SB0023 94TH GENERAL ASSEMBLY

LRB094 03731 BDD 33740 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
SB0023

Introduced 1/26/2005, by Sen. Jacqueline Y. Collins

SYNOPSIS AS INTRODUCED:

15 ILCS 520/7.5 new
15 ILCS 520/15	from Ch. 130, par. 34
15 ILCS 520/22.5	from Ch. 130, par. 41a
40 ILCS 5/1-110	from Ch. 108 1/2, par. 1-110

Amends the Deposit of State Moneys Act. Provides that a bank or savings and loan association is disqualified as a State depository upon making a loan to certain entities doing business in or with the government of Sudan until such time as the United Nations determines that the government of Sudan has taken sufficient and demonstrable steps to end human rights abuses in that nation. Amends the Illinois Pension Code. Prohibits the investment or deposit from the retirement system or pension fund to certain entities doing business in or with the government of Sudan until such time as the United Nations determines that the government of Sudan has taken sufficient and demonstrable steps to end human rights abuses in that nation. Effective immediately.

FISCAL NOTE ACT MAY APPLY

PENSION IMPACT NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning State government.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Deposit of State Moneys Act is amended by changing Sections 15 and 22.5 and by adding Section 7.5 as follows:

(15 ILCS 520/7.5 new)

Sec. 7.5. Mandatory rejection of certain proposals. The State Treasurer must reject a proposal of any eligible institution that, on or after the effective date of this amendatory Act of the 94th General Assembly, makes a loan to any individual, firm, corporation, agency, association, or other entity for the purpose of doing business in or with the government of Sudan until such time as the United Nations determines that the government of Sudan has taken sufficient and demonstrable steps to:

(i) ensure that the armed forces of Sudan and any associated militias are not committing human rights atrocities or obstructing human rights monitors or the provision of humanitarian assistance;

(ii) demobilize and disarm militias supported or created by the government of Sudan; and

(iii) allow full and unfettered humanitarian assistance to all regions of Sudan, including Dafur.

(15 ILCS 520/15) (from Ch. 130, par. 34)

Sec. 15. (a) A bank or savings and loan association approved as a depositary shall cease to be an approved bank or savings and loan association, and shall be disqualified by the State Treasurer:

(1) Upon its failure to post a suitable bond or deposit securities with the State Treasurer;

(2) Upon its failure or refusal to pay over public moneys or any part thereof;

(3) Upon its becoming insolvent or bankrupt, or being placed in the hands of a receiver;

(4) Upon a showing of unsatisfactory financial condition through a report made to, or an examination made by, the Comptroller of the Currency, the Commissioner of Banks and Real Estate, or the Federal Home Loan Bank or its successors; .

(5) Upon making any loan that would require the rejection of a proposal under Section 7.5 of this Act.

(b) No approved depositary shall be disqualified by the State Treasurer solely by reason of its acquisition by another institution.

(Source: P.A. 89-508, eff. 7-3-96.)

(15 ILCS 520/22.5) (from Ch. 130, par. 41a)

Sec. 22.5. Permitted investments. The State Treasurer may, with the approval of the Governor, invest and reinvest any State money in the treasury which is not needed for current expenditures due or about to become due, in obligations of the United States government or its agencies or of National Mortgage Associations established by or under the National Housing Act, 1201 U.S.C. 1701 et seq., or in mortgage participation certificates representing undivided interests in specified, first-lien conventional residential Illinois mortgages that are underwritten, insured, guaranteed, or purchased by the Federal Home Loan Mortgage Corporation or in Affordable Housing Program Trust Fund Bonds or Notes as defined in and issued pursuant to the Illinois Housing Development Act. All such obligations shall be considered as cash and may be delivered over as cash by a State Treasurer to his successor.

The State Treasurer may, with the approval of the Governor, purchase any state bonds with any money in the State Treasury that has been set aside and held for the payment of the principal of and interest on the bonds. The bonds shall be considered as cash and may be delivered over as cash by the State Treasurer to his successor.

The State Treasurer may, with the approval of the Governor, invest or reinvest any State money in the treasury that is not needed for current expenditure due or about to become due, or any money in the State Treasury that has been set aside and held for the payment of the principal of and the interest on any State bonds, in shares, withdrawable accounts, and investment certificates of savings and building and loan associations, incorporated under the laws of this State or any other state or under the laws of the United States; provided, however, that investments may be made only in those savings and loan or building and loan associations the shares and withdrawable accounts or other forms of investment securities of which are insured by the Federal Deposit Insurance Corporation.

The State Treasurer may not invest State money in any savings and loan or building and loan association unless a commitment by the savings and loan (or building and loan) association, executed by the president or chief executive officer of that association, is submitted in the following form:

The .................. Savings and Loan (or Building and Loan) Association pledges not to reject arbitrarily mortgage loans for residential properties within any specific part of the community served by the savings and loan (or building and loan) association because of the location of the property. The savings and loan (or building and loan) association also pledges to make loans available on low and moderate income residential property throughout the community within the limits of its legal restrictions and prudent financial practices. The .................. Savings and Loan (or Building and Loan) Association further pledges not to make a loan that would require the rejection of a proposal under Section 7.5 of this Act.

The State Treasurer may, with the approval of the Governor, invest or reinvest, at a price not to exceed par, any State money in the treasury that is not needed for current expenditures due or about to become due, or any money in the State Treasury that has been set aside and held for the payment of the principal of and interest on any State bonds, in bonds issued by counties or municipal corporations of the State of Illinois.

The State Treasurer may, with the approval of the Governor, invest or reinvest any State money in the Treasury which is not needed for current expenditure, due or about to become due, or any money in the State Treasury which has been set aside and held for the payment of the principal of and the interest on any State bonds, in participations in loans, the principal of which participation is fully guaranteed by an agency or instrumentality of the United States government; provided, however, that such loan participations are represented by certificates issued only by banks which are incorporated under the laws of this State or any other state or under the laws of the United States, and such banks, but not the loan participation certificates, are insured by the Federal Deposit Insurance Corporation.

The State Treasurer may, with the approval of the Governor, invest or reinvest any State money in the Treasury that is not needed for current expenditure, due or about to become due, or any money in the State Treasury that has been set aside and held for the payment of the principal of and the interest on any State bonds, in any of the following:

(1) Bonds, notes, certificates of indebtedness, Treasury bills, or other securities now or hereafter issued that are guaranteed by the full faith and credit of the United States of America as to principal and interest.

(2) Bonds, notes, debentures, or other similar obligations of the United States of America, its agencies, and instrumentalities.

(2.5) Bonds, notes, debentures, or other similar obligations of a foreign government that are guaranteed by the full faith and credit of that government as to principal and interest, but only if the foreign government has not defaulted and has met its payment obligations in a timely manner on all similar obligations for a period of at least 25 years immediately before the time of acquiring those obligations.

(3) Interest-bearing savings accounts, interest-bearing certificates of deposit, interest-bearing time deposits, or any other investments constituting direct obligations of any bank as defined by the Illinois Banking Act.

(4) Interest-bearing accounts, certificates of deposit, or any other investments constituting direct obligations of any savings and loan associations incorporated under the laws of this State or any other state or under the laws of the United States.

(5) Dividend-bearing share accounts, share certificate accounts, or class of share accounts of a credit union chartered under the laws of this State or the laws of the United States; provided, however, the principal office of the credit union must be located within the State of Illinois.

(6) Bankers' acceptances of banks whose senior obligations are rated in the top 2 rating categories by 2 national rating agencies and maintain that rating during the term of the investment.

(7) Short-term obligations of corporations organized in the United States with assets exceeding $500,000,000 if (i) the obligations are rated at the time of purchase at one of the 3 highest classifications established by at least 2 standard rating services and mature not later than 180 days from the date of purchase, (ii) the purchases do not exceed 10% of the corporation's outstanding obligations, and (iii) no more than one-third of the public agency's funds are invested in short-term obligations of corporations.

(8) Money market mutual funds registered under the Investment Company Act of 1940, provided that the portfolio of the money market mutual fund is limited to obligations described in this Section and to agreements to repurchase such obligations.

(9) The Public Treasurers' Investment Pool created under Section 17 of the State Treasurer Act or in a fund managed, operated, and administered by a bank.

(10) Repurchase agreements of government securities having the meaning set out in the Government Securities Act of 1986 subject to the provisions of that Act and the regulations issued thereunder.

(11) Investments made in accordance with the Technology Development Act.

For purposes of this Section, "agencies" of the United States Government includes:

(i) the federal land banks, federal intermediate credit banks, banks for cooperatives, federal farm credit banks, or any other entity authorized to issue debt obligations under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) and Acts amendatory thereto;

(ii) the federal home loan banks and the federal home loan mortgage corporation;

(iii) the Commodity Credit Corporation; and

(iv) any other agency created by Act of Congress.

The Treasurer may, with the approval of the Governor, lend any securities acquired under this Act. However, securities may be lent under this Section only in accordance with Federal Financial Institution Examination Council guidelines and only if the securities are collateralized at a level sufficient to assure the safety of the securities, taking into account market value fluctuation. The securities may be collateralized by cash or collateral acceptable under Sections 11 and 11.1.

(Source: P.A. 92-546, eff. 1-1-03; 92-851, eff. 8-26-02; revised 9-19-02.)

Section 10. The Illinois Pension Code is amended by changing Section 1-110 as follows:

(40 ILCS 5/1-110) (from Ch. 108 1/2, par. 1-110)

Sec. 1-110. Prohibited Transactions.

(a) A fiduciary with respect to a retirement system or pension fund shall not cause the retirement system or pension fund to engage in a transaction if he or she knows or should know that such transaction constitutes a direct or indirect:

(1) Sale or exchange, or leasing of any property from the retirement system or pension fund to a party in interest for less than adequate consideration, or from a party in interest to a retirement system or pension fund for more than adequate consideration.

(2) Lending of money or other extension of credit from the retirement system or pension fund to a party in interest without the receipt of adequate security and a reasonable rate of interest, or from a party in interest to a retirement system or pension fund with the provision of excessive security or an unreasonably high rate of interest.

(3) Furnishing of goods, services or facilities from the retirement system or pension fund to a party in interest for less than adequate consideration, or from a party in interest to a retirement system or pension fund for more than adequate consideration.

(4) Transfer to, or use by or for the benefit of, a party in interest of any assets of a retirement system or pension fund for less than adequate consideration.

(5) Investment or deposit in any individual, firm, corporation, agency, association, or other entity for the purpose of doing business in or with the government of Sudan until such time as the United Nations determines that the government of Sudan has taken sufficient and demonstrable steps to:

(i) ensure that the armed forces of Sudan and any associated militias are not committing human rights atrocities or obstructing human rights monitors or the provision of humanitarian assistance;

(ii) demobilize and disarm militias supported or created by the government of Sudan; and

(iii) allow full and unfettered humanitarian assistance to all regions of Sudan, including Dafur.

(b) A fiduciary with respect to a retirement system or pension fund established under this Code shall not:

(1) Deal with the assets of the retirement system or pension fund in his own interest or for his own account;

(2) In his individual or any other capacity act in any transaction involving the retirement system or pension fund on behalf of a party whose interests are adverse to the interests of the retirement system or pension fund or the interests of its participants or beneficiaries; or

(3) Receive any consideration for his own personal account from any party dealing with the retirement system or pension fund in connection with a transaction involving the assets of the retirement system or pension fund.

(c) Nothing in this Section shall be construed to prohibit any trustee from:

(1) Receiving any benefit to which he may be entitled as a participant or beneficiary in the retirement system or pension fund.

(2) Receiving any reimbursement of expenses properly and actually incurred in the performance of his duties with the retirement system or pension fund.

(3) Serving as a trustee in addition to being an officer, employee, agent or other representative of a party in interest.

(Source: P.A. 88-535.)

Section 99. Effective date. This Act takes effect upon becoming law.