Illinois Pension Reform Legislation in Public Act 096-0006

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Illinois Public Act 096-0006 became effective on April 3, 2009, making significant changes to the operations of Illinois retirement systems, pension funds and investment boards. The Act imposes increased oversight and accountability requirements on the boards of trustees, fiduciaries and investment advisers, managers and consultants. The provisions apply not only at the state level, but at the local level, including pension systems of the City of Chicago and other local governments.

The Act amends the Illinois Pension Code (40 ILCS 5/1-101 et seq.), the Illinois Governmental Ethics Act (5 ILCS 420/1-101 et seq.), the State Officials and Employees Ethics Act (5 ILCS 430/1-1 et seq.), and the State Treasurer Act (15 ILCS 505/0.01 et seq.).

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Registration Disclosure for Illinois Entity Registration

Illinois has a new business entity registration for procurement law in place to counteract “pay-to-play” in state contracting.

As part of the registration process, you must register the company as well as any “affiliated entity” and any “affiliated person.” Both of these terms are defined in Section 50-37 of Illinois Procurement Code.

“Affiliated person” means
(i) any person with any ownership interest or distributive share of the bidding or contracting business entity in excess of 7.5%,
(ii) executive employees of the bidding or contracting business entity, and
(iii) the spouse and minor children of any such persons.

“Affiliated entity” means
(i) any subsidiary of the bidding or contracting business entity,
(ii) any member of the same unitary business group,
(iii) any organization recognized by the United States Internal Revenue Service as a tax‑exempt organization described in Section 501(c) of the Internal Revenue Code of 1986 (or any successor provision of federal tax law) established by the bidding or contracting business entity, any affiliated entity of that business entity, or any affiliated person of that business entity, or
(iv) any political committee for which the bidding or contracting business entity, or any 501(c) organization described in item (iii) related to that business entity, is the sponsoring entity.

Illinois Business Entity Registration for Procurement

On January 1, 2009, two “pay-to-play” measures went into effect in Illinois.

Public Act 95-971 (.pdf) requires any business whose state contracts and/or bids on state contracts exceed $50,000 annually (“Covered Entity”) to register with the Board by January 31, 2009. The registration includes the Covered Entity’s name and address; the name and address of the Covered Entity’s parents, subsidiaries and affiliates (“Affiliated Entities”); and the name and address of any person who is an executive employee of, or who has an ownership interest exceeding 7.5% of, the Covered Entity, and the spouses and minor children of those persons (“Affiliated Persons”). Any business not currently a Covered Entity must register with the Board prior to submitting a bid whose value would cause the business to become a Covered Entity.

Upon registering, a Covered Entity will receive from the Board a certificate of registration. Within ten days of receiving the certificate, the Covered Entity must provide a copy to each of its Affiliated Entities and Affiliated Persons.

By April 1, 2009, the Covered Entity must provide a copy to the chief procurement officer of each agency with which the Covered Entity has a contract or to which the Covered Entity has submitted a bid. The Covered Entity must notify any political committee to which it contributes that it is registered with the Board; likewise, an Affiliated Entity and Affiliated Person must notify any political entity to which it (or he or she) contributes that it is affiliated with a Covered Entity.

Public Act 95-971 prohibits Covered Entities from making political contributions to statewide elected officials (Governor, Lieutenant Governor, Attorney General, Secretary of State, Comptroller, and Treasurer), and to declared candidates for those offices, if the officeholder is responsible for awarding a contract held or sought by the Covered Entity. The same prohibition applies to the Covered Entity’s Affiliated Entities and Affiliated Persons. The prohibitions extend for the duration of the officeholder’s term,or for a period of two years following the termination of the contract, whichever is longer.

Executive Order 3 (.pdf) imposes additional restrictions on Covered Entities that contract or bid with state agencies under the Governor’s authority. Those Covered Entities are prohibited from making political contributions not only to the particular statewide officeholder (and declared candidates for the office) responsible for awarding the relevant contract, but also to: (i) all other statewide elected officeholders and declared candidates for those offices; (ii) all members of the General Assembly and declared candidates for the General Assembly; and (iii) all political committees of a party’s state central committee represented by a statewide elected officer or member of the General Assembly. In addition, Executive Order 3 prohibits Covered Entities from making political contributions and from soliciting contributions or engaging lobbyists to solicit or make contributions.

Surprisingly, now-former-governor Rod Blagojevich signed the August, 2008 Executive Order #3 (.pdf).

You should also take a look at the Illinois State Board of Elections emergency regulations for this registration process. (.pdf)

Here is the Business Entity Registration Form (a fillable .pdf)