Full Text of SB0536 103rd General Assembly
SB0536eng 103RD GENERAL ASSEMBLY | | | SB0536 Engrossed | | LRB103 03007 HLH 48013 b |
|
| 1 | | AN ACT concerning finance. | 2 | | Be it enacted by the People of the State of Illinois, | 3 | | represented in the General Assembly: | 4 | | Section 5. The Public Funds Investment Act is amended by | 5 | | changing Section 2 as follows: | 6 | | (30 ILCS 235/2) (from Ch. 85, par. 902) | 7 | | Sec. 2. Authorized investments. | 8 | | (a) Any public agency may invest any public funds as | 9 | | follows: | 10 | | (1) in bonds, notes, certificates of indebtedness, | 11 | | treasury bills or other securities now or hereafter | 12 | | issued, which are guaranteed by the full faith and credit | 13 | | of the United States of America as to principal and | 14 | | interest; | 15 | | (2) in bonds, notes, debentures, or other similar | 16 | | obligations of the United States of America, its agencies, | 17 | | and its instrumentalities; | 18 | | (3) in interest-bearing savings accounts, | 19 | | interest-bearing certificates of deposit or | 20 | | interest-bearing time deposits or any other investments | 21 | | constituting direct obligations of any bank as defined by | 22 | | the Illinois Banking Act; | 23 | | (4) in short-term obligations of corporations |
| | | SB0536 Engrossed | - 2 - | LRB103 03007 HLH 48013 b |
|
| 1 | | organized in the United States with assets exceeding | 2 | | $500,000,000 if (i) such obligations are rated at the time | 3 | | of purchase at one of the 3 highest classifications | 4 | | established by at least 2 standard rating services and | 5 | | which mature not later than 270 days from the date of | 6 | | purchase, (ii) such purchases do not exceed 10% of the | 7 | | corporation's outstanding obligations, and (iii) no more | 8 | | than one-third of the public agency's funds may be | 9 | | invested in short-term obligations of corporations under | 10 | | this paragraph (4); | 11 | | (4.5) in obligations of corporations organized in the | 12 | | United States with assets exceeding $500,000,000 if (i) | 13 | | such obligations are rated at the time of purchase at one | 14 | | of the 3 highest classifications established by at least 2 | 15 | | standard rating services and which mature more than 270 | 16 | | days but less than 10 3 years from the date of purchase, | 17 | | (ii) such purchases do not exceed 10% of the corporation's | 18 | | outstanding obligations, and (iii) no more than one-third | 19 | | of the public agency's funds may be invested in | 20 | | obligations of corporations under this paragraph (4.5); or | 21 | | (5) in money market mutual funds registered under the | 22 | | Investment Company Act of 1940, provided that the | 23 | | portfolio of any such money market mutual fund is limited | 24 | | to obligations described in paragraph (1) or (2) of this | 25 | | subsection and to agreements to repurchase such | 26 | | obligations. |
| | | SB0536 Engrossed | - 3 - | LRB103 03007 HLH 48013 b |
|
| 1 | | (a-1) In addition to any other investments authorized | 2 | | under this Act, a municipality, park district, forest preserve | 3 | | district, conservation district, county, or other governmental | 4 | | unit may invest its public funds in interest bearing bonds of | 5 | | any county, township, city, village, incorporated town, | 6 | | municipal corporation, or school district, of the State of | 7 | | Illinois, of any other state, or of any political subdivision | 8 | | or agency of the State of Illinois or of any other state, | 9 | | whether the interest earned thereon is taxable or tax-exempt | 10 | | under federal law. The bonds shall be registered in the name of | 11 | | the municipality, park district, forest preserve district, | 12 | | conservation district, county, or other governmental unit, or | 13 | | held under a custodial agreement at a bank. The bonds shall be | 14 | | rated at the time of purchase within the 4 highest general | 15 | | classifications established by a rating service of nationally | 16 | | recognized expertise in rating bonds of states and their | 17 | | political subdivisions. | 18 | | (b) Investments may be made only in banks which are | 19 | | insured by the Federal Deposit Insurance Corporation. Any | 20 | | public agency may invest any public funds in short term | 21 | | discount obligations of the Federal National Mortgage | 22 | | Association or in shares or other forms of securities legally | 23 | | issuable by savings banks or savings and loan associations | 24 | | incorporated under the laws of this State or any other state or | 25 | | under the laws of the United States. Investments may be made | 26 | | only in those savings banks or savings and loan associations |
| | | SB0536 Engrossed | - 4 - | LRB103 03007 HLH 48013 b |
|
| 1 | | the shares, or investment certificates of which are insured by | 2 | | the Federal Deposit Insurance Corporation. Any such securities | 3 | | may be purchased at the offering or market price thereof at the | 4 | | time of such purchase. All such securities so purchased shall | 5 | | mature or be redeemable on a date or dates prior to the time | 6 | | when, in the judgment of such governing authority, the public | 7 | | funds so invested will be required for expenditure by such | 8 | | public agency or its governing authority. The expressed | 9 | | judgment of any such governing authority as to the time when | 10 | | any public funds will be required for expenditure or be | 11 | | redeemable is final and conclusive. Any public agency may | 12 | | invest any public funds in dividend-bearing share accounts, | 13 | | share certificate accounts or class of share accounts of a | 14 | | credit union chartered under the laws of this State or the laws | 15 | | of the United States; provided, however, the principal office | 16 | | of any such credit union must be located within the State of | 17 | | Illinois. Investments may be made only in those credit unions | 18 | | the accounts of which are insured by applicable law. | 19 | | (c) For purposes of this Section, the term "agencies of | 20 | | the United States of America" includes: (i) the federal land | 21 | | banks, federal intermediate credit banks, banks for | 22 | | cooperative, federal farm credit banks, or any other entity | 23 | | authorized to issue debt obligations under the Farm Credit Act | 24 | | of 1971 (12 U.S.C. 2001 et seq.) and Acts amendatory thereto; | 25 | | (ii) the federal home loan banks and the federal home loan | 26 | | mortgage corporation; and (iii) any other agency created by |
| | | SB0536 Engrossed | - 5 - | LRB103 03007 HLH 48013 b |
|
| 1 | | Act of Congress. | 2 | | (d) Except for pecuniary interests permitted under | 3 | | subsection (f) of Section 3-14-4 of the Illinois Municipal | 4 | | Code or under Section 3.2 of the Public Officer Prohibited | 5 | | Practices Act, no person acting as treasurer or financial | 6 | | officer or who is employed in any similar capacity by or for a | 7 | | public agency may do any of the following: | 8 | | (1) have any interest, directly or indirectly, in any | 9 | | investments in which the agency is authorized to invest. | 10 | | (2) have any interest, directly or indirectly, in the | 11 | | sellers, sponsors, or managers of those investments. | 12 | | (3) receive, in any manner, compensation of any kind | 13 | | from any investments in which the agency is authorized to | 14 | | invest. | 15 | | (e) Any public agency may also invest any public funds in a | 16 | | Public Treasurers' Investment Pool created under Section 17 of | 17 | | the State Treasurer Act. Any public agency may also invest any | 18 | | public funds in a fund managed, operated, and administered by | 19 | | a bank, subsidiary of a bank, or subsidiary of a bank holding | 20 | | company or use the services of such an entity to hold and | 21 | | invest or advise regarding the investment of any public funds. | 22 | | (f) To the extent a public agency has custody of funds not | 23 | | owned by it or another public agency and does not otherwise | 24 | | have authority to invest such funds, the public agency may | 25 | | invest such funds as if they were its own. Such funds must be | 26 | | released to the appropriate person at the earliest reasonable |
| | | SB0536 Engrossed | - 6 - | LRB103 03007 HLH 48013 b |
|
| 1 | | time, but in no case exceeding 31 days, after the private | 2 | | person becomes entitled to the receipt of them. All earnings | 3 | | accruing on any investments or deposits made pursuant to the | 4 | | provisions of this Act shall be credited to the public agency | 5 | | by or for which such investments or deposits were made, except | 6 | | as provided otherwise in Section 4.1 of the State Finance Act | 7 | | or the Local Governmental Tax Collection Act, and except where | 8 | | by specific statutory provisions such earnings are directed to | 9 | | be credited to and paid to a particular fund. | 10 | | (g) A public agency may purchase or invest in repurchase | 11 | | agreements of government securities having the meaning set out | 12 | | in the Government Securities Act of 1986, as now or hereafter | 13 | | amended or succeeded, subject to the provisions of said Act | 14 | | and the regulations issued thereunder. The government | 15 | | securities, unless registered or inscribed in the name of the | 16 | | public agency, shall be purchased through banks or trust | 17 | | companies authorized to do business in the State of Illinois. | 18 | | (h) Except for repurchase agreements of government | 19 | | securities which are subject to the Government Securities Act | 20 | | of 1986, as now or hereafter amended or succeeded, no public | 21 | | agency may purchase or invest in instruments which constitute | 22 | | repurchase agreements, and no financial institution may enter | 23 | | into such an agreement with or on behalf of any public agency | 24 | | unless the instrument and the transaction meet the following | 25 | | requirements: | 26 | | (1) The securities, unless registered or inscribed in |
| | | SB0536 Engrossed | - 7 - | LRB103 03007 HLH 48013 b |
|
| 1 | | the name of the public agency, are purchased through banks | 2 | | or trust companies authorized to do business in the State | 3 | | of Illinois. | 4 | | (2) An authorized public officer after ascertaining | 5 | | which firm will give the most favorable rate of interest, | 6 | | directs the custodial bank to "purchase" specified | 7 | | securities from a designated institution. The "custodial | 8 | | bank" is the bank or trust company, or agency of | 9 | | government, which acts for the public agency in connection | 10 | | with repurchase agreements involving the investment of | 11 | | funds by the public agency. The State Treasurer may act as | 12 | | custodial bank for public agencies executing repurchase | 13 | | agreements. To the extent the Treasurer acts in this | 14 | | capacity, he is hereby authorized to pass through to such | 15 | | public agencies any charges assessed by the Federal | 16 | | Reserve Bank. | 17 | | (3) A custodial bank must be a member bank of the | 18 | | Federal Reserve System or maintain accounts with member | 19 | | banks. All transfers of book-entry securities must be | 20 | | accomplished on a Reserve Bank's computer records through | 21 | | a member bank of the Federal Reserve System. These | 22 | | securities must be credited to the public agency on the | 23 | | records of the custodial bank and the transaction must be | 24 | | confirmed in writing to the public agency by the custodial | 25 | | bank. | 26 | | (4) Trading partners shall be limited to banks or |
| | | SB0536 Engrossed | - 8 - | LRB103 03007 HLH 48013 b |
|
| 1 | | trust companies authorized to do business in the State of | 2 | | Illinois or to registered primary reporting dealers. | 3 | | (5) The security interest must be perfected. | 4 | | (6) The public agency enters into a written master | 5 | | repurchase agreement which outlines the basic | 6 | | responsibilities and liabilities of both buyer and seller. | 7 | | (7) Agreements shall be for periods of 330 days or | 8 | | less. | 9 | | (8) The authorized public officer of the public agency | 10 | | informs the custodial bank in writing of the maturity | 11 | | details of the repurchase agreement. | 12 | | (9) The custodial bank must take delivery of and | 13 | | maintain the securities in its custody for the account of | 14 | | the public agency and confirm the transaction in writing | 15 | | to the public agency. The Custodial Undertaking shall | 16 | | provide that the custodian takes possession of the | 17 | | securities exclusively for the public agency; that the | 18 | | securities are free of any claims against the trading | 19 | | partner; and any claims by the custodian are subordinate | 20 | | to the public agency's claims to rights to those | 21 | | securities. | 22 | | (10) The obligations purchased by a public agency may | 23 | | only be sold or presented for redemption or payment by the | 24 | | fiscal agent bank or trust company holding the obligations | 25 | | upon the written instruction of the public agency or | 26 | | officer authorized to make such investments. |
| | | SB0536 Engrossed | - 9 - | LRB103 03007 HLH 48013 b |
|
| 1 | | (11) The custodial bank shall be liable to the public | 2 | | agency for any monetary loss suffered by the public agency | 3 | | due to the failure of the custodial bank to take and | 4 | | maintain possession of such securities. | 5 | | (i) Notwithstanding the foregoing restrictions on | 6 | | investment in instruments constituting repurchase agreements | 7 | | the Illinois Housing Development Authority may invest in, and | 8 | | any financial institution with capital of at least | 9 | | $250,000,000 may act as custodian for, instruments that | 10 | | constitute repurchase agreements, provided that the Illinois | 11 | | Housing Development Authority, in making each such investment, | 12 | | complies with the safety and soundness guidelines for engaging | 13 | | in repurchase transactions applicable to federally insured | 14 | | banks, savings banks, savings and loan associations or other | 15 | | depository institutions as set forth in the Federal Financial | 16 | | Institutions Examination Council Policy Statement Regarding | 17 | | Repurchase Agreements and any regulations issued, or which may | 18 | | be issued by the supervisory federal authority pertaining | 19 | | thereto and any amendments thereto; provided further that the | 20 | | securities shall be either (i) direct general obligations of, | 21 | | or obligations the payment of the principal of and/or interest | 22 | | on which are unconditionally guaranteed by, the United States | 23 | | of America or (ii) any obligations of any agency, corporation | 24 | | or subsidiary thereof controlled or supervised by and acting | 25 | | as an instrumentality of the United States Government pursuant | 26 | | to authority granted by the Congress of the United States and |
| | | SB0536 Engrossed | - 10 - | LRB103 03007 HLH 48013 b |
|
| 1 | | provided further that the security interest must be perfected | 2 | | by either the Illinois Housing Development Authority, its | 3 | | custodian or its agent receiving possession of the securities | 4 | | either physically or transferred through a nationally | 5 | | recognized book entry system. | 6 | | (j) In addition to all other investments authorized under | 7 | | this Section, a community college district may invest public | 8 | | funds in any mutual funds that invest primarily in corporate | 9 | | investment grade or global government short term bonds. | 10 | | Purchases of mutual funds that invest primarily in global | 11 | | government short term bonds shall be limited to funds with | 12 | | assets of at least $100 million and that are rated at the time | 13 | | of purchase as one of the 10 highest classifications | 14 | | established by a recognized rating service. The investments | 15 | | shall be subject to approval by the local community college | 16 | | board of trustees. Each community college board of trustees | 17 | | shall develop a policy regarding the percentage of the | 18 | | college's investment portfolio that can be invested in such | 19 | | funds. | 20 | | (k) In addition to all other investments authorized under | 21 | | this Section, a public agency may adopt an ordinance or | 22 | | resolution to allow for investment of public funds in other | 23 | | instruments not specifically listed in this Section provided | 24 | | that those investments comply with (i) any other law that | 25 | | authorizes public agencies to invest funds and (ii) the | 26 | | investment policy adopted by the public agency under Section |
| | | SB0536 Engrossed | - 11 - | LRB103 03007 HLH 48013 b |
|
| 1 | | 2.5 of this Act. | 2 | | Nothing in this Section shall be construed to authorize an | 3 | | intergovernmental risk management entity to accept the deposit | 4 | | of public funds except for risk management purposes. | 5 | | (Source: P.A. 102-285, eff. 8-6-21.) |
|