On February 19, 2016 State Senator Dan Duffy introduced Senate Bill 3317.
SB 3317 generally requires “eligible” Article 3 and 4 pension boards to transfer assets to the Illinois State Board of Investment. An “eligible pension fund” is one that has assets that exceed the “threshold amount.” The “threshold amount” is an amount equal to 3 months of current liabilities of the pension fund to pay beneficiaries and reasonable operational expenses. Within 18 months after the effective date of the law or the issuance to the pension board of a “certified investment asset list” from the DOI, whichever occurs first, the pension board would be required to transfer all investment assets to the Illinois State Board of Investment thereby terminating the pension board’s investment authority. The DOI would audit each pension fund to create the “certified investment asset list” and each pension fund would pay for the audit. Once investments are transferred from a pension fund, the Illinois State Board of Investment would be required to perform an audit of those investments.
SB 3317 bill grants immunity to the Illinois State Board of Investment from any beneficiary for the nonpayment of pension benefits from a police or fire pension fund. The State Board of Investment shall report to each pension board at least annually on the invested assets and earnings attributable to each pension fund.
SB 3317 requires all tax money collected for each pension fund to be credited to the Illinois State Board of Investment. Each pension board shall then make written application to the Illinois State Board of Investment for deposit into each pension fund to maintain 3 months of reserves. The DOI would hear any disputes between the Illinois State Board of Investment and the pension board.
SB 3317 requires every Article 3 and 4 pension fund, beginning in 2017, to transition to a fiscal year that starts on May 1 and ends on April 30.
SB 3317 doubles annual compliance fees to the DOI from 2 basis points to 4 basis points, and increases the maximum fee from $8,000 to $16,000.
SB 3317 gives the director of the DOI authority to fine pension boards up to $2,000 per day for noncompliance with the investment transfer provisions.
SB 3317 changes the actuarial cost method from the Projected Unit Credit cost method to the Entry Age Normal cost method
SB 3317 requires the pension board to seek statutory annual enforcement by applying to the director of the DOI for intercept. The DOI shall then certify the intercept amount to the State Comptroller in accordance with rules promulgated by the DOI, rather than the State Comptroller.
SB 3317 would also reduce the training requirements for Article 3 and 4 trustees. Initial trustee training would be reduced from 32 to 8 hours. Annual training would be reduced from 16 hours to 4 hours.