Public Act 90-0688 of the 90th General Assembly

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Public Act 90-0688

SB1555 Enrolled                                LRB9011612JMmb

    AN ACT concerning the  safety  and  soundness  of  public
investments.

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

    Section 5.  The Public Funds Investment Act is amended by
adding Section 2.5 as follows:

    (30 ILCS 235/2.5 new)
    Sec. 2.5.  Investment policy.
    (a)  Investment of public funds by a public agency  shall
be  governed  by  a  written investment policy adopted by the
public agency.  The level of detail  and  complexity  of  the
investment  policy  shall be appropriate to the nature of the
funds, the purpose for the  funds,  and  the  amount  of  the
public  funds  within  the  investment portfolio.  The policy
shall address safety of principal, liquidity  of  funds,  and
return  on  investment  and shall require that the investment
portfolio  be  structured  in  such  manner  as  to   provide
sufficient liquidity to pay obligations as they come due.  In
addition,  the investment policy shall include or address the
following:
         (1)  a listing of authorized investments;
         (2)  a rule, such  as  the  "prudent  person  rule",
    establishing the standard of care that must be maintained
    by the persons investing the public funds;
         (3)  investment  guidelines  that are appropriate to
    the nature of the funds, the purpose for the  funds,  and
    the  amount  of  the  public  funds within the investment
    portfolio;
         (4)  a  policy  regarding  diversification  of   the
    investment portfolio that is appropriate to the nature of
    the  funds,  the purpose for the funds, and the amount of
    the public funds within the investment portfolio;
         (5)  guidelines regarding  collateral  requirements,
    if  any,  for  the deposit of public funds in a financial
    institution  made  pursuant  to   this   Act,   and,   if
    applicable,  guidelines  for contractual arrangements for
    the custody and safekeeping of that collateral;
         (6)  a  policy  regarding  the  establishment  of  a
    system  of  internal  controls  and  written  operational
    procedures designed to prevent losses of funds that might
    arise from fraud, employee  error,  misrepresentation  by
    third  parties,  or imprudent actions by employees of the
    entity;
         (7)  identification of the chief investment  officer
    who is responsible for establishing the internal controls
    and   written   procedures   for  the  operation  of  the
    investment program;
         (8)  performance measures that  are  appropriate  to
    the  nature  of the funds, the purpose for the funds, and
    the amount of the  public  funds  within  the  investment
    portfolio;
         (9)  a  policy regarding appropriate periodic review
    of the investment portfolio, its effectiveness in meeting
    the public agency's needs for safety, liquidity, rate  of
    return, and diversification, and its general performance;
         (10)  a   policy  establishing  at  least  quarterly
    written reports of investment activities  by  the  public
    agency's  chief  financial  officer for submission to the
    governing body and chief executive officer of the  public
    agency.   The reports shall include information regarding
    securities in the portfolio by class or type, book value,
    income earned, and market value as of the report date;
         (11)  a policy regarding the selection of investment
    advisors, money managers, and financial institutions; and
         (12)  a policy regarding  ethics  and  conflicts  of
    interest.
    (b)  For   purposes   of  the  State  or  a  county,  the
investment policy shall be adopted by the  elected  treasurer
and   presented  to  the  chief  executive  officer  and  the
governing body.  For purposes of any other public agency, the
investment policy shall be adopted by the governing  body  of
the public agency.
    (c)  The investment policy shall be made available to the
public  at  the  main  administrative  office  of  the public
agency.
    (d)  The written investment policy  required  under  this
Section  shall  be  developed  and  implemented by January 1,
2000.

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

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