HB 3428 amends the General Provisions Article of the Illinois Pension Code to prohibit the state-funded retirement systems from investing in for-profit companies that contract to shelter migrant children. The phrase “contract to shelter migrant children” means entering into a contract with the federal government to shelter migrant children under the federal Unaccompanied Alien Children Program or a substantially similar federal program.
Specifically, HB 3428 requires the Illinois Investment Policy Board to make its best efforts to identify all for-profit companies that contract to shelter migrant children and include those companies in the list of restricted companies distributed to each retirement system by July 1, 2020. These efforts must include the following, as appropriate in the Illinois Investment Policy Board’s judgment: (1) reviewing and relying on publicly available information regarding for-profit companies that contract to shelter migrant children, including information provided by nonprofit organizations, research firms, and government entities; (2) contacting asset managers contracted by the retirement systems that invest in for-profit companies that contract to shelter migrant children; (3) contacting other institutional investors that have divested from or engaged with for-profit companies that contract to shelter migrant children; and (4) retaining an independent research firm to identify for-profit companies that contract to shelter migrant children.
Generally, each retirement system must sell, redeem, divest or withdraw all direct holdings of restricted companies from its assets under management in an orderly and fiduciarily responsible manner within 12 months after the company’s most recent appearance on the list of restricted companies, and the retirement system cannot acquire securities of the restricted companies. These provisions do not apply to the retirement system’s indirect holdings or private market funds. For those investments, the Illinois Investment Policy Board must submit letters to the managers requesting that they consider removing the companies from the fund or create a similar actively managed fund having indirect holdings devoid of the companies. If the manager creates a similar fund, the retirement system must replace all applicable investments with investments in the similar fund in an expedited timeframe consistent with prudent investing standards. A retirement system may cease divesting from companies if clear and convincing evidence shows that the value of investments in such companies becomes equal to or less than 0.5 percent of the market value of all assets under management by the retirement system, upon providing a written notice to the Illinois Investment Policy Board in advance of the cessation of the divestment.
HB 3428 takes effect immediately upon becoming law.