Illinois General Assembly - Full Text of SB3093
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Full Text of SB3093  99th General Assembly




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1    AN ACT concerning finance.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Deposit of State Moneys Act is amended by
5adding Section 6.1 as follows:
6    (15 ILCS 520/6.1 new)
7    Sec. 6.1. Submission of proposals. Nothing in this Act
8shall be construed as prohibiting a bank, savings bank, or
9credit union from submitting a proposal to the State Treasurer
10on the basis that it does not offer a product or service in
11this State, unless a specific requirement is noted in the
12public solicitation that is related to the product or service
13being solicited. Nothing in this Section is intended to limit
14the State Treasurer's discretion in the selection of a bank,
15savings bank, or credit union, as provided in this Act.
16    Section 10. The Public Funds Investment Act is amended by
17changing Section 2 and by adding Section 6.1 as follows:
18    (30 ILCS 235/2)  (from Ch. 85, par. 902)
19    Sec. 2. Authorized investments.
20    (a) Any public agency may invest any public funds as



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1        (1) in bonds, notes, certificates of indebtedness,
2    treasury bills or other securities now or hereafter issued,
3    which are guaranteed by the full faith and credit of the
4    United States of America as to principal and interest;
5        (2) in bonds, notes, debentures, or other similar
6    obligations of the United States of America, its agencies,
7    and its instrumentalities;
8        (3) in interest-bearing savings accounts,
9    interest-bearing certificates of deposit or
10    interest-bearing time deposits or any other investments
11    constituting direct obligations of any bank as defined by
12    the Illinois Banking Act;
13        (4) in short term obligations of corporations
14    organized in the United States with assets exceeding
15    $500,000,000 if (i) such obligations are rated at the time
16    of purchase at one of the 3 highest classifications
17    established by at least 2 standard rating services and
18    which mature not later than 3 years 270 days from the date
19    of purchase, (ii) such purchases do not exceed 10% of the
20    corporation's outstanding obligations and (iii) no more
21    than one-third of the public agency's funds may be invested
22    in short term obligations of corporations; or
23        (5) in money market mutual funds registered under the
24    Investment Company Act of 1940, provided that the portfolio
25    of any such money market mutual fund is limited to
26    obligations described in paragraph (1) or (2) of this



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1    subsection and to agreements to repurchase such
2    obligations.
3    (a-1) In addition to any other investments authorized under
4this Act, a municipality, park district, forest preserve
5district, conservation district, county, or other governmental
6unit may invest its public funds in interest bearing bonds of
7any county, township, city, village, incorporated town,
8municipal corporation, or school district, of the State of
9Illinois, of any other state, or of any political subdivision
10or agency of the State of Illinois or of any other state,
11whether the interest earned thereon is taxable or tax-exempt
12under federal law. The bonds shall be registered in the name of
13the municipality, park district, forest preserve district,
14conservation district, county, or other governmental unit, or
15held under a custodial agreement at a bank. The bonds shall be
16rated at the time of purchase within the 4 highest general
17classifications established by a rating service of nationally
18recognized expertise in rating bonds of states and their
19political subdivisions.
20    (b) Investments may be made only in banks which are insured
21by the Federal Deposit Insurance Corporation. Any public agency
22may invest any public funds in short term discount obligations
23of the Federal National Mortgage Association or in shares or
24other forms of securities legally issuable by savings banks or
25savings and loan associations incorporated under the laws of
26this State or any other state or under the laws of the United



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1States. Investments may be made only in those savings banks or
2savings and loan associations the shares, or investment
3certificates of which are insured by the Federal Deposit
4Insurance Corporation. Any such securities may be purchased at
5the offering or market price thereof at the time of such
6purchase. All such securities so purchased shall mature or be
7redeemable on a date or dates prior to the time when, in the
8judgment of such governing authority, the public funds so
9invested will be required for expenditure by such public agency
10or its governing authority. The expressed judgment of any such
11governing authority as to the time when any public funds will
12be required for expenditure or be redeemable is final and
13conclusive. Any public agency may invest any public funds in
14dividend-bearing share accounts, share certificate accounts or
15class of share accounts of a credit union chartered under the
16laws of this State or the laws of the United States; provided,
17however, the principal office of any such credit union must be
18located within the State of Illinois. Investments may be made
19only in those credit unions the accounts of which are insured
20by applicable law.
21    (c) For purposes of this Section, the term "agencies of the
22United States of America" includes: (i) the federal land banks,
23federal intermediate credit banks, banks for cooperative,
24federal farm credit banks, or any other entity authorized to
25issue debt obligations under the Farm Credit Act of 1971 (12
26U.S.C. 2001 et seq.) and Acts amendatory thereto; (ii) the



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1federal home loan banks and the federal home loan mortgage
2corporation; and (iii) any other agency created by Act of
4    (d) Except for pecuniary interests permitted under
5subsection (f) of Section 3-14-4 of the Illinois Municipal Code
6or under Section 3.2 of the Public Officer Prohibited Practices
7Act, no person acting as treasurer or financial officer or who
8is employed in any similar capacity by or for a public agency
9may do any of the following:
10        (1) have any interest, directly or indirectly, in any
11    investments in which the agency is authorized to invest.
12        (2) have any interest, directly or indirectly, in the
13    sellers, sponsors, or managers of those investments.
14        (3) receive, in any manner, compensation of any kind
15    from any investments in which the agency is authorized to
16    invest.
17    (e) Any public agency may also invest any public funds in a
18Public Treasurers' Investment Pool created under Section 17 of
19the State Treasurer Act. Any public agency may also invest any
20public funds in a fund managed, operated, and administered by a
21bank, subsidiary of a bank, or subsidiary of a bank holding
22company or use the services of such an entity to hold and
23invest or advise regarding the investment of any public funds.
24    (f) To the extent a public agency has custody of funds not
25owned by it or another public agency and does not otherwise
26have authority to invest such funds, the public agency may



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1invest such funds as if they were its own. Such funds must be
2released to the appropriate person at the earliest reasonable
3time, but in no case exceeding 31 days, after the private
4person becomes entitled to the receipt of them. All earnings
5accruing on any investments or deposits made pursuant to the
6provisions of this Act shall be credited to the public agency
7by or for which such investments or deposits were made, except
8as provided otherwise in Section 4.1 of the State Finance Act
9or the Local Governmental Tax Collection Act, and except where
10by specific statutory provisions such earnings are directed to
11be credited to and paid to a particular fund.
12    (g) A public agency may purchase or invest in repurchase
13agreements of government securities having the meaning set out
14in the Government Securities Act of 1986, as now or hereafter
15amended or succeeded, subject to the provisions of said Act and
16the regulations issued thereunder. The government securities,
17unless registered or inscribed in the name of the public
18agency, shall be purchased through banks or trust companies
19authorized to do business in the State of Illinois.
20    (h) Except for repurchase agreements of government
21securities which are subject to the Government Securities Act
22of 1986, as now or hereafter amended or succeeded, no public
23agency may purchase or invest in instruments which constitute
24repurchase agreements, and no financial institution may enter
25into such an agreement with or on behalf of any public agency
26unless the instrument and the transaction meet the following



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2        (1) The securities, unless registered or inscribed in
3    the name of the public agency, are purchased through banks
4    or trust companies authorized to do business in the State
5    of Illinois.
6        (2) An authorized public officer after ascertaining
7    which firm will give the most favorable rate of interest,
8    directs the custodial bank to "purchase" specified
9    securities from a designated institution. The "custodial
10    bank" is the bank or trust company, or agency of
11    government, which acts for the public agency in connection
12    with repurchase agreements involving the investment of
13    funds by the public agency. The State Treasurer may act as
14    custodial bank for public agencies executing repurchase
15    agreements. To the extent the Treasurer acts in this
16    capacity, he is hereby authorized to pass through to such
17    public agencies any charges assessed by the Federal Reserve
18    Bank.
19        (3) A custodial bank must be a member bank of the
20    Federal Reserve System or maintain accounts with member
21    banks. All transfers of book-entry securities must be
22    accomplished on a Reserve Bank's computer records through a
23    member bank of the Federal Reserve System. These securities
24    must be credited to the public agency on the records of the
25    custodial bank and the transaction must be confirmed in
26    writing to the public agency by the custodial bank.



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1        (4) Trading partners shall be limited to banks or trust
2    companies authorized to do business in the State of
3    Illinois or to registered primary reporting dealers.
4        (5) The security interest must be perfected.
5        (6) The public agency enters into a written master
6    repurchase agreement which outlines the basic
7    responsibilities and liabilities of both buyer and seller.
8        (7) Agreements shall be for periods of 330 days or
9    less.
10        (8) The authorized public officer of the public agency
11    informs the custodial bank in writing of the maturity
12    details of the repurchase agreement.
13        (9) The custodial bank must take delivery of and
14    maintain the securities in its custody for the account of
15    the public agency and confirm the transaction in writing to
16    the public agency. The Custodial Undertaking shall provide
17    that the custodian takes possession of the securities
18    exclusively for the public agency; that the securities are
19    free of any claims against the trading partner; and any
20    claims by the custodian are subordinate to the public
21    agency's claims to rights to those 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.



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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
6investment in instruments constituting repurchase agreements
7the Illinois Housing Development Authority may invest in, and
8any financial institution with capital of at least $250,000,000
9may act as custodian for, instruments that constitute
10repurchase agreements, provided that the Illinois Housing
11Development Authority, in making each such investment,
12complies with the safety and soundness guidelines for engaging
13in repurchase transactions applicable to federally insured
14banks, savings banks, savings and loan associations or other
15depository institutions as set forth in the Federal Financial
16Institutions Examination Council Policy Statement Regarding
17Repurchase Agreements and any regulations issued, or which may
18be issued by the supervisory federal authority pertaining
19thereto and any amendments thereto; provided further that the
20securities shall be either (i) direct general obligations of,
21or obligations the payment of the principal of and/or interest
22on which are unconditionally guaranteed by, the United States
23of America or (ii) any obligations of any agency, corporation
24or subsidiary thereof controlled or supervised by and acting as
25an instrumentality of the United States Government pursuant to
26authority granted by the Congress of the United States and



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1provided further that the security interest must be perfected
2by either the Illinois Housing Development Authority, its
3custodian or its agent receiving possession of the securities
4either physically or transferred through a nationally
5recognized book entry system.
6    (j) In addition to all other investments authorized under
7this Section, a community college district may invest public
8funds in any mutual funds that invest primarily in corporate
9investment grade or global government short term bonds.
10Purchases of mutual funds that invest primarily in global
11government short term bonds shall be limited to funds with
12assets of at least $100 million and that are rated at the time
13of purchase as one of the 10 highest classifications
14established by a recognized rating service. The investments
15shall be subject to approval by the local community college
16board of trustees. Each community college board of trustees
17shall develop a policy regarding the percentage of the
18college's investment portfolio that can be invested in such
20    Nothing in this Section shall be construed to authorize an
21intergovernmental risk management entity to accept the deposit
22of public funds except for risk management purposes.
23(Source: P.A. 97-129, eff. 7-14-11; 98-297, eff. 1-1-14;
2498-390, eff. 8-16-13; 98-756, eff. 7-16-14.)
25    (30 ILCS 235/6.1 new)



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1    Sec. 6.1. Submission of proposals. Nothing in this Act
2shall be construed as prohibiting a bank, savings bank, or
3credit union from submitting a proposal to a public agency on
4the basis that it does not offer a product or service in this
5State, unless a specific requirement is noted in the public
6solicitation that is related to the product or service being
7solicited. Nothing in this Section is intended to limit a
8public agency's discretion in the selection of a bank, savings
9bank, or credit union as provided in this Act.
10    Section 99. Effective date. This Act takes effect upon
11becoming law.