interest bearing
13 funds or pooled accounts of the Illinois Metropolitan
14 Investment Funds, and interest bearing funds or pooled
15 accounts managed, operated, and administered by banks,
16 subsidiaries of banks, or subsidiaries of bank holding
17 companies in accordance with the laws of the State of
18 Illinois.
19 (9) Interest bearing bonds or tax anticipation
20 warrants of any county, township, or municipal corporation
21 of the State of Illinois.
22 (10) Direct obligations of the State of Israel, subject
23 to the conditions and limitations of item (5.1) of Section
24 1-113.
25 (11) Money market mutual funds managed by investment
26 companies that are registered under the federal Investment

HB5013- 9 -LRB100 16930 RPS 32073 b
1 Company Act of 1940 and the Illinois Securities Law of 1953
2 and are diversified, open-ended management investment
3 companies; provided that the portfolio of the money market
4 mutual fund is limited to the following:
5 (i) bonds, notes, certificates of indebtedness,
6 treasury bills, or other securities that are
7 guaranteed by the full faith and credit of the United
8 States of America as to principal and interest;
9 (ii) bonds, notes, debentures, or other similar
10 obligations of the United States of America or its
11 agencies; and
12 (iii) short term obligations of corporations
13 organized in the United States with assets exceeding
14 $400,000,000, provided that (A) the obligations mature
15 no later than 180 days from the date of purchase, (B)
16 at the time of purchase, the obligations are rated by
17 at least 2 standard national rating services at one of
18 their 3 highest classifications, and (C) the
19 obligations held by the mutual fund do not exceed 10%
20 of the corporation's outstanding obligations.
21 (12) General accounts of life insurance companies
22 authorized to transact business in Illinois.
23 (13) Any combination of the following, not to exceed
24 10% of the pension fund's net assets:
25 (i) separate accounts that are managed by life
26 insurance companies authorized to transact business in

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1 Illinois and are comprised of diversified portfolios
2 consisting of common or preferred stocks, bonds, or
3 money market instruments;
4 (ii) separate accounts that are managed by
5 insurance companies authorized to transact business in
6 Illinois, and are comprised of real estate or loans
7 upon real estate secured by first or second mortgages;
8 and
9 (iii) mutual funds that meet the following
10 requirements:
11 (A) the mutual fund is managed by an investment
12 company as defined and registered under the
13 federal Investment Company Act of 1940 and
14 registered under the Illinois Securities Law of
15 1953;
16 (B) the mutual fund has been in operation for
17 at least 5 years;
18 (C) the mutual fund has total net assets of
19 $250 million or more; and
20 (D) the mutual fund is comprised of
21 diversified portfolios of common or preferred
22 stocks, bonds, or money market instruments.
23 (14) Corporate bonds managed through an investment
24 advisor must meet all of the following requirements:
25 (1) The bonds must be rated as investment grade by
26 one of the 2 largest rating services at the time of

HB5013- 11 -LRB100 16930 RPS 32073 b
1 purchase.
2 (2) If subsequently downgraded below investment
3 grade, the bonds must be liquidated from the portfolio
4 within 90 days after being downgraded by the manager.
5(Source: P.A. 96-1495, eff. 1-1-11.)
6 (40 ILCS 5/1-113.3)
7 Sec. 1-113.3. List of additional permitted investments for
8certain pension funds with net assets of $2,500,000 or more.
9 (a) Beginning 18 months after the effective date of this
10amendatory Act of the 100th General Assembly or when the
11transfer of investment authority is made pursuant to Section
121-113.05, whichever occurs first, subsection (a-5) of this
13Section does not apply to any pension fund that is an eligible
14pension fund as defined in Section 1-101.6.
15 (a-5) Except as provided in subsection (a), in (a) In
16addition to the items in Section 3-113.2, a pension fund
17established under Article 3 or 4 that has net assets of at
18least $2,500,000 may invest a portion of its net assets in the
19following items:
20 (1) Separate accounts that are managed by life
21 insurance companies authorized to transact business in
22 Illinois and are comprised of diversified portfolios
23 consisting of common or preferred stocks, bonds, or money
24 market instruments.
25 (2) Mutual funds that meet the following requirements:

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1 (i) the mutual fund is managed by an investment
2 company as defined and registered under the federal
3 Investment Company Act of 1940 and registered under the
4 Illinois Securities Law of 1953;
5 (ii) the mutual fund has been in operation for at
6 least 5 years;
7 (iii) the mutual fund has total net assets of $250
8 million or more; and
9 (iv) the mutual fund is comprised of diversified
10 portfolios of common or preferred stocks, bonds, or
11 money market instruments.
12 (b) A pension fund's total investment in the items
13authorized under this Section shall not exceed 35% of the
14market value of the pension fund's net present assets stated in
15its most recent annual report on file with the Illinois
16Department of Insurance.
17(Source: P.A. 90-507, eff. 8-22-97.)
18 (40 ILCS 5/1-113.4)
19 Sec. 1-113.4. List of additional permitted investments for
20certain pension funds with net assets of $5,000,000 or more.
21 (a) Beginning 18 months after the effective date of this
22amendatory Act of the 100th General Assembly or when the
23transfer of investment authority is made pursuant to Section
241-113.05, whichever occurs first, subsection (a-5) of this
25Section does not apply to any pension fund that is an eligible

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1pension fund as defined in Section 1-101.6.
2 (a-5) Except as provided in subsection (a), in (a) In
3addition to the items in Sections 1-113.2 and 1-113.3, a
4pension fund established under Article 3 or 4 that has net
5assets of at least $5,000,000 and has appointed an investment
6adviser under Section 1-113.5 may, through that investment
7adviser, invest a portion of its assets in common and preferred
8stocks authorized for investments of trust funds under the laws
9of the State of Illinois. The stocks must meet all of the
10following requirements:
11 (1) The common stocks are listed on a national
12 securities exchange or board of trade (as defined in the
13 federal Securities Exchange Act of 1934 and set forth in
14 subdivision G of Section 3 of the Illinois Securities Law
15 of 1953) or quoted in the National Association of
16 Securities Dealers Automated Quotation System National
17 Market System (NASDAQ NMS).
18 (2) The securities are of a corporation created or
19 existing under the laws of the United States or any state,
20 district, or territory thereof and the corporation has been
21 in existence for at least 5 years.
22 (3) The corporation has not been in arrears on payment
23 of dividends on its preferred stock during the preceding 5
24 years.
25 (4) The market value of stock in any one corporation
26 does not exceed 5% of the cash and invested assets of the

HB5013- 14 -LRB100 16930 RPS 32073 b
1 pension fund, and the investments in the stock of any one
2 corporation do not exceed 5% of the total outstanding stock
3 of that corporation.
4 (5) The straight preferred stocks or convertible
5 preferred stocks are issued or guaranteed by a corporation
6 whose common stock qualifies for investment by the board.
7 (6) The issuer of the stocks has been subject to the
8 requirements of Section 12 of the federal Securities
9 Exchange Act of 1934 and has been current with the filing
10 requirements of Sections 13 and 14 of that Act during the
11 preceding 3 years.
12 (b) A pension fund's total investment in the items
13authorized under this Section and Section 1-113.3 shall not
14exceed 35% of the market value of the pension fund's net
15present assets stated in its most recent annual report on file
16with the Illinois Department of Insurance.
17 (c) A pension fund that invests funds under this Section
18shall electronically file with the Division any reports of its
19investment activities that the Division may require, at the
20times and in the format required by the Division.
21(Source: P.A. 100-201, eff. 8-18-17.)
22 (40 ILCS 5/1-113.4a)
23 Sec. 1-113.4a. List of additional permitted investments
24for certain Article 3 and 4 pension funds with net assets of
25$10,000,000 or more.

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1 (a) Beginning 18 months after the effective date of this
2amendatory Act of the 100th General Assembly or when the
3transfer of investment authority is made pursuant to Section
41-113.05, whichever occurs first, subsection (a-5) of this
5Section does not apply to any pension fund that is an eligible
6pension fund as defined in Section 1-101.6.
7 (a-5) Except as provided in subsection (a), in (a) In
8addition to the items in Sections 1-113.2 and 1-113.3, a
9pension fund established under Article 3 or 4 that has net
10assets of at least $10,000,000 and has appointed an investment
11adviser, as defined under Sections 1-101.4 and 1-113.5, may,
12through that investment adviser, invest an additional portion
13of its assets in common and preferred stocks and mutual funds.
14 (b) The stocks must meet all of the following requirements:
15 (1) The common stocks must be listed on a national
16 securities exchange or board of trade (as defined in the
17 Federal Securities Exchange Act of 1934 and set forth in
18 paragraph G of Section 3 of the Illinois Securities Law of
19 1953) or quoted in the National Association of Securities
20 Dealers Automated Quotation System National Market System.
21 (2) The securities must be of a corporation in
22 existence for at least 5 years.
23 (3) The market value of stock in any one corporation
24 may not exceed 5% of the cash and invested assets of the
25 pension fund, and the investments in the stock of any one
26 corporation may not exceed 5% of the total outstanding

HB5013- 16 -LRB100 16930 RPS 32073 b
1 stock of that corporation.
2 (4) The straight preferred stocks or convertible
3 preferred stocks must be issued or guaranteed by a
4 corporation whose common stock qualifies for investment by
5 the board.
6 (c) The mutual funds must meet the following requirements:
7 (1) The mutual fund must be managed by an investment
8 company registered under the Federal Investment Company
9 Act of 1940 and registered under the Illinois Securities
10 Law of 1953.
11 (2) The mutual fund must have been in operation for at
12 least 5 years.
13 (3) The mutual fund must have total net assets of
14 $250,000,000 or more.
15 (4) The mutual fund must be comprised of a diversified
16 portfolio of common or preferred stocks, bonds, or money
17 market instruments.
18 (d) A pension fund's total investment in the items
19authorized under this Section and Section 1-113.3 shall not
20exceed 50% effective July 1, 2011 and 55% effective July 1,
212012 of the market value of the pension fund's net present
22assets stated in its most recent annual report on file with the
23Department of Insurance.
24 (e) A pension fund that invests funds under this Section
25shall electronically file with the Division any reports of its
26investment activities that the Division may require, at the

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1time and in the format required by the Division.
2(Source: P.A. 96-1495, eff. 1-1-11.)
3 (40 ILCS 5/1-113.5)
4 Sec. 1-113.5. Investment advisers and investment services
5for certain all Article 3 or 4 pension funds.
6 (a) Beginning 18 months after the effective date of this
7amendatory Act of the 100th General Assembly or when the
8transfer of investment authority is made pursuant to Section
91-113.05, whichever occurs first, subsection (a-1) of this
10Section does not apply to any pension fund that is an eligible
11pension fund as defined in Section 1-101.6.
12 (a-1) Except as provided in subsection (a), the (a) The
13board of trustees of a pension fund established under Article 3
14or 4 of this Code may appoint investment advisers as defined in
15Section 1-101.4. The board of any pension fund investing in
16common or preferred stock under Section 1-113.4 shall appoint
17an investment adviser before making such investments.
18 The investment adviser or consultant shall be a fiduciary,
19as defined in Section 1-101.2, with respect to the pension fund
20and shall be one of the following:
21 (1) an investment adviser registered under the federal
22 Investment Advisers Act of 1940 and the Illinois Securities
23 Law of 1953;
24 (2) a bank or trust company authorized to conduct a
25 trust business in Illinois;

HB5013- 18 -LRB100 16930 RPS 32073 b
1 (3) a life insurance company authorized to transact
2 business in Illinois; or
3 (4) an investment company as defined and registered
4 under the federal Investment Company Act of 1940 and
5 registered under the Illinois Securities Law of 1953.
6 (a-5) Notwithstanding any other provision of law, a person
7or entity that provides consulting services (referred to as a
8"consultant" in this Section) to a pension fund with respect to
9the selection of fiduciaries may not be awarded a contract to
10provide those consulting services that is more than 5 years in
11duration. No contract to provide such consulting services may
12be renewed or extended. At the end of the term of a contract,
13however, the contractor is eligible to compete for a new
14contract. No person shall attempt to avoid or contravene the
15restrictions of this subsection by any means. All offers from
16responsive offerors shall be accompanied by disclosure of the
17names and addresses of the following:
18 (1) The offeror.
19 (2) Any entity that is a parent of, or owns a
20 controlling interest in, the offeror.
21 (3) Any entity that is a subsidiary of, or in which a
22 controlling interest is owned by, the offeror.
23 Beginning on July 1, 2008, a person, other than a trustee
24or an employee of a pension fund or retirement system, may not
25act as a consultant under this Section unless that person is at
26least one of the following: (i) registered as an investment

HB5013- 19 -LRB100 16930 RPS 32073 b
1adviser under the federal Investment Advisers Act of 1940 (15
2U.S.C. 80b-1, et seq.); (ii) registered as an investment
3adviser under the Illinois Securities Law of 1953; (iii) a
4bank, as defined in the Investment Advisers Act of 1940; or
5(iv) an insurance company authorized to transact business in
6this State.
7 (b) All investment advice and services provided by an
8investment adviser or a consultant appointed under this Section
9shall be rendered pursuant to a written contract between the
10investment adviser and the board, and in accordance with the
11board's investment policy.
12 The contract shall include all of the following:
13 (1) acknowledgement in writing by the investment
14 adviser that he or she is a fiduciary with respect to the
15 pension fund;
16 (2) the board's investment policy;
17 (3) full disclosure of direct and indirect fees,
18 commissions, penalties, and any other compensation that
19 may be received by the investment adviser, including
20 reimbursement for expenses; and
21 (4) a requirement that the investment adviser submit
22 periodic written reports, on at least a quarterly basis,
23 for the board's review at its regularly scheduled meetings.
24 All returns on investment shall be reported as net returns
25 after payment of all fees, commissions, and any other
26 compensation.

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1 (b-5) Each contract described in subsection (b) shall also
2include (i) full disclosure of direct and indirect fees,
3commissions, penalties, and other compensation, including
4reimbursement for expenses, that may be paid by or on behalf of
5the investment adviser or consultant in connection with the
6provision of services to the pension fund and (ii) a
7requirement that the investment adviser or consultant update
8the disclosure promptly after a modification of those payments
9or an additional payment.
10 Within 30 days after the effective date of this amendatory
11Act of the 95th General Assembly, each investment adviser and
12consultant providing services on the effective date or subject
13to an existing contract for the provision of services must
14disclose to the board of trustees all direct and indirect fees,
15commissions, penalties, and other compensation paid by or on
16behalf of the investment adviser or consultant in connection
17with the provision of those services and shall update that
18disclosure promptly after a modification of those payments or
19an additional payment.
20 A person required to make a disclosure under subsection (d)
21is also required to disclose direct and indirect fees,
22commissions, penalties, or other compensation that shall or may
23be paid by or on behalf of the person in connection with the
24rendering of those services. The person shall update the
25disclosure promptly after a modification of those payments or
26an additional payment.

HB5013- 21 -LRB100 16930 RPS 32073 b
1 The disclosures required by this subsection shall be in
2writing and shall include the date and amount of each payment
3and the name and address of each recipient of a payment.
4 (c) Within 30 days after appointing an investment adviser
5or consultant, the board shall submit a copy of the contract to
6the Division of Insurance of the Department of Financial and
7Professional Regulation.
8 (d) Investment services provided by a person other than an
9investment adviser appointed under this Section, including but
10not limited to services provided by the kinds of persons listed
11in items (1) through (4) of subsection (a), shall be rendered
12only after full written disclosure of direct and indirect fees,
13commissions, penalties, and any other compensation that shall
14or may be received by the person rendering those services.
15 (e) The board of trustees of each pension fund shall retain
16records of investment transactions in accordance with the rules
17of the Department of Financial and Professional Regulation.
18 (f) Upon the initial transfer of assets and investment
19authority of an eligible pension fund under subsection (b) of
20Section 3-135, and thereafter in perpetuity, the Downstate
21Police Pension Investment Board shall provide all investment
22services for that eligible pension fund.
23 The Downstate Police Pension Investment Board shall not be
24held liable by or indemnify any individual annuitant or
25beneficiary of any eligible pension fund established under
26Article 3 for nonpayment of benefits by the eligible pension

HB5013- 22 -LRB100 16930 RPS 32073 b
1fund.
2 (g) Upon the initial transfer of assets and investment
3authority of an eligible pension fund under subsection (b) of
4Section 4-128, and thereafter in perpetuity, the Downstate
5Firefighter Pension Investment Board shall provide all
6investment services for that eligible pension fund.
7 The Downstate Firefighter Pension Investment Board shall
8not be held liable by or indemnify any individual annuitant or
9beneficiary of any eligible pension fund established under
10Article 4 for nonpayment of benefits by the eligible pension
11fund.
12(Source: P.A. 95-950, eff. 8-29-08; 96-6, eff. 4-3-09.)
13 (40 ILCS 5/1-113.6)
14 Sec. 1-113.6. Investment policies.
15 (a) Except as provided in subsection (b), every Every board
16of trustees of a pension fund shall adopt a written investment
17policy and file a copy of that policy with the Department of
18Insurance within 30 days after its adoption. Whenever a board
19changes its investment policy, it shall file a copy of the new
20policy with the Department within 30 days.
21 (b) Beginning 18 months after the effective date of this
22amendatory Act of the 100th General Assembly or when the
23transfer of its investment authority under Section 1-113.05,
24whichever occurs first, the requirement to maintain and file an
25investment policy under subsection (a) ceases to apply to the

HB5013- 23 -LRB100 16930 RPS 32073 b
1board of trustees of an eligible pension fund established under
2Article 3 or Article 4 of this Code.
3(Source: P.A. 90-507, eff. 8-22-97.)
4 (40 ILCS 5/1-113.7)
5 Sec. 1-113.7. Registration of investments; custody and
6safekeeping.
7 This Section does not apply to investments that have been
8transferred under Section 1-113.05.
9 The board of trustees may register the investments of its
10pension fund in the name of the pension fund, in the nominee
11name of a bank or trust company authorized to conduct a trust
12business in Illinois, or in the nominee name of the Illinois
13Public Treasurer's Investment Pool.
14 The assets of the pension fund and ownership of its
15investments shall be protected through third-party custodial
16safekeeping. The board of trustees may appoint as custodian of
17the investments of its pension fund the treasurer of the
18municipality, a bank or trust company authorized to conduct a
19trust business in Illinois, or the Illinois Public Treasurer's
20Investment Pool.
21 A dealer may not maintain possession of or control over
22securities of a pension fund subject to the provisions of this
23Section unless it is registered as a broker-dealer with the
24U.S. Securities and Exchange Commission and is a member in good
25standing of the National Association of Securities Dealers, and

HB5013- 24 -LRB100 16930 RPS 32073 b
1(1) with respect to securities that are not issued only in
2book-entry form, (A) all such securities of each fund are
3either held in safekeeping in a place reasonably free from risk
4of destruction or held in custody by a securities depository
5that is a "clearing agency" registered with the U.S. Securities
6and Exchange Commission, (B) the dealer is a member of the
7Securities Investor Protection Corporation, (C) the dealer
8sends to each fund, no less frequently than each calendar
9quarter, an itemized statement showing the moneys and
10securities in the custody or possession of the dealer at the
11end of such period, and (D) an independent certified public
12accountant conducts an audit, no less frequently than each
13calendar year, that reviews the dealer's internal accounting
14controls and procedures for safeguarding securities; and (2)
15with respect to securities that are issued only in book-entry
16form, (A) all such securities of each fund are held either in a
17securities depository that is a "clearing agency" registered
18with the U.S. Securities and Exchange Commission or in a bank
19that is a member of the Federal Reserve System, (B) the dealer
20records the ownership interest of the funds in such securities
21on the dealer's books and records, (C) the dealer is a member
22of the Securities Investor Protection Corporation, (D) the
23dealer sends to each fund, no less frequently than each
24calendar quarter, an itemized statement showing the moneys and
25securities in the custody or possession of the dealer at the
26end of such period, and (E) the dealer's financial statement

HB5013- 25 -LRB100 16930 RPS 32073 b
1(which shall contain among other things a statement of the
2dealer's net capital and its required net capital computed in
3accordance with Rule 15c3-1 under the Securities Exchange Act
4of 1934) is audited annually by an independent certified public
5accountant, and the dealer's most recent audited financial
6statement is furnished to the fund. No broker-dealer serving as
7a custodian for any public pension fund as provided by this Act
8shall be authorized to serve as an investment advisor for that
9same public pension fund as described in Section 1-101.4 of
10this Code, to the extent that the investment advisor acquires
11or disposes of any asset of that same public pension fund.
12Notwithstanding the foregoing, in no event may a broker or
13dealer that is a natural person maintain possession of or
14control over securities or other assets of a pension fund
15subject to the provisions of this Section. In maintaining
16securities of a pension fund subject to the provisions of this
17Section, each dealer must maintain those securities in
18conformity with the provisions of Rule 15c3-3(b) of the
19Securities Exchange Act of 1934 (Physical Possession or Control
20of Securities). The Director of the Department of Insurance may
21adopt such rules and regulations as shall be necessary and
22appropriate in his or her judgment to effectuate the purposes
23of this Section.
24 A bank or trust company authorized to conduct a trust
25business in Illinois shall register, deposit, or hold
26investments for safekeeping, all in accordance with the

HB5013- 26 -LRB100 16930 RPS 32073 b
1obligations and subject to the limitations of the Securities in
2Fiduciary Accounts Act.
3(Source: P.A. 92-651, eff. 7-11-02.)
4 (40 ILCS 5/1-136 new)
5 Sec. 1-136. Fiscal year for Article 3 and Article 4 pension
6funds. For every pension fund established under Article 3 or
7Article 4 of this Code, by April 30, 2019, the fiscal year of
8the fund shall be transitioned to a fiscal year ending April
930, 2019, so that the fund thereafter operates on a May 1 to
10April 30 fiscal year.
11 (40 ILCS 5/1A-112)
12 Sec. 1A-112. Fees.
13 (a) Every pension fund that is required to file an annual
14statement under Section 1A-109 shall pay to the Department an
15annual compliance fee. In the case of a pension fund under
16Article 3 or 4 of this Code, the annual compliance fee shall be
170.04% 0.02% (4 2 basis points) of the total assets of the
18pension fund, as reported in the most current annual statement
19of the fund, but not more than $16,000 $8,000. In the case of
20all other pension funds and retirement systems, the annual
21compliance fee shall be $16,000 $8,000.
22 (b) The annual compliance fee shall be due on June 30 for
23the following State fiscal year, except that the fee payable in
241997 for fiscal year 1998 shall be due no earlier than 30 days

HB5013- 27 -LRB100 16930 RPS 32073 b
1following the effective date of this amendatory Act of 1997.
2 (c) Any information obtained by the Division that is
3available to the public under the Freedom of Information Act
4and is either compiled in published form or maintained on a
5computer processible medium shall be furnished upon the written
6request of any applicant and the payment of a reasonable
7information services fee established by the Director,
8sufficient to cover the total cost to the Division of
9compiling, processing, maintaining, and generating the
10information. The information may be furnished by means of
11published copy or on a computer processed or computer
12processible medium.
13 No fee may be charged to any person for information that
14the Division is required by law to furnish to that person.
15 (d) Except as otherwise provided in this Section, all fees
16and penalties collected by the Department under this Code shall
17be deposited into the Public Pension Regulation Fund.
18 (e) Fees collected under subsection (c) of this Section and
19money collected under Section 1A-107 shall be deposited into
20the Technology Management Revolving Fund and credited to the
21account of the Department's Public Pension Division. This
22income shall be used exclusively for the purposes set forth in
23Section 1A-107. Notwithstanding the provisions of Section
24408.2 of the Illinois Insurance Code, no surplus funds
25remaining in this account shall be deposited in the Insurance
26Financial Regulation Fund. All money in this account that the

HB5013- 28 -LRB100 16930 RPS 32073 b
1Director certifies is not needed for the purposes set forth in
2Section 1A-107 of this Code shall be transferred to the Public
3Pension Regulation Fund.
4 (f) Nothing in this Code prohibits the General Assembly
5from appropriating funds from the General Revenue Fund to the
6Department for the purpose of administering or enforcing this
7Code.
8(Source: P.A. 100-23, eff. 7-6-17.)
9 (40 ILCS 5/1A-113)
10 Sec. 1A-113. Penalties.
11 (a) A pension fund that fails, without just cause, to file
12its annual statement within the time prescribed under Section
131A-109 shall pay to the Department a penalty to be determined
14by the Department, which shall not exceed $100 for each day's
15delay.
16 (b) A pension fund that fails, without just cause, to file
17its actuarial statement within the time prescribed under
18Section 1A-110 or 1A-111 shall pay to the Department a penalty
19to be determined by the Department, which shall not exceed $100
20for each day's delay.
21 (c) A pension fund that fails to pay a fee within the time
22prescribed under Section 1A-112 shall pay to the Department a
23penalty of 5% of the amount of the fee for each month or part of
24a month that the fee is late. The entire penalty shall not
25exceed 25% of the fee due.

HB5013- 29 -LRB100 16930 RPS 32073 b
1 (c-5) Whenever the Director of Insurance determines that a
2pension fund is not in compliance with Section 3-132, 3-135,
33-135.1, 3-135.2, 4-123, 4-128, 4-128.1, or 4-128.2 of this
4Code:
5 (1) The Director of Insurance shall notify the pension
6 fund board of trustees in writing of the noncompliance.
7 (2) The board of trustees of the pension fund shall
8 take immediate steps to come into compliance with the
9 applicable provisions of this Code within 15 days after the
10 date of the notice of noncompliance.
11 (3) If the pension fund does not come into compliance
12 with the applicable provisions of this Code within 15 days
13 after the date of the notice, the Department of Insurance
14 shall assess a penalty of up to $2,000 per day of
15 noncompliance, to be paid by the fund within 21 days after
16 the date of the order assessing the penalty.
17 (4) A board so notified and assessed may request a
18 hearing on the noncompliance alleged in the notice within
19 15 days after the date of the notice.
20 Any hearing held under this subsection (c-5) shall be held
21in accordance with the rules of the Department of Insurance.
22 (d) This subsection applies to any governmental unit or
23pension fund, as defined in Section 1A-102, that is subject to
24any law establishing a pension fund or retirement system for
25the benefit of employees of the governmental unit.
26 Whenever the Division determines by examination,

HB5013- 30 -LRB100 16930 RPS 32073 b
1investigation, or in any other manner that the governing body
2or any elected or appointed officer or official of a
3governmental unit has failed to comply with any provision of
4this Code that law:
5 (1) The Director shall notify in writing the governing
6 body, officer, or official of the specific provision or
7 provisions of the law with which the person has failed to
8 comply.
9 (2) Upon receipt of the notice, the person notified
10 shall take immediate steps to comply with the provisions of
11 law specified in the notice.
12 (3) If the person notified fails to comply within a
13 reasonable time after receiving the notice, the Director
14 may hold a hearing at which the person notified may show
15 cause for noncompliance with the law.
16 (4) If upon hearing the Director determines that good
17 and sufficient cause for noncompliance has not been shown,
18 the Director may order the person to submit evidence of
19 compliance within a specified period of not less than 30
20 days.
21 (5) If evidence of compliance has not been submitted to
22 the Director within the period of time prescribed in the
23 order and no administrative appeal from the order has been
24 initiated, the Director may assess a civil penalty of up to
25 $2,000 against the governing body, officer, or official for
26 each noncompliance with an order of the Director.

HB5013- 31 -LRB100 16930 RPS 32073 b
1 The Director shall develop by rule, with as much
2specificity as practicable, the standards and criteria to be
3used in assessing penalties and their amounts. The standards
4and criteria shall include, but need not be limited to,
5consideration of evidence of efforts made in good faith to
6comply with applicable legal requirements. This rulemaking is
7subject to the provisions of the Illinois Administrative
8Procedure Act.
9 If a penalty is not paid within 30 days of the date of
10assessment, the Director without further notice shall report
11the act of noncompliance to the Attorney General of this State.
12It shall be the duty of the Attorney General or, if the
13Attorney General so designates, the State's Attorney of the
14county in which the governmental unit is located to apply
15promptly by complaint on relation of the Director of Insurance
16in the name of the people of the State of Illinois, as
17plaintiff, to the circuit court of the county in which the
18governmental unit is located for enforcement of the penalty
19prescribed in this subsection or for such additional relief as
20the nature of the case and the interest of the employees of the
21governmental unit or the public may require.
22 (e) Whoever knowingly makes a false certificate, entry, or
23memorandum upon any of the books or papers pertaining to any
24pension fund or upon any statement, report, or exhibit filed or
25offered for file with the Division or the Director of Insurance
26in the course of any examination, inquiry, or investigation,

HB5013- 32 -LRB100 16930 RPS 32073 b
1with intent to deceive the Director, the Division, or any of
2its employees is guilty of a Class A misdemeanor.
3(Source: P.A. 90-507, eff. 8-22-97.)
4 (40 ILCS 5/3-125) (from Ch. 108 1/2, par. 3-125)
5 Sec. 3-125. Financing.
6 (a) The city council or the board of trustees of the
7municipality shall annually levy a tax upon all the taxable
8property of the municipality at the rate on the dollar which
9will produce an amount which, when added to the deductions from
10the salaries or wages of police officers, and revenues
11available from other sources, will equal a sum sufficient to
12meet the annual requirements of the police pension fund. The
13annual requirements to be provided by such tax levy are equal
14to (1) the normal cost of the pension fund for the year
15involved, plus (2) an amount sufficient to bring the total
16assets of the pension fund up to 90% of the total actuarial
17liabilities of the pension fund by the end of municipal fiscal
18year 2040, as annually updated and determined by an enrolled
19actuary employed by the Illinois Department of Insurance or by
20an enrolled actuary retained by the pension fund or the
21municipality. In making these determinations, the required
22minimum employer contribution shall be calculated each year as
23a level percentage of payroll over the years remaining up to
24and including fiscal year 2040 and shall be determined under
25the projected unit credit actuarial cost method and utilizing

HB5013- 33 -LRB100 16930 RPS 32073 b
1the rate of return and asset total determined under Article 22B
2of this Code. The tax shall be levied and collected in the same
3manner as the general taxes of the municipality, and in
4addition to all other taxes now or hereafter authorized to be
5levied upon all property within the municipality, and shall be
6in addition to the amount authorized to be levied for general
7purposes as provided by Section 8-3-1 of the Illinois Municipal
8Code, approved May 29, 1961, as amended. The tax shall be
9forwarded directly to the treasurer of the board within 30
10business days after receipt by the county.
11 (b) For purposes of determining the required employer
12contribution to a pension fund, the value of the pension fund's
13assets shall be equal to the actuarial value of the pension
14fund's assets, which shall be calculated as follows:
15 (1) On March 30, 2011, the actuarial value of a pension
16 fund's assets shall be equal to the market value of the
17 assets as of that date.
18 (2) In determining the actuarial value of the System's
19 assets for fiscal years after March 30, 2011, any actuarial
20 gains or losses from investment return incurred in a fiscal
21 year shall be recognized in equal annual amounts over the
22 5-year period following that fiscal year.
23 (c) If a participating municipality fails to transmit to
24the fund contributions required of it under this Article for
25more than 90 days after the payment of those contributions is
26due, the fund may, after giving notice to the municipality,

HB5013- 34 -LRB100 16930 RPS 32073 b
1apply to the Director of Insurance for intercept. The
2Department of Insurance shall certify to the State Comptroller
3the amounts of the delinquent payments in accordance with any
4applicable rules of the Department of Insurance Comptroller,
5and the Comptroller must, beginning in fiscal year 2016, deduct
6and remit to the fund the certified amounts or a portion of
7those amounts from the following proportions of payments of
8State funds to the municipality:
9 (1) in fiscal year 2016, one-third of the total amount
10 of any payments of State funds to the municipality;
11 (2) in fiscal year 2017, two-thirds of the total amount
12 of any payments of State funds to the municipality; and
13 (3) in fiscal year 2018 and each fiscal year
14 thereafter, the total amount of any payments of State funds
15 to the municipality.
16 The State Comptroller may not deduct from any payments of
17State funds to the municipality more than the amount of
18delinquent payments certified to the State Comptroller by the
19fund.
20 (d) The police pension fund shall consist of the following
21moneys which shall be set apart by the treasurer of the
22municipality:
23 (1) All moneys derived from the taxes levied hereunder;
24 (2) Contributions by police officers under Section
25 3-125.1;
26 (3) All moneys accumulated by the municipality under

HB5013- 35 -LRB100 16930 RPS 32073 b
1 any previous legislation establishing a fund for the
2 benefit of disabled or retired police officers;
3 (4) Donations, gifts or other transfers authorized by
4 this Article.
5 (e) The Commission on Government Forecasting and
6Accountability shall conduct a study of all funds established
7under this Article and shall report its findings to the General
8Assembly on or before January 1, 2013. To the fullest extent
9possible, the study shall include, but not be limited to, the
10following:
11 (1) fund balances;
12 (2) historical employer contribution rates for each
13 fund;
14 (3) the actuarial formulas used as a basis for employer
15 contributions, including the actual assumed rate of return
16 for each year, for each fund;
17 (4) available contribution funding sources;
18 (5) the impact of any revenue limitations caused by
19 PTELL and employer home rule or non-home rule status; and
20 (6) existing statutory funding compliance procedures
21 and funding enforcement mechanisms for all municipal
22 pension funds.
23(Source: P.A. 99-8, eff. 7-9-15.)
24 (40 ILCS 5/3-127) (from Ch. 108 1/2, par. 3-127)
25 Sec. 3-127. Reserves.

HB5013- 36 -LRB100 16930 RPS 32073 b
1 (a) The board shall establish and maintain a reserve to
2insure the payment of all obligations incurred under this
3Article excluding retirement annuities established under
4Section 3-109.3. The reserve to be accumulated shall be equal
5to the estimated total actuarial requirements of the fund.
6 (b) In the case of an eligible pension fund that has
7transferred its investment authority to the Downstate Police
8Pension Investment Board under Section 1-113.05 of this Code,
9the assets invested by the Downstate Police Pension Investment
10Board on behalf of the pension fund, and the dividends and
11other investment earnings attributable thereto, shall be
12considered as part of the reserve for the purposes of this
13Section.
14 The Downstate Police Pension Investment Board shall report
15to the board of each such fund at least annually the financial
16information on the invested assets and earnings attributable to
17that pension fund so that the board may make the determinations
18required under this Article.
19 (c) If a pension fund has a reserve of less than the
20accrued liabilities of the fund, the board of the pension fund,
21in making its annual report to the city council or board of
22trustees of the municipality, shall designate the amount,
23calculated as a level percentage of payroll, needed annually to
24insure the accumulation of the reserve to the level of the
25fund's accrued liabilities over a period of 40 years from July
261, 1993 for pension funds then in operation, or from the date

HB5013- 37 -LRB100 16930 RPS 32073 b
1of establishment in the case of a fund created thereafter, so
2that the necessary reserves will be attained over such a
3period.
4(Source: P.A. 91-939, eff. 2-1-01.)
5 (40 ILCS 5/3-132) (from Ch. 108 1/2, par. 3-132)
6 Sec. 3-132. To control and manage the Pension Fund.
7 (a) In accordance with the applicable provisions of
8Articles 1 and 1A and this Article, the board of trustees of
9the pension fund shall have the authority to control and
10manage, exclusively, the following:
11 (1) the pension fund, and
12 (2) investment expenditures and income, including
13 interest dividends, capital gains and other distributions
14 on the investments, and
15 (2) (3) all money donated, paid, assessed, or provided
16 by law for the pensioning of disabled and retired police
17 officers, their surviving spouses, minor children, and
18 dependent parents. All such money received or collected
19 shall be credited by the treasurer of the municipality to
20 the custodian's account of the pension fund and held by the
21 custodian for purposes of investment pursuant to Article
22 22B of this Code.
23 (b) Pursuant to rules adopted under Article 22B of this
24Code, the board of trustees of an eligible pension fund shall
25make periodic written application to the Downstate Police

HB5013- 38 -LRB100 16930 RPS 32073 b
1Pension Investment Board for receipt and deposit of reserves
2into the pension fund. Reserves in the amount of 3 months'
3current liabilities, including annuity and benefit payments
4and operational expenses owed by the fund, shall be held by the
5treasurer of the municipality subject to the order and control
6of the board. The treasurer of the municipality shall maintain
7a record of all money received, transferred, and held for the
8account of the board.
9 (c) In case of any dispute that may arise between the board
10of trustees of the eligible pension fund and the Downstate
11Police Pension Investment Board pursuant to subsection (b) of
12this Section, the board of trustees of the eligible pension
13fund shall appeal the dispute to the Director of Insurance. If
14the Director finds that there exists a good faith dispute
15between the parties, the Director may hold a hearing in
16accordance with the rules of the Department of Insurance.
17(Source: P.A. 90-507, eff. 8-22-97.)
18 (40 ILCS 5/3-135) (from Ch. 108 1/2, par. 3-135)
19 Sec. 3-135. To invest, manage, and transfer funds.
20 (a) Except as provided in subsection (b), Beginning January
211, 1998, the board shall invest funds in accordance with
22Sections 1-113.1 through 1-113.10 of this Code.
23 Any pension fund that is not an eligible pension fund as
24defined in Section 1-101.6 of this Code shall retain the
25authority to control and manage investment expenditures and

HB5013- 39 -LRB100 16930 RPS 32073 b
1income, including interest, dividends, capital gains, and
2other distributions on the investments.
3 (b) The board of an eligible pension fund that receives a
4certified investment asset list under Section 3-135.1 shall
5cease investment activities upon receiving the certified
6investment asset list and shall transfer all investment assets,
7minus assets needed to comply with subsection (b) of Section
83-132, to the Downstate Police Pension Investment Board in the
9manner prescribed by rules adopted by the Downstate Police
10Pension Investment Board under Article 22B. Upon completion of
11the transfer described in this subsection, the investment
12authority of the board shall terminate.
13(Source: P.A. 90-507, eff. 8-22-97.)
14 (40 ILCS 5/3-135.1 new)
15 Sec. 3-135.1. Certified investment asset list.
16 (a) Within 18 months of the effective date of this
17amendatory Act of the 100th General Assembly, the Department of
18Insurance shall audit the investment assets of each eligible
19pension fund established under this Article to determine a
20certified investment asset list. The audit shall be performed
21by a certified public accountant. The board of the pension fund
22shall defray the expense of the audit.
23 (b) Upon completion of the audit, the Department of
24Insurance shall provide the certified investment asset list to
25the eligible pension fund and the Downstate Police Pension

HB5013- 40 -LRB100 16930 RPS 32073 b
1Investment Board. The Department of Insurance may adopt rules
2governing the creation and distribution of the certified
3investment asset list.
4 (40 ILCS 5/3-135.2 new)
5 Sec. 3-135.2. To transfer investment funds. At each
6quarterly meeting of the board, the board of trustees of any
7eligible pension fund shall transfer any available funds for
8investment to the Downstate Police Pension Investment Board in
9accordance with provisions of Article 22B of this Code. Each
10transfer shall be made within 30 days after the end of the
11fiscal year quarter and written notice of the transfer shall be
12given to the Downstate Police Pension Investment Board.
13 (40 ILCS 5/4-118) (from Ch. 108 1/2, par. 4-118)
14 Sec. 4-118. Financing.
15 (a) The city council or the board of trustees of the
16municipality shall annually levy a tax upon all the taxable
17property of the municipality at the rate on the dollar which
18will produce an amount which, when added to the deductions from
19the salaries or wages of firefighters and revenues available
20from other sources, will equal a sum sufficient to meet the
21annual actuarial requirements of the pension fund, as
22determined by an enrolled actuary employed by the Illinois
23Department of Insurance or by an enrolled actuary retained by
24the pension fund or municipality. For the purposes of this

HB5013- 41 -LRB100 16930 RPS 32073 b
1Section, the annual actuarial requirements of the pension fund
2are equal to (1) the normal cost of the pension fund, or 17.5%
3of the salaries and wages to be paid to firefighters for the
4year involved, whichever is greater, plus (2) an annual amount
5sufficient to bring the total assets of the pension fund up to
690% of the total actuarial liabilities of the pension fund by
7the end of municipal fiscal year 2040, as annually updated and
8determined by an enrolled actuary employed by the Illinois
9Department of Insurance or by an enrolled actuary retained by
10the pension fund or the municipality. In making these
11determinations, the required minimum employer contribution
12shall be calculated each year as a level percentage of payroll
13over the years remaining up to and including fiscal year 2040
14and shall be determined under the projected unit credit
15actuarial cost method and utilizing the rate of return and
16asset total determined under Article 22C of this Code. The
17amount to be applied towards the amortization of the unfunded
18accrued liability in any year shall not be less than the annual
19amount required to amortize the unfunded accrued liability,
20including interest, as a level percentage of payroll over the
21number of years remaining in the 40 year amortization period.
22 (a-5) For purposes of determining the required employer
23contribution to a pension fund, the value of the pension fund's
24assets shall be equal to the actuarial value of the pension
25fund's assets, which shall be calculated as follows:
26 (1) On March 30, 2011, the actuarial value of a pension

HB5013- 42 -LRB100 16930 RPS 32073 b
1 fund's assets shall be equal to the market value of the
2 assets as of that date.
3 (2) In determining the actuarial value of the pension
4 fund's assets for fiscal years after March 30, 2011, any
5 actuarial gains or losses from investment return incurred
6 in a fiscal year shall be recognized in equal annual
7 amounts over the 5-year period following that fiscal year.
8 (b) The tax shall be levied and collected in the same
9manner as the general taxes of the municipality, and shall be
10in addition to all other taxes now or hereafter authorized to
11be levied upon all property within the municipality, and in
12addition to the amount authorized to be levied for general
13purposes, under Section 8-3-1 of the Illinois Municipal Code or
14under Section 14 of the Fire Protection District Act. The tax
15shall be forwarded directly to the treasurer of the board
16within 30 business days of receipt by the county (or, in the
17case of amounts added to the tax levy under subsection (f),
18used by the municipality to pay the employer contributions
19required under subsection (b-1) of Section 15-155 of this
20Code).
21 (b-5) If a participating municipality fails to transmit to
22the fund contributions required of it under this Article for
23more than 90 days after the payment of those contributions is
24due, the fund may, after giving notice to the municipality,
25apply to the Director of Insurance for intercept. The
26Department of Insurance shall certify to the State Comptroller

HB5013- 43 -LRB100 16930 RPS 32073 b
1the amounts of the delinquent payments in accordance with any
2applicable rules of the Department of Insurance Comptroller,
3and the Comptroller must, beginning in fiscal year 2016, deduct
4and remit to the fund the certified amounts or a portion of
5those amounts from the following proportions of payments of
6State funds to the municipality:
7 (1) in fiscal year 2016, one-third of the total amount
8 of any payments of State funds to the municipality;
9 (2) in fiscal year 2017, two-thirds of the total amount
10 of any payments of State funds to the municipality; and
11 (3) in fiscal year 2018 and each fiscal year
12 thereafter, the total amount of any payments of State funds
13 to the municipality.
14 The State Comptroller may not deduct from any payments of
15State funds to the municipality more than the amount of
16delinquent payments certified to the State Comptroller by the
17fund.
18 (c) The board shall make available to the membership and
19the general public for inspection and copying at reasonable
20times the most recent Actuarial Valuation Balance Sheet and Tax
21Levy Requirement issued to the fund by the Department of
22Insurance.
23 (d) The firefighters' pension fund shall consist of the
24following moneys which shall be set apart by the treasurer of
25the municipality: (1) all moneys derived from the taxes levied
26hereunder; (2) contributions by firefighters as provided under

HB5013- 44 -LRB100 16930 RPS 32073 b
1Section 4-118.1; (3) all rewards in money, fees, gifts, and
2emoluments that may be paid or given for or on account of
3extraordinary service by the fire department or any member
4thereof, except when allowed to be retained by competitive
5awards; and (4) any money, real estate or personal property
6received by the board.
7 (e) For the purposes of this Section, "enrolled actuary"
8means an actuary: (1) who is a member of the Society of
9Actuaries or the American Academy of Actuaries; and (2) who is
10enrolled under Subtitle C of Title III of the Employee
11Retirement Income Security Act of 1974, or who has been engaged
12in providing actuarial services to one or more public
13retirement systems for a period of at least 3 years as of July
141, 1983.
15 (f) The corporate authorities of a municipality that
16employs a person who is described in subdivision (d) of Section
174-106 may add to the tax levy otherwise provided for in this
18Section an amount equal to the projected cost of the employer
19contributions required to be paid by the municipality to the
20State Universities Retirement System under subsection (b-1) of
21Section 15-155 of this Code.
22 (g) The Commission on Government Forecasting and
23Accountability shall conduct a study of all funds established
24under this Article and shall report its findings to the General
25Assembly on or before January 1, 2013. To the fullest extent
26possible, the study shall include, but not be limited to, the

HB5013- 45 -LRB100 16930 RPS 32073 b
1following:
2 (1) fund balances;
3 (2) historical employer contribution rates for each
4 fund;
5 (3) the actuarial formulas used as a basis for employer
6 contributions, including the actual assumed rate of return
7 for each year, for each fund;
8 (4) available contribution funding sources;
9 (5) the impact of any revenue limitations caused by
10 PTELL and employer home rule or non-home rule status; and
11 (6) existing statutory funding compliance procedures
12 and funding enforcement mechanisms for all municipal
13 pension funds.
14(Source: P.A. 99-8, eff. 7-9-15.)
15 (40 ILCS 5/4-120) (from Ch. 108 1/2, par. 4-120)
16 Sec. 4-120. Reserves.
17 (a) The board shall establish and maintain a reserve to
18insure the payment of all obligations incurred under this
19Article. The reserve to be accumulated shall be equal to the
20estimated total actuarial requirements of the Fund.
21 (b) In the case of an eligible pension fund that has
22transferred its investment authority to the Downstate
23Firefighter Pension Investment Board under Section 1-113.05 of
24this Code, the assets invested by the Downstate Firefighter
25Pension Investment Board on behalf of the pension fund, and the

HB5013- 46 -LRB100 16930 RPS 32073 b
1dividends and other investment earnings attributable thereto,
2shall be considered as part of the reserve for the purposes of
3this Section.
4 The Downstate Firefighter Pension Investment Board shall
5report to the board of each such fund at least annually the
6financial information on the invested assets and earnings to
7that pension fund so that the board may make the determinations
8required under this Article.
9(Source: P.A. 83-1440.)
10 (40 ILCS 5/4-123) (from Ch. 108 1/2, par. 4-123)
11 Sec. 4-123. To control and manage the Pension Fund.
12 (a) In accordance with the applicable provisions of
13Articles 1 and 1A and this Article the board of trustees of the
14pension fund shall have the authority, to control and manage,
15exclusively, the following:
16 (1) the pension fund, and
17 (2) investment expenditures and income, including
18 interest dividends, capital gains, and other distributions
19 on the investments, and
20 (2) (3) all money donated, paid, assessed, or provided
21 by law for the pensioning of disabled and retired
22 firefighters, their surviving spouses, minor children, and
23 dependent parents. All such money received or collected
24 shall be credited by the treasurer of the municipality to
25 the custodian's account of the pension fund and held by the

HB5013- 47 -LRB100 16930 RPS 32073 b
1 custodian for purposes of investment pursuant to Article
2 22C of this Code.
3 (b) Pursuant to rules adopted under Article 22C of this
4Code, the board of trustees of an eligible pension fund shall
5make periodic written application to the Downstate Firefighter
6Pension Investment Board for receipt and deposit of reserves
7into the pension fund. Reserves in the amount of 3 months'
8current liabilities, including annuity and benefit payments
9and operational expenses owed by the fund, shall be held by the
10treasurer of the municipality subject to the order and control
11of the board. The treasurer of the municipality shall maintain
12a record of all money received, transferred, and held for the
13account of the board.
14 (c) In case of any dispute that may arise between the board
15of trustees of any eligible pension fund and the Downstate
16Firefighter Pension Investment Board pursuant to subsection
17(b) of this Section, the board of trustees of the pension fund
18shall appeal the dispute to the Director of Insurance. If the
19Director finds good faith dispute between the parties, the
20Director may hold a hearing in accordance with the rules of the
21Department of Insurance.
22(Source: P.A. 90-507, eff. 8-22-97.)
23 (40 ILCS 5/4-128) (from Ch. 108 1/2, par. 4-128)
24 Sec. 4-128. To invest and transfer funds.
25 (a) Except as provided in subsection (b), Beginning January

HB5013- 48 -LRB100 16930 RPS 32073 b
11, 1998, the board shall invest funds in accordance with
2Sections 1-113.1 through 1-113.10 of this Code.
3 Any pension fund that is not an eligible pension fund as
4defined in Section 1-101.6 of this Code shall retain the
5authority to control and manage investment expenditures and
6income, including interest, dividends, capital gains, and
7other distributions on the investments.
8 (b) The board of an eligible pension fund that receives a
9certified investment asset list under Section 4-128.1 shall
10cease investment activities upon receiving the certified
11investment asset list and shall transfer all investment assets,
12minus assets needed to comply with subsection (b) of Section
134-123, to the Downstate Firefighter Pension Investment Board in
14the manner prescribed by rules adopted by the Downstate
15Firefighter Pension Investment Board under Article 22C. Upon
16completion of the transfer described in this subsection, the
17investment authority of the board shall terminate.
18(Source: P.A. 90-507, eff. 8-22-97.)
19 (40 ILCS 5/4-128.1 new)
20 Sec. 4-128.1. Certified investment asset list.
21 (a) Within 18 months of the effective date of this
22amendatory Act of the 100th General Assembly, the Department of
23Insurance shall audit the investment assets of each eligible
24pension fund established under this Article to determine a
25certified investment asset list. The audit shall be performed

HB5013- 49 -LRB100 16930 RPS 32073 b
1by a certified public accountant. The board of the pension fund
2shall defray the expense of the audit.
3 (b) Upon completion of the audit, the Department of
4Insurance shall provide the certified investment asset list to
5the eligible pension fund and the Downstate Firefighter Pension
6Investment Board. The Department of Insurance may adopt rules
7governing the creation and distribution of the certified
8investment asset list.
9 (40 ILCS 5/4-128.2 new)
10 Sec. 4-128.2. To transfer investment funds. At each
11quarterly meeting of the board, the board of trustees of any
12eligible pension fund shall transfer any available funds for
13investment to the Downstate Firefighter Pension Investment
14Board in accordance with provisions of Article 22C of this
15Code. Each transfer shall be made within 30 days of the end of
16the fiscal year quarter and written notice of the transfer
17shall be given to the Downstate Firefighter Pension Investment
18Board.
19 (40 ILCS 5/Art. 22B heading new)
20
ARTICLE 22B. DOWNSTATE POLICE PENSION INVESTMENT BOARD
21 (40 ILCS 5/22B-101 new)
22 Sec. 22B-101. Establishment. The Downstate Police Pension
23Investment Board is created with authority to manage, invest,

HB5013- 50 -LRB100 16930 RPS 32073 b
1and reinvest the reserves, funds, assets, securities, and
2moneys of any pension fund, as provided in this Article, and to
3perform such other duties as may from time to time be
4authorized by the General Assembly.
5 (40 ILCS 5/22B-102 new)
6 Sec. 22B-102. Definitions. For the purposes of this
7Article, the following words and phrases shall have the meaning
8ascribed to them unless the context requires otherwise.
9 (40 ILCS 5/22B-103 new)
10 Sec. 22B-103. Board. "Board": The Downstate Police Pension
11Investment Board.
12 (40 ILCS 5/22B-105 new)
13 Sec. 22B-105. Pension fund. "Pension fund": A pension fund
14established under Article 3 of this Code, including the
15reserves, funds, assets, securities, moneys, and property of
16the pension fund.
17 (40 ILCS 5/22B-106 new)
18 Sec. 22B-106. Manage. "Manage": To invest, reinvest,
19exchange, and perform all investment functions with regard to
20reserves, funds, assets, securities, and moneys that the board
21is authorized to invest; and to preserve and protect such
22reserves, funds, assets, securities, and moneys, including,

HB5013- 51 -LRB100 16930 RPS 32073 b
1but not limited to, authority to vote any stocks, bonds, or
2other securities and to give general or special proxies or
3powers of attorney with or without power of substitution.
4"Manage" does not include any functions, duties, or
5responsibilities incident to the operation and administration
6of pension funds other than that of investments.
7 (40 ILCS 5/22B-107 new)
8 Sec. 22B-107. Invest. "Invest": To acquire, invest,
9reinvest, exchange, or retain property held for a pension fund
10and to sell and manage the reserves, funds, securities, moneys,
11or assets of any pension fund in accordance with this Article.
12 (40 ILCS 5/22B-108 new)
13 Sec. 22B-108. Investment. "Investment": Any property
14acquired by the board for a pension fund.
15 (40 ILCS 5/22B-108.1 new)
16 Sec. 22B-108.1. Investment advisor. "Investment advisor":
17Any person or business entity that provides investment advice
18to the board on a personalized basis and with an understanding
19of the policies and goals of the board. "Investment advisor"
20does not include any person or business entity that provides
21statistical or general market research data available for
22purchase or use by others.

HB5013- 52 -LRB100 16930 RPS 32073 b
1 (40 ILCS 5/22B-109 new)
2 Sec. 22B-109. Membership of board. The board shall consist
3of the following members:
4 (1) Two trustees who are active participants of a
5 police pension fund under Article 3, elected by the active
6 participants of the police pension funds.
7 (2) Two trustees who are beneficiaries of a police
8 pension fund under Article 3, elected by the beneficiaries
9 of the police pension funds.
10 (3) Four trustees who are mayors or presidents of
11 boards of trustees of municipalities, as defined in Section
12 3-103, elected by the mayors and presidents of boards of
13 trustees of municipalities.
14 The members shall serve for terms of 4 years, except that
15the terms of office of the original members pursuant to this
16amendatory Act of the 100th General Assembly shall be as
17follows: 2 members, determined by lot, for a term of 1 year; 2
18members, determined by lot, for a term of 2 years; 2 members,
19determined by lot, for a term of 3 years; and 2 members,
20determined by lot, for a term of 4 years. If there is a vacancy
21among the members, the vacancy shall be filled for the
22remainder of the unexpired term by a special election, to be
23called by the board and conducted in the same manner as the
24regular election.
25 The active police pension fund participants shall be
26entitled to vote only for the members of the board who are

HB5013- 53 -LRB100 16930 RPS 32073 b
1active police pension fund participants. Beneficiaries of
2legal age may vote only for the members of the board who are
3police pension fund beneficiaries. No person shall be entitled
4to cast more than one ballot at such election.
5 Mayors and presidents of boards of trustees of
6municipalities shall be entitled to vote only for the members
7who are mayors or presidents of boards of trustees of
8municipalities.
9 Each person elected to membership shall qualify by taking
10an oath of office before the Secretary of State stating that he
11or she will diligently and honestly administer the affairs of
12the board and will not violate or knowingly permit the
13violation of any provisions of this Article.
14 Members of the board shall receive no salary for service on
15the board, but shall be reimbursed for travel expenses incurred
16while on business for the board according to the standards in
17effect for members of the Illinois Legislative Research Unit.
18 A majority of the members of the board shall constitute a
19quorum. The board shall elect from its membership, biennially,
20a chairperson, vice chairperson, and a recording secretary.
21These officers, together with one other member elected by the
22board, shall constitute the executive committee. During the
23interim between regular meetings of the board, the executive
24committee shall have authority to conduct all business of the
25board and shall report such business conducted at the next
26following meeting of the board for ratification.

HB5013- 54 -LRB100 16930 RPS 32073 b
1 No member of the board shall have any interest in any
2brokerage fee, commission, or other profit or gain arising out
3of any investment made by the board. This paragraph does not
4preclude ownership by any member of any minority interest in
5any common stock or any corporate obligation in which
6investment is made by the board.
7 The board shall contract for a blanket fidelity bond in the
8penal sum of not less than $1,000,000 to cover members of the
9board, the director, and all other employees of the board
10conditioned for the faithful performance of the duties of their
11respective offices, the premium on which shall be paid by the
12board.
13 (40 ILCS 5/22B-110 new)
14 Sec. 22B-110. Administration.
15 (a) The board shall appoint a director to administer the
16affairs of the board subject to and under its supervision and
17fix his or her compensation. The board may appoint investment
18officers and fix their compensation. With the approval of the
19board, the director may employ such personnel, professional or
20clerical, as may be desirable and fix their compensation. The
21appointment and compensation of the personnel other than the
22director and investment officers shall be subject to the
23Personnel Code.
24 (b) The board may adopt such rules and regulations (not
25inconsistent with this Article) as in its judgment are

HB5013- 55 -LRB100 16930 RPS 32073 b
1desirable to implement and properly administer this Article. A
2copy thereof shall be filed with the Secretary of State.
3 (c) The board may exercise any of the powers granted to
4boards of trustees of pension funds under Sections 1-107 or
51-108 and may by resolution provide for the indemnification of
6its members and any of its directors, officers, advisors, or
7employees in a manner consistent with those Sections.
8 (d) An office for meetings of the board and for
9administrative personnel shall be established at any suitable
10place within the State as may be selected by the board. All
11books and records of the board shall be kept in such office.
12 (40 ILCS 5/22B-111 new)
13 Sec. 22B-111. Management of investments.
14 (a) The board shall manage the investments of each pension
15fund for the purpose of obtaining a total return on investments
16for the long term. The Board also shall perform such other
17functions as may be assigned or directed by the General
18Assembly.
19 (b) The authority of the board to manage pension fund
20investments and the liability of the board shall begin when
21there has been a physical transfer of the pension fund
22investments to the board and placed in the custody of the
23board's custodian.
24 (c) The board may not delegate its management functions,
25but it may, but is not required to, arrange to compensate for

HB5013- 56 -LRB100 16930 RPS 32073 b
1personalized investment advisory service for any or all
2investments under its control with any national or state bank
3or trust company authorized to do a trust business and
4domiciled in Illinois, other financial institution organized
5under the laws of Illinois, or an investment advisor who is
6qualified under the Federal Investment Advisers Act of 1940 and
7is registered under the Illinois Securities Law of 1953.
8Nothing contained in this Article shall prevent the board from
9subscribing to general investment research services available
10for purchase or use by others. The board shall also have the
11authority to compensate for accounting services.
12 (d) This Section does not prohibit the board from directly
13investing pension assets in public market investments, private
14investments, real estate investments, or other investments
15authorized by this Code.
16 (40 ILCS 5/22B-112 new)
17 Sec. 22B-112. Investment authority. The board shall have
18the authority to invest funds, subject to the requirements and
19restrictions set forth in Sections 1-109, 1-109.1, 1-109.2,
201-110, 1-111, 1-114, and 1-115 of this Code.
21 No bank or savings and loan association shall receive
22investment funds as permitted by this Section, unless it has
23complied with the requirements established pursuant to Section
246 of the Public Funds Investment Act. The limitations set forth
25in that Section 6 shall be applicable only at the time of

HB5013- 57 -LRB100 16930 RPS 32073 b
1investment and shall not require the liquidation of any
2investment at any time.
3 The board shall have the authority to enter into such
4agreements and to execute such documents as it determines to be
5necessary to complete any investment transaction.
6 All investments shall be clearly held and accounted for to
7indicate ownership by the board. The board may direct the
8registration of securities in its own name or in the name of a
9nominee created for the express purpose of registration of
10securities by a national or state bank or trust company
11authorized to conduct a trust business in the State of
12Illinois.
13 Investments shall be carried at cost or at a value
14determined in accordance with generally accepted accounting
15principles and accounting procedures approved by the board.
16 The value of investments held by any pension fund in one or
17more commingled investment accounts shall be determined in
18accordance with generally accepted accounting principles.
19 (40 ILCS 5/22B-113 new)
20 Sec. 22B-113. Transfer of securities and investment
21functions.
22 (a) As soon as practicable following the receipt of a
23certified investment asset list provided under Section
243-135.1, the trustees of each pension fund shall transfer to
25the Downstate Police Pension Investment Board for management

HB5013- 58 -LRB100 16930 RPS 32073 b
1and investment all of their securities, including those for
2which commitments have been made, and all funds, assets, or
3moneys representing permanent or temporary investments, or
4cash reserves maintained for the purpose of obtaining income
5thereon.
6 (b) Prior to the transfer, the trustees of each pension
7fund shall provide for completion of an audit by a certified
8public accountant of the securities and other assets of the
9pension fund, as directed and approved by the Downstate Police
10Pension Investment Board, the expense of which shall be assumed
11by the pension fund. Upon such transfer, the authority of the
12Downstate Police Pension Investment Board with respect to the
13pension fund is effective. These transfers shall be receipted
14for in detail by the chairperson and director of the board.
15 (40 ILCS 5/22B-113.1 new)
16 Sec. 22B-113.1. Report of investable funds. Each pension
17fund shall report to the board from time to time the amounts of
18funds available for investment. These amounts shall be
19transferred as soon as practical to the board's custodian or
20the custodian's authorized agent for the account of the board
21to be applied for investment by the board. Notice of each
22transfer shall be given by the pension fund as the transfer
23occurs.
24 (40 ILCS 5/22B-113.2 new)

HB5013- 59 -LRB100 16930 RPS 32073 b
1 Sec. 22B-113.2. Custodian.
2 (a) The securities, funds, and other assets transferred to
3the Downstate Police Pension Investment Board or otherwise
4acquired by the board shall be placed in the custody of the
5board's custodian. The custodian shall provide adequate safe
6deposit facilities therefor and hold all such securities,
7funds, and other assets subject to the order of the board.
8 (b) As soon as may be practicable, the board shall appoint
9and retain a qualified custodian. Until a custodian has been
10appointed by the board, the State Treasurer shall serve as
11official custodian of the board.
12 (c) The custodian shall furnish a corporate surety bond of
13such amount as the board designates. The bond shall indemnify
14the board against any loss that may result from any action or
15failure to act by the custodian or any of the custodian's
16agents. All charges incidental to the procuring and giving of
17such bond shall be paid by the board. The bond shall be in the
18custody of the board.
19 (40 ILCS 5/22B-113.3 new)
20 Sec. 22B-113.3. Transfer from eligible pension funds.
21 (a) Upon receipt of a certified investment asset list
22provided under Section 3-135.1 of this Code for an eligible
23pension fund, the Downstate Police Pension Investment Board
24shall, as soon as practicable, initiate the transfer of assets
25from the board of trustees of that fund, and the board of that

HB5013- 60 -LRB100 16930 RPS 32073 b
1fund shall transfer to the Downstate Police Pension Investment
2Board for management and investment all of its securities
3including securities for which commitments have been made, and
4all funds, assets, moneys representing permanent or temporary
5investments, and cash reserves maintained for the purpose of
6obtaining income thereon.
7 (b) Upon the transfer of securities and assets from a board
8of trustees under this Section, the custody and control of the
9Downstate Police Pension Investment Board over the present and
10future assets of the pension fund shall take effect. The
11transfer shall be receipted for in detail by the Downstate
12Police Pension Investment Board and the receipt shall be
13provided to the board of trustees of the pension fund within 30
14days of the effective date of the transfer.
15 (40 ILCS 5/22B-114 new)
16 Sec. 22B-114. Accounting. In the management of pension fund
17investments, the board:
18 (1) may, for investment purposes, commingle all or a
19 part of the invested assets of one or more pension funds
20 under its jurisdiction and authority;
21 (2) shall carry assets of all funds at cost or a value
22 determined in accordance with generally accepted
23 accounting principles and accounting procedures approved
24 by the board. Each investment initially transferred to the
25 board by a pension fund shall be similarly valued except

HB5013- 61 -LRB100 16930 RPS 32073 b
1 that the board may elect to place such value on any
2 investment conditionally in which case the amount of any
3 later realization of such asset in cash that is in excess
4 of or is less than the amount so credited shall be credited
5 or charged to the fund that made the transfer;
6 (3) shall keep proper books of account which shall
7 reflect at all times the value of all investments held by
8 the board for a pension fund whether for the separate
9 account of the fund or in a commingled fund;
10 (4) shall charge each pension fund with its share of
11 all expenses of the board at quarter-yearly periods pro
12 rata according to the value of the investments held for the
13 respective funds at the beginning of the quarter or any
14 other equitable formula; and
15 (5) shall charge all distributions made by the board to
16 or for a pension fund to the account maintained for that
17 fund.
18 (40 ILCS 5/22B-115 new)
19 Sec. 22B-115. Audits and reports.
20 (a) At least annually, the books, records, accounts, and
21securities of the board shall be audited by a certified public
22accountant designated by the Auditor General of the State. The
23audit opinion shall be published as a part of the annual report
24of the board.
25 (b) For the quarterly periods ending September 30, December

HB5013- 62 -LRB100 16930 RPS 32073 b
131, and March 31, the board shall submit to each pension fund
2under its jurisdiction a report containing, among other things,
3the following information:
4 (1) a full description of the investments acquired,
5 showing average costs;
6 (2) a full description of the securities sold or
7 exchanged, showing average proceeds or other conditions of
8 an exchange;
9 (3) gains or losses realized during the period;
10 (4) income from investments;
11 (5) administrative expenses of the board; and
12 (6) the proportion of administrative expenses
13 allocable to each pension fund.
14 (c) An annual report shall be prepared by the board for
15submission to each pension fund under its jurisdiction within 6
16months after the close of each fiscal year. A fiscal year shall
17date from July 1 of one year to June 30 of the year next
18following. This report shall contain full information
19concerning the results of investment operations of the board
20for the year, the information required under subsections (a)
21and (b), and the following information:
22 (1) a listing of the investments held by the board as
23 at the end of the year showing their book values and market
24 values and their income yields on market values;
25 (2) the amounts as determined under item (1) of
26 subsection (b) allocable to each pension fund managed by

HB5013- 63 -LRB100 16930 RPS 32073 b
1 the board;
2 (3) comments on the pertinent factors affecting the
3 operations of the board for the year;
4 (4) a review of the policies maintained by the board
5 and any changes therein that occurred during the year;
6 (5) a copy of the audited financial statements for the
7 year;
8 (6) recommendations for possible changes in the law
9 governing the operations of the board; and
10 (7) a listing of the names of securities brokers and
11 dealers dealt with during the year showing the total amount
12 of commissions received by each on transactions with the
13 board.
14 (40 ILCS 5/22B-115.5 new)
15 Sec. 22B-115.5. Audit of transition. Within 6 months after
16the transfer of investment assets from an eligible pension fund
17established under Article 3 of this Code to the control of the
18Board, the books, records, accounts, and securities of the
19board shall be audited by a certified public accountant
20designated by the Illinois Auditor General. The audit shall
21include, but is not limited to, the following:
22 (i) a full description of the investments acquired,
23 showing average costs;
24 (ii) a full description of the securities sold or
25 exchanged, showing average proceeds or other conditions of

HB5013- 64 -LRB100 16930 RPS 32073 b
1 an exchange;
2 (iii) gains or losses realized during the period;
3 (iv) income from investments;
4 (v) administrative expenses of the board; and
5 (vi) the proportion of administrative expenses
6 allocable to each pension fund.
7 The audit report shall be published on the board's website
8and filed with the Department of Insurance.
9 (40 ILCS 5/Art. 22C heading new)
10
ARTICLE 22C. DOWNSTATE FIREFIGHTER PENSION INVESTMENT BOARD
11 (40 ILCS 5/22C-101 new)
12 Sec. 22C-101. Establishment. The Downstate Firefighter
13Pension Investment Board is created with authority to manage,
14invest, and reinvest the reserves, funds, assets, securities,
15and moneys of any pension fund, as provided in this Article and
16to perform such other duties as may from time to time be
17authorized by the General Assembly.
18 (40 ILCS 5/22C-102 new)
19 Sec. 22C-102. Definitions. For the purposes of this
20Article, the following words and phrases shall have the meaning
21ascribed to them unless the context requires otherwise.
22 (40 ILCS 5/22C-103 new)

HB5013- 65 -LRB100 16930 RPS 32073 b
1 Sec. 22C-103. Board. "Board": The Downstate Firefighter
2Pension Investment Board.
3 (40 ILCS 5/22C-105 new)
4 Sec. 22C-105. Pension fund. "Pension fund": A pension fund
5established under Article 4 of this Code, including the
6reserves, funds, assets, securities, moneys, and property of
7any pension fund or retirement system.
8 (40 ILCS 5/22C-106 new)
9 Sec. 22C-106. Manage. "Manage": To invest, reinvest,
10exchange, and perform all investment functions with regard to
11reserves, funds, assets, securities, and moneys that the board
12is authorized to invest; and to preserve and protect such
13reserves, funds, assets, securities, and moneys, including,
14but not limited to, authority to vote any stocks, bonds, or
15other securities and to give general or special proxies or
16powers of attorney with or without power of substitution.
17"Manage" does not include any functions, duties, or
18responsibilities incident to the operation and administration
19of pension funds other than that of investments.
20 (40 ILCS 5/22C-107 new)
21 Sec. 22C-107. Invest. "Invest": To acquire, invest,
22reinvest, exchange, or retain property held for a pension fund
23and to sell and manage the reserves, funds, securities, moneys,

HB5013- 66 -LRB100 16930 RPS 32073 b
1or assets of any pension fund in accordance with this Article.
2 (40 ILCS 5/22C-108 new)
3 Sec. 22C-108. Investment. "Investment": Any property
4acquired by the board for a pension fund.
5 (40 ILCS 5/22C-108.1 new)
6 Sec. 22C-108.1. Investment advisor. "Investment advisor":
7Any person or business entity that provides investment advice
8to the board on a personalized basis and with an understanding
9of the policies and goals of the board. "Investment advisor"
10does not include any person or business entity that provides
11statistical or general market research data available for
12purchase or use by others.
13 (40 ILCS 5/22C-109 new)
14 Sec. 22C-109. Membership of board. The board shall consist
15of the following members:
16 (1) Two trustees who are active participants of a
17 firefighter pension fund under Article 4, elected by the
18 active participants of the firefighter pension funds.
19 (2) Two trustees who are beneficiaries of a firefighter
20 pension fund under Article 4, elected by the beneficiaries
21 of the firefighter pension funds.
22 (3) Four trustees who are mayors or presidents of
23 boards of trustees of municipalities, as defined in Section

HB5013- 67 -LRB100 16930 RPS 32073 b
1 4-103, elected by the mayors and presidents of boards of
2 trustees of municipalities.
3 The members shall serve for terms of 4 years, except that
4the terms of office of the original members pursuant to this
5amendatory Act of the 100th General Assembly shall be as
6follows: 2 members, determined by lot, for a term of 1 year; 2
7members, determined by lot, for a term of 2 years; 2 members,
8determined by lot, for a term of 3 years; and 2 members,
9determined by lot, for a term of 4 years. If there is a vacancy
10among the members, the vacancy shall be filled for the
11remainder of the unexpired term by a special election, to be
12called by the board and conducted in the same manner as the
13regular election.
14 The active firefighter pension fund participants shall be
15entitled to vote only for the members of the board who are
16active firefighter pension fund participants. Beneficiaries of
17legal age may vote only for the members of the board who are
18firefighter pension fund beneficiaries. No person shall be
19entitled to cast more than one ballot at such election.
20 Mayors and presidents of boards of trustees of
21municipalities shall be entitled to vote only for the members
22who are mayors or presidents of boards of trustees of
23municipalities.
24 Each person elected to membership shall qualify by taking
25an oath of office before the Secretary of State stating that he
26or she will diligently and honestly administer the affairs of

HB5013- 68 -LRB100 16930 RPS 32073 b
1the board and will not violate or knowingly permit the
2violation of any provisions of this Article.
3 Members of the board shall receive no salary for service on
4the board but shall be reimbursed for travel expenses incurred
5while on business for the board according to the standards in
6effect for members of the Illinois Legislative Research Unit.
7 A majority of the members of the board shall constitute a
8quorum. The board shall elect from its membership, biennially,
9a chairperson, vice chairperson, and a recording secretary.
10These officers, together with one other member elected by the
11board, shall constitute the executive committee. During the
12interim between regular meetings of the board, the executive
13committee shall have authority to conduct all business of the
14board and shall report such business conducted at the next
15following meeting of the board for ratification.
16 No member of the board shall have any interest in any
17brokerage fee, commission, or other profit or gain arising out
18of any investment made by the board. This paragraph does not
19preclude ownership by any member of any minority interest in
20any common stock or any corporate obligation in which
21investment is made by the board.
22 The board shall contract for a blanket fidelity bond in the
23penal sum of not less than $1,000,000 to cover members of the
24board, the director, and all other employees of the board
25conditioned for the faithful performance of the duties of their
26respective offices, the premium on which shall be paid by the

HB5013- 69 -LRB100 16930 RPS 32073 b
1board.
2 (40 ILCS 5/22C-110 new)
3 Sec. 22C-110. Administration.
4 (a) The board shall appoint a director to administer the
5affairs of the board subject to and under its supervision and
6fix his or her compensation. The board may appoint investment
7officers and fix their compensation. With the approval of the
8board, the director may employ such personnel, professional or
9clerical, as may be desirable and fix their compensation. The
10appointment and compensation of the personnel other than the
11director and investment officers shall be subject to the
12Personnel Code.
13 (b) The board may adopt such rules and regulations (not
14inconsistent with this Article) as in its judgment are
15desirable to implement and properly administer this Article. A
16copy thereof shall be filed with the Secretary of State.
17 (c) The board may exercise any of the powers granted to
18boards of trustees of pension funds under Sections 1-107 or
191-108 and may by resolution provide for the indemnification of
20its members and any of its directors, officers, advisors, or
21employees in a manner consistent with those Sections.
22 (d) An office for meetings of the board and for
23administrative personnel shall be established at any suitable
24place within the State as may be selected by the board. All
25books and records of the board shall be kept in such office.

HB5013- 70 -LRB100 16930 RPS 32073 b
1 (40 ILCS 5/22C-111 new)
2 Sec. 22C-111. Management of investments.
3 (a) The board shall manage the investments of each pension
4fund for the purpose of obtaining a total return on investments
5for the long term. The board also shall perform such other
6functions as may be assigned or directed by the General
7Assembly.
8 (b) The authority of the board to manage pension fund
9investments and the liability of the board shall begin when
10there has been a physical transfer of the pension fund
11investments to the board and placed in the custody of the
12board's custodian.
13 (c) The board may not delegate its management functions,
14but it may, but is not required to, arrange to compensate for
15personalized investment advisory service for any or all
16investments under its control with any national or state bank
17or trust company authorized to do a trust business and
18domiciled in Illinois, other financial institution organized
19under the laws of Illinois, or an investment advisor who is
20qualified under the Federal Investment Advisers Act of 1940 and
21is registered under the Illinois Securities Law of 1953.
22Nothing contained in this Article shall prevent the board from
23subscribing to general investment research services available
24for purchase or use by others. The board shall also have the
25authority to compensate for accounting services.

HB5013- 71 -LRB100 16930 RPS 32073 b
1 (d) This Section does not prohibit the board from directly
2investing pension assets in public market investments, private
3investments, real estate investments, or other investments
4authorized by this Code.
5 (40 ILCS 5/22C-112 new)
6 Sec. 22C-112. Investment authority. The board shall have
7the authority to invest funds, subject to the requirements and
8restrictions set forth in Sections 1-109, 1-109.1, 1-109.2,
91-110, 1-111, 1-114, and 1-115 of this Code.
10 No bank or savings and loan association shall receive
11investment funds as permitted by this Section, unless it has
12complied with the requirements established pursuant to Section
136 of the Public Funds Investment Act. The limitations set forth
14in that Section 6 shall be applicable only at the time of
15investment and shall not require the liquidation of any
16investment at any time.
17 The board shall have the authority to enter into such
18agreements and to execute such documents as it determines to be
19necessary to complete any investment transaction.
20 All investments shall be clearly held and accounted for to
21indicate ownership by the board. The board may direct the
22registration of securities in its own name or in the name of a
23nominee created for the express purpose of registration of
24securities by a national or state bank or trust company
25authorized to conduct a trust business in the State of

HB5013- 72 -LRB100 16930 RPS 32073 b
1Illinois.
2 Investments shall be carried at cost or at a value
3determined in accordance with generally accepted accounting
4principles and accounting procedures approved by the board.
5 The value of investments held by any pension fund in one or
6more commingled investment accounts shall be determined in
7accordance with generally accepted accounting principles.
8 (40 ILCS 5/22C-113 new)
9 Sec. 22C-113. Transfer of securities and investment
10functions.
11 (a) As soon as practicable following the receipt of a
12certified investment asset list provided under Section
134-128.1, the trustees of each pension fund shall transfer to
14the Downstate Firefighter Pension Investment Board for
15management and investment all of their securities, including
16those for which commitments have been made, and all funds,
17assets, or moneys representing permanent or temporary
18investments, or cash reserves maintained for the purpose of
19obtaining income thereon.
20 (b) Prior to the transfer, the trustees of each pension
21fund shall provide for completion of an audit by a certified
22public accountant of the securities and other assets of the
23pension fund, as directed and approved by the Downstate
24Firefighter Pension Investment Board, the expense of which
25shall be assumed by the pension fund. Upon such transfer, the

HB5013- 73 -LRB100 16930 RPS 32073 b
1authority of the Downstate Firefighter Pension Investment
2Board with respect to the pension fund is effective. These
3transfers shall be receipted for in detail by the chairperson
4and director of the board.
5 (40 ILCS 5/22C-113.1 new)
6 Sec. 22C-113.1. Report of investable funds. Each pension
7fund shall report to the board from time to time the amounts of
8funds available for investment. These amounts shall be
9transferred as soon as practical to the board's custodian or
10the custodian's authorized agent for the account of the board
11to be applied for investment by the board. Notice of each
12transfer shall be given by the pension fund as the transfer
13occurs.
14 (40 ILCS 5/22C-113.2 new)
15 Sec. 22C-113.2. Custodian.
16 (a) The securities, funds, and other assets transferred to
17the Downstate Firefighter Pension Investment Board or
18otherwise acquired by the board shall be placed in the custody
19of the board's custodian. The custodian shall provide adequate
20safe deposit facilities therefor and hold all such securities,
21funds, and other assets subject to the order of the board.
22 (b) As soon as may be practicable, the board shall appoint
23and retain a qualified custodian. Until a custodian has been
24appointed by the board, the State Treasurer shall serve as

HB5013- 74 -LRB100 16930 RPS 32073 b
1official custodian of the board.
2 (c) The custodian shall furnish a corporate surety bond of
3such amount as the board designates. The bond shall indemnify
4the board against any loss that may result from any action or
5failure to act by the custodian or any of the custodian's
6agents. All charges incidental to the procuring and giving of
7such bond shall be paid by the board. The bond shall be in the
8custody of the board.
9 (40 ILCS 5/22C-113.3 new)
10 Sec. 22C-113.3. Transfer from eligible pension funds.
11 (a) Upon receipt of a certified investment asset list
12provided under Section 4-128.1 of this Code for an eligible
13pension fund, the Downstate Firefighter Pension Investment
14Board shall, as soon as practicable, initiate the transfer of
15assets from the board of trustees of that fund, and the board
16of that fund shall transfer to the Downstate Firefighter
17Pension Investment Board for management and investment all of
18its securities including securities for which commitments have
19been made, and all funds, assets, moneys representing permanent
20or temporary investments, and cash reserves maintained for the
21purpose of obtaining income thereon.
22 (b) Upon the transfer of securities and assets from a board
23of trustees under this Section, the custody and control of the
24Downstate Firefighter Pension Investment Board over the
25present and future assets of the pension fund shall take

HB5013- 75 -LRB100 16930 RPS 32073 b
1effect. The transfer shall be receipted for in detail by the
2Downstate Firefighter Pension Investment Board and the receipt
3shall be provided to the board of trustees of the pension fund
4within 30 days of the effective date of the transfer.
5 (40 ILCS 5/22C-114 new)
6 Sec. 22C-114. Accounting. In the management of pension fund
7investments, the board:
8 (1) may, for investment purposes, commingle all or a
9 part of the invested assets of one or more pension funds
10 under its jurisdiction and authority;
11 (2) shall carry assets of all funds at cost or a value
12 determined in accordance with generally accepted
13 accounting principles and accounting procedures approved
14 by the board. Each investment initially transferred to the
15 board by a pension fund shall be similarly valued except
16 that the board may elect to place such value on any
17 investment conditionally in which case the amount of any
18 later realization of such asset in cash that is in excess
19 of or is less than the amount so credited shall be credited
20 or charged to the fund that made the transfer;
21 (3) shall keep proper books of account which shall
22 reflect at all times the value of all investments held by
23 the board for a pension fund whether for the separate
24 account of the fund or in a commingled fund;
25 (4) shall charge each pension fund with its share of

HB5013- 76 -LRB100 16930 RPS 32073 b
1 all expenses of the board at quarter-yearly periods pro
2 rata according to the value of the investments held for the
3 respective funds at the beginning of the quarter or any
4 other equitable formula; and
5 (5) shall charge all distributions made by the board to
6 or for a pension fund to the account maintained for that
7 fund.
8 (40 ILCS 5/22C-115 new)
9 Sec. 22C-115. Audits and reports.
10 (a) At least annually, the books, records, accounts, and
11securities of the board shall be audited by a certified public
12accountant designated by the Auditor General of the State. The
13audit opinion shall be published as a part of the annual report
14of the board.
15 (b) For the quarterly periods ending September 30, December
1631, and March 31, the board shall submit to each pension fund
17under its jurisdiction a report containing, among other things,
18the following information:
19 (1) a full description of the investments acquired,
20 showing average costs;
21 (2) a full description of the securities sold or
22 exchanged, showing average proceeds or other conditions of
23 an exchange;
24 (3) gains or losses realized during the period;
25 (4) income from investments;

HB5013- 77 -LRB100 16930 RPS 32073 b
1 (5) administrative expenses of the board; and
2 (6) the proportion of administrative expenses
3 allocable to each pension fund.
4 (c) An annual report shall be prepared by the board for
5submission to each pension fund under its jurisdiction within 6
6months after the close of each fiscal year. A fiscal year shall
7date from July 1 of one year to June 30 of the year next
8following. This report shall contain full information
9concerning the results of investment operations of the board
10for the year, the information required under subsections (a)
11and (b), and the following information:
12 (1) a listing of the investments held by the board as
13 at the end of the year showing their book values and market
14 values and their income yields on market values;
15 (2) the amounts as determined under item (1) of
16 subsection (b) allocable to each pension fund managed by
17 the board;
18 (3) comments on the pertinent factors affecting the
19 operations of the board for the year;
20 (4) a review of the policies maintained by the board
21 and any changes therein that occurred during the year;
22 (5) a copy of the audited financial statements for the
23 year;
24 (6) recommendations for possible changes in the law
25 governing the operations of the board; and
26 (7) a listing of the names of securities brokers and

HB5013- 78 -LRB100 16930 RPS 32073 b
1 dealers dealt with during the year showing the total amount
2 of commissions received by each on transactions with the
3 board.
4 (40 ILCS 5/22C-115.5 new)
5 Sec. 22C-115.5. Audit of transition. Within 6 months after
6the transfer of investment assets from an eligible pension fund
7established under Article 4 of this Code to the control of the
8Board, the books, records, accounts, and securities of the
9board shall be audited by a certified public accountant
10designated by the Illinois Auditor General. The audit shall
11include, but is not limited to, the following:
12 (i) a full description of the investments acquired,
13 showing average costs;
14 (ii) a full description of the securities sold or
15 exchanged, showing average proceeds or other conditions of
16 an exchange;
17 (iii) gains or losses realized during the period;
18 (iv) income from investments;
19 (v) administrative expenses of the board; and
20 (vi) the proportion of administrative expenses
21 allocable to each pension fund.
22 The audit report shall be published on the board's website
23and filed with the Department of Insurance.
24 Section 90. The State Mandates Act is amended by adding

HB5013- 79 -LRB100 16930 RPS 32073 b
1Section 8.42 as follows:
2 (30 ILCS 805/8.42 new)
3 Sec. 8.42. Exempt mandate. Notwithstanding Sections 6 and 8
4of this Act, no reimbursement by the State is required for the
5implementation of any mandate created by this amendatory Act of
6the 100th General Assembly.
7 Section 999. Effective date. This Act takes effect upon
8becoming law.

HB5013- 80 -LRB100 16930 RPS 32073 b
1 INDEX
2 Statutes amended in order of appearance
3 40 ILCS 5/1-101.6 new
4 40 ILCS 5/1-101.7 new
5 40 ILCS 5/1-109.3
6 40 ILCS 5/1-113.05 new
7 40 ILCS 5/1-113.1
8 40 ILCS 5/1-113.2
9 40 ILCS 5/1-113.3
10 40 ILCS 5/1-113.4
11 40 ILCS 5/1-113.4a
12 40 ILCS 5/1-113.5
13 40 ILCS 5/1-113.6
14 40 ILCS 5/1-113.7
15 40 ILCS 5/1-136 new
16 40 ILCS 5/1A-112
17 40 ILCS 5/1A-113
18 40 ILCS 5/3-125from Ch. 108 1/2, par. 3-125
19 40 ILCS 5/3-127from Ch. 108 1/2, par. 3-127
20 40 ILCS 5/3-132from Ch. 108 1/2, par. 3-132
21 40 ILCS 5/3-135from Ch. 108 1/2, par. 3-135
22 40 ILCS 5/3-135.1 new
23 40 ILCS 5/3-135.2 new
24 40 ILCS 5/4-118from Ch. 108 1/2, par. 4-118
25 40 ILCS 5/4-120from Ch. 108 1/2, par. 4-120

HB5013- 81 -LRB100 16930 RPS 32073 b
1 40 ILCS 5/4-123from Ch. 108 1/2, par. 4-123
2 40 ILCS 5/4-128from Ch. 108 1/2, par. 4-128
3 40 ILCS 5/4-128.1 new
4 40 ILCS 5/4-128.2 new
5 40 ILCS 5/Art. 22B heading
6 new
7 40 ILCS 5/22B-101 new
8 40 ILCS 5/22B-102 new
9 40 ILCS 5/22B-103 new
10 40 ILCS 5/22B-105 new
11 40 ILCS 5/22B-106 new
12 40 ILCS 5/22B-107 new
13 40 ILCS 5/22B-108 new
14 40 ILCS 5/22B-108.1 new
15 40 ILCS 5/22B-109 new
16 40 ILCS 5/22B-110 new
17 40 ILCS 5/22B-111 new
18 40 ILCS 5/22B-112 new
19 40 ILCS 5/22B-113 new
20 40 ILCS 5/22B-113.1 new
21 40 ILCS 5/22B-113.2 new
22 40 ILCS 5/22B-113.3 new
23 40 ILCS 5/22B-114 new
24 40 ILCS 5/22B-115 new
25 40 ILCS 5/22B-115.5 new

HB5013- 82 -LRB100 16930 RPS 32073 b