Section 740.200  Definitions

 

"Act" means the State Treasurer Act [15 ILCS 505].

 

"Custodian Bank" means the financial institution, designated by the Treasurer, responsible for fund accounting, recordkeeping, transfer agent, custodial and trust services for IPTIP.

 

"Custodian Bank Agreement" means the participant agreement that sets forth the Custodian Bank's terms and conditions.

 

"Custodial Accounts" means the accounts established for a public agency to hold and invest public funds.

 

"Enrollment Form" means the form provided by the Treasurer to collect the required pertinent participant information prior to the deposit of any public funds in IPTIP.

 

"Fiscal Agent" means the Treasurer of the State of Illinois or their designees.

 

"Illinois Funds Agreement" means the participant agreement that sets forth the Treasurer's terms and conditions for participation in IPTIP.

 

"IPTIP" or "Illinois Funds" means the Illinois Public Treasurers' Investment Pool provided to public agencies to supplement and enhance investment opportunities otherwise available to managers of public funds or public agencies in the State.

 

"Participant" means a public agency that has been accepted by the Treasurer and enrolled into IPTIP.

 

"Pool" means combined public monies invested through IPTIP.

 

"Principal" means an individual who is authorized by the public agency or statute to execute contractual agreements on behalf of the public agency.

 

"Public Agency" has the same meaning as in Section 17 of the Act.  Questions regarding whether an entity qualifies as a component unit of a public agency shall be resolved by the Treasurer, referring to Governmental Accounting Standards Board (GASB) pronouncements, including, but not limited to, GASB Statement 14:  The Financial Reporting Entity.  Component units need not be limited to those entities which may be designated as component units by the Illinois Office of the Comptroller and may include, but need not be limited to, area agencies on aging and other providers under the Illinois Act on the Aging, [20 ILCS 105].

 

"Public Funds" means current operating funds, special funds, interest and sinking funds, and funds of any kind or character belonging to or in the custody of any public agency. [30 ILCS 235/1]

 

"Signer" means the individual authorized by the principal, public agency, or statute to open, close or make changes to a custodial account.

 

"Trader" means the individuals authorized by the principal or signer to do any or all of the following:  receive balance and transaction information on the custodial account, make changes to the custodial account, and direct investments.

 

"Treasurer" means the duly elected Treasurer of the State of Illinois or their designees.

 

(Source:  Amended at 47 Ill. Reg. 1724, effective January 19, 2023)

SUBPART C: ADMINISTRATION

 

Section 740.300  Treasurer Responsibilities

 

The Treasurer is responsible for overseeing the management of IPTIP and will perform the following:

 

a)         review the eligibility of public agencies prior to enrollment;

 

b)         establish enrollment, quality control and maintenance requirements and processes;

 

c)         establish terms and conditions;

 

d)         establish customer service processes;

 

e)         determine the administrative fees paid from earnings of IPTIP in accordance with Section 330;

 

f)         notify all participants of any increase in the administrative fee above 5 basis points, in accordance with Section 330;

 

g)         provide investment management services through the use of authorized securities to achieve investment returns for the participants;

 

h)         procure any necessary custodial, investment, or banking services administered through IPTIP;

 

i)          retain documents in compliance with State statutes, including the State Records Act [5 ILCS 160], the State Records Commission administrative rules (44 Ill. Adm. Code 4400) and the Treasurer's Application for Authority to Dispose of State Records (Application 98-02M), approved by the State Records Commission;

 

j)          provide administrative accounting; and

 

k)         other tasks necessary to administer IPTIP.

 

Section 740.310  Investment Policy

 

The Treasurer shall develop, publish, and implement an investment policy covering the management of funds in the Public Treasurers' Investment Pool. The policy shall be published each year as part of the audit of IPTIP by the Auditor General, which shall be distributed to all participants. The Treasurer shall notify all IPTIP participants in writing, and the Treasurer shall publish in at least one newspaper of general circulation in both Springfield and Chicago, any changes to a previously published investment policy at least 30 calendar days before implementing the policy. Any such investment policy adopted by the Treasurer shall be reviewed, and updated if necessary, within 90 days following the installation of a new Treasurer. [15 ILCS 505/17]

 

a)         The investment policy is a written statement describing the investment objectives, permissible investments, pool oversight and due diligence, and risk management practices and should be designed to:

 

1)         describe the Treasurer's investment objectives;

 

2)         state permissible investments;

 

3)         describe the process of evaluating pool performance compared to applicable performance benchmarks and standards;

 

4)         ensure that risks taken are prudent, properly managed and adequately compensated compared to applicable performance benchmarks and standards; and

 

5)         ensure that an effective risk management process is in place to monitor the risk levels of the pool.

 

b)         Permissible Investments – The pool's permissible investments may include, but are not limited to:

 

1)         short-term investments (i.e., money market funds rated AAA); and

 

2)         fixed income investments (i.e., government agency bonds, corporate bonds, and supranational bonds).

 

c)         No participant may, directly or indirectly, cause the investment of any monies to an account to be made to any investment option other than one currently offered to all the participants.

 

Section 740.320  Custodian Bank Responsibilities

 

The custodian bank is responsible for the day-to-day management of IPTIP and will perform the following:

 

a)         Enroll public agencies that meet the participation requirements set forth in Section 740.400;

 

b)         Provide participant accounting services;

 

c)         Provide custodial services to participants;

 

d)         Provide customer service;

 

e)         Provide transfer agent and recordkeeping services;

 

f)         Provide training;

 

g)         Retain copies of participant documents; and

 

h)         Provide sufficient reporting capabilities to the Treasurer and to participants.

 

Section 740.330  Fees

 

Administrative fees will be charged to the participants.  Administrative fees cover expenses related to the pool, such as fund accounting, transfer agent services, customer service, marketing, and investment management.  Administrative fees shall be publicly available and disclosed to public agencies prior to enrollment.

 

a)         The administrative fees will be determined by the Treasurer as set forth in this Section and paid from earnings of IPTIP.  In determining the administrative fees, the Treasurer shall weigh the following factors:

 

1)         the IPTIP current and projected asset size; and

 

2)         the Treasurer's anticipated administrative and management expenses.

 

b)         The Treasurer shall notify all participants of any increase in the total administrative fees above 5 basis points. In no event shall the total administrative fees exceed 25 basis points (annualized), calculated on a daily basis. One basis point equals .01%.

 

c)         The Treasurer may reduce administrative fees to ensure a certain level of participant earnings.

 

Section 740.340  Allocation of Investment Earnings or Losses

 

Interest income will be computed daily, credited or paid monthly, and reinvested in the participant's account or distributed to the participant in a manner that equitably reflects the differing amounts of their respective investments in the pool and the differing periods of time for which those amounts were in the custody of the pool.

SUBPART D: PARTICIPATION AND ENROLLMENT IN IPTIP

 

Section 740.400  Participation

 

In order to participate in IPTIP, a public agency shall submit an enrollment form and agree to the terms and conditions established by the Treasurer and its custodian bank.

 

Section 740.410  Enrollment

 

A public agency may enroll in IPTIP on documents prescribed by the Treasurer and the custodian bank.  Electronic signatures are permitted when electronically submitting any documents, Illinois Funds agreements, or custodian bank agreements.

 

a)         The enrollment forms shall require public agencies to provide the following information:

 

1)         name of public agency;

 

2)         name and title of person who will be the principal;

 

3)         names and titles of authorized traders;

 

4)         names and titles of authorized signers;

 

5)         tax identification number;

 

6)         mailing and physical street address;

 

7)         email address;

 

8)         phone number;

 

9)         bank instructions; and

 

10)        any additional information needed to assist in clarifying when the enrollment form is unclear or insufficient.

 

b)         If applicable, public agencies shall sign a custodian bank agreement in which they agree to the terms and conditions of the custodian bank.

 

c)         Public agencies shall sign an Illinois Funds agreement in which they agree to the terms and conditions of the Treasurer.

 

Section 740.420  Termination

 

The Treasurer reserves the right to freeze and/or terminate the participant's IPTIP services for failure to comply with the terms and conditions of the custodian bank as set forth in the custodian bank agreement or the Treasurer as set forth in the Illinois Funds agreement (see Section 744.410(b) and (c)).  Prior to freezing or terminating any services, the Treasurer will provide a minimum of 30 days' notice of the intent to freeze or terminate. The notice will identify the grounds for freezing or terminating.  If satisfactory remedial action is not taken by the participant within the 30 day period, the Treasurer will freeze or terminate the services, depending upon the type of notice given.  Notwithstanding anything to the contrary in this Section, the Treasurer may freeze the participant's custodial accounts without notice if there is illegal, or suspected illegal, use of the custodial accounts; if there is use of the custodial accounts that is unauthorized by the participant, or suspected to be so unauthorized; if there is a request from law enforcement; or for any reason that the custodial accounts cannot be provided through no fault of the Treasurer's (e.g., problems with the custodian bank).  Failure by the Treasurer to freeze or terminate services in one instance does not waive the Treasurer's right to freeze or terminate services in subsequent instances.

SUBPART E: CUSTODIAL ACCOUNT

 

Section 740.500  Custodial Account

 

Funding from investment activity will be distributed to the participant's custodial account at the custodian bank. The custodian bank must, at minimum, be authorized to do business in Illinois as an Illinois bank or a national bank with a presence in Illinois.  In addition, the custodian bank must be a member of the Automated Clearing House network, participate in the Federal Reserve's wire network, and qualify as a depository for public funds pursuant to the Deposit of State Moneys Act [15 ILCS 520].