Biss05302017Private equity firms would have to disclose the currently secret investment fees they charge to Illinois’ public pension funds under legislation sponsored by Senator Daniel Biss (D-Evanston) that was approved in the Senate Monday, May 29.

These sometimes lucrative fees charged by private equity firms and hedge fund managers are exempt from disclosure to taxpayers under Illinois sunshine laws. Even the boards that oversee the pension funds are kept in the dark about some fees.

Biss maintains that this kind of secrecy flies in the face of a steadily growing national and global movement toward more transparency.

“This is not a time for Illinois taxpayers to be paying fees they don’t know about,” he said. “If you’re concerned about the asset levels in the pension funds, you should be concerned about the fees you’re paying. That is the only expenditure that is secret from you right now.”

Senate Bill 779 would attempts to increase the state’s pension funds’ investment transparency by requiring that:

  • pension systems disclose agreements with alternative investment funds and certain provisions of those agreements;
  • alternative investment fund managers and general partners disclose certain investment fees paid directly or indirectly to the alternative investment fund;
  • if an investment fund utilizes the Institutional Limited Partners Association template, the fund will be in compliance with the disclosure requirements; and
  • disclosures would be published on the systems’ websites and subject to FOIA.

The provisions of Senate Bill 779 would apply to every large retirement system or pension fund regulated by the Illinois Pension Code, as well as the Illinois State Board of Investment. The disclosure requirements would apply to new agreements proposed or executed after Jan. 1, 2018.

The Teachers Retirement System, the largest system in Illinois, currently has nearly $8.5 billion invested and committed to the private equity asset class.

According to a 2015 ranking by Institutional Investor’s Alpha magazine, the country’s 25 top-earning hedge fund managers raked in an estimated $11.6 billion in 2014. The previous year, the top 25 collectively earned nearly double that, estimated to be more than $21 billion.

Comparatively, the aggregate pay for all of the kindergarten teachers in the nation in 2014 was an estimated $8.5 billion.

“Common sense says that if we have that greater level of transparency, we’ll pay lower fees and have better returns,” Biss said. “We should know the fees we pay, and that knowledge will allow us to negotiate better deals on our pension funds. That’s a winning formula for taxpayers.”

Senate Bill 779 now will go to the House for consideration.

Category: Latest

DBiss05252017As Washington sends mixed signals about the future of affordable health care for millions of Americans, the Illinois Senate on Friday voted to bar health insurance companies from denying coverage to Illinoisans with pre-existing conditions.

House Bill 2959 garnered bipartisan support in the Senate’s 46-5 vote. The measure now has been approved in both the Senate and the House; it is expected to be sent to Gov. Bruce Rauner for consideration.

“This legislation guarantees that health insurance companies may not discriminate based on pre-existing conditions – something that roughly half of all non-elderly Americans have, according to the federal government,” said Senator Daniel Biss, an Evanston Democrat and the Senate sponsor of the legislation. Rep. Laura Fine (D-Glenview) sponsored it in the House.

On May 4, Congress passed the American Health Care Act 217-213, which would allow states to opt out of community ratings in the individual markets. These ratings provide a way of spreading risk by setting rates for health insurance among a geographic area regardless of age, gender or health status.

Under the act, if this restriction is removed, states could vary premiums by health status for people who have had a gap in insurance of 63 or more consecutive days in the past year. The state would be required to set up a program for subsidizing high-risk patients, either through a reinsurance system that would pay money directly to insurers or by setting up a high-risk pool. The state would not be required to provide insurance coverage for these patients.

Last week, the Congressional Budget Office released findings that the state waivers allowed by the bill pending in Congress could lead to skyrocketing premiums for people with pre-existing conditions, such as an extra $1,000 per month for maternity coverage in states that waive certain coverage regulations for insurers. Additionally, the CBO found that many people with pre-existing conditions simply would be priced out of coverage in states that use the waivers.

“While it’s unclear how all of these changes in Washington will shake out in the end, Illinois has too much at stake to sit idly by and wait to see what will happen,” Biss said.

“House Bill 2959 will help to protect vulnerable Illinoisans who rely on the ACA and are at risk of losing their coverage with no other affordable options available to them. Gov. Rauner should sign this measure into law so that we can provide a crucial protection for many of our constituents all over the state.”

Category: Latest

Dbiss05102017A measure that would bring fairness to Illinois’ income tax system, close the wealth divide and help to resolve the state’s budget crisis passed in the Senate this week.

Senate Bill 1719, sponsored by Senator Daniel Biss (D-Evanston), would close the carried interest loophole that enables ultra-wealthy hedge fund and private equity managers to avoid paying millions of dollars in Illinois taxes.

“Wealthy hedge fund managers are exploiting an archaic tax loophole and profiting off the backs of Illinois taxpayers,” Biss said. “We have a corrupt tax system in which ordinary people aren’t receiving the government services they help to pay for because the state is broke, in part because of a tax loophole that helps the rich get richer.”

The legislation would establish a 20 percent privilege tax on a former of compensation known as carried interest beginning July 1, 2017. The tax is on the fees earned from the investment strategy of the investment manager, not on the investment itself.

Estimates are that the legislation annually could generate between $473 million and $1.7 billion for the state.

Amisha Patel, executive director of Grassroots Collaborative, a Chicago-based organization, commended Biss and the Illinois Senate for passing the legislation.

“This is great news for Illinois residents who have been languishing under an extended budget impasse,” Patel said. “Illinois needs new revenue. Senate Bill 1719 generates significant revenue, raising it from those who have profited for years off a rigged tax system, instead of asking for more sacrifices from our most vulnerable residents.”

Biss said this is just another step toward correcting inequities that are baked into Illinois’ tax system.

“There is no reason for the State of Illinois to aid billionaires in finding ways to shelter their income,” he said. “Everyone should have to pay their fair share of income taxes. And if lawmakers in Congress won’t help us right this wrong, we’ll have to do it ourselves.”

Category: Press Releases

Biss05232017State Senator Daniel Biss (D-Evanston) issued the following statement regarding today’s vote in the Illinois Senate to advance a balanced budget proposal and take a small step toward the fiscal stability Illinois so desperately needs after two years of chaos and mismanagement under Gov. Bruce Rauner:

“It’s time to stop the dangerous, unproductive, two-year staring contest in Springfield.

“A budget is a statement of priorities, and while this one is far from perfect, it reflects some core priorities – health care for the poor, P-12 schools, higher education, an increase in the tax credit for low-income workers and vital services for those who need our help. It offers some short-term stability by making different choices and calling on everyone to share the burden of cleaning up Gov. Bruce Rauner’s failures.

“But long-term solutions to our fiscal problems will require bigger reform to create a fair tax system. We must repeal our constitution’s unjust and unusual flat tax provision; we must finally require millionaires and billionaires to pay their fair share; and we must eliminate the current carried interest tax loophole that allows the super wealthy to evade state taxes.

“That’s why I am pleased that today we made progress toward establishing each of these policies and building the fair economy that is our only hope for long-term economic health.

“These are the kinds of honest solutions that taxpayers want lawmakers to find the courage to pursue. Until we do that, we will continue to fight budget battles like these – battles that result in winners and lowers – over and over again.”

Category: Latest

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3706 Dempster St.
Skokie, IL 60076
(847) 568-1250
(847) 568-1256 FAX

Springfield office:
417B Capitol Building
Springfield, IL 62706
(217) 782-2119

Email:
biss@senatedem.illinois.gov

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