Sen. Jacqueline Y. Collins
Filed: 4/30/2009
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1 | AMENDMENT TO HOUSE BILL 177
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2 | AMENDMENT NO. ______. Amend House Bill 177 by replacing | ||||||
3 | everything after the enacting clause with the following:
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4 | "Section 5. The Public Funds Investment Act is amended by | ||||||
5 | changing Section 2 as follows:
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6 | (30 ILCS 235/2) (from Ch. 85, par. 902)
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7 | Sec. 2. Authorized investments.
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8 | (a) Any public agency may invest any public funds as | ||||||
9 | follows:
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10 | (1) in bonds, notes, certificates of indebtedness, | ||||||
11 | treasury bills or
other securities now or hereafter issued, | ||||||
12 | which are guaranteed by the full
faith and credit of the | ||||||
13 | United States of America as to principal and interest;
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14 | (2) in bonds, notes, debentures, or other similar | ||||||
15 | obligations of the
United States of America or its | ||||||
16 | agencies;
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1 | (3) in interest-bearing savings accounts, | ||||||
2 | interest-bearing
certificates of deposit or | ||||||
3 | interest-bearing time deposits or any other
investments | ||||||
4 | constituting direct obligations of any bank as defined by | ||||||
5 | the
Illinois Banking Act;
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6 | (4) in short term obligations of corporations
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7 | organized in the United States with assets exceeding | ||||||
8 | $500,000,000 if (i)
such obligations are rated at the time | ||||||
9 | of purchase at one of the 3 highest
classifications | ||||||
10 | established by at least 2 standard rating services and
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11 | which mature not later than 270 180 days from the date of | ||||||
12 | purchase, (ii)
such purchases do not exceed 10% of the | ||||||
13 | corporation's outstanding
obligations and (iii) no more | ||||||
14 | than one-third of the public agency's funds
may be invested | ||||||
15 | in short term obligations of corporations; or
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16 | (5) in money market mutual funds registered under the | ||||||
17 | Investment
Company Act of 1940, provided that the portfolio | ||||||
18 | of any such money market
mutual fund is limited to | ||||||
19 | obligations described in paragraph (1) or (2) of this
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20 | subsection and to agreements to repurchase such | ||||||
21 | obligations.
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22 | (a-1) In addition to any other investments authorized under | ||||||
23 | this Act, a
municipality may invest its public funds in | ||||||
24 | interest bearing bonds of any
county, township, city, village, | ||||||
25 | incorporated town, municipal corporation, or
school district, | ||||||
26 | of the State of Illinois, of any other state, or of
any |
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1 | political subdivision or
agency of the State of Illinois or of | ||||||
2 | any other state, whether the interest
earned thereon is taxable | ||||||
3 | or tax-exempt under federal law. The bonds shall
be registered | ||||||
4 | in the name of the municipality
or held under a custodial | ||||||
5 | agreement at a bank. The bonds shall be rated at the
time of | ||||||
6 | purchase within the 4 highest general classifications | ||||||
7 | established by a
rating service of nationally recognized | ||||||
8 | expertise in rating bonds of states and
their political | ||||||
9 | subdivisions.
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10 | (b) Investments may be made only in banks which are insured | ||||||
11 | by the
Federal Deposit Insurance Corporation. Any public agency | ||||||
12 | may invest any
public funds in short term discount obligations | ||||||
13 | of the Federal National
Mortgage Association or in shares or | ||||||
14 | other forms of securities legally
issuable by savings banks or | ||||||
15 | savings and loan associations incorporated under
the laws of | ||||||
16 | this State or any other state or under the laws of the United
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17 | States. Investments may be made only in those savings banks or | ||||||
18 | savings and
loan associations the shares, or investment | ||||||
19 | certificates of which are insured
by the Federal Deposit | ||||||
20 | Insurance Corporation. Any such securities may be
purchased at | ||||||
21 | the offering or market price thereof at the time of such
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22 | purchase. All such securities so purchased shall mature or be | ||||||
23 | redeemable on
a date or dates prior to the time when, in the | ||||||
24 | judgment of
such governing authority, the public funds so | ||||||
25 | invested will be required
for expenditure by such public agency | ||||||
26 | or its governing authority. The
expressed judgment of any such |
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1 | governing authority as to the time when
any public funds will | ||||||
2 | be required for expenditure or be redeemable is
final and | ||||||
3 | conclusive. Any public agency may invest any public funds in
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4 | dividend-bearing share accounts, share certificate accounts or | ||||||
5 | class of
share accounts of a credit union chartered under the | ||||||
6 | laws of this State
or the laws of the United States; provided, | ||||||
7 | however, the principal office
of any such credit union must be | ||||||
8 | located within the State of Illinois.
Investments may be made | ||||||
9 | only in those credit unions the accounts of which
are insured | ||||||
10 | by applicable law.
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11 | (c) For purposes of this Section, the term "agencies of the | ||||||
12 | United States
of America" includes: (i) the federal land banks, | ||||||
13 | federal intermediate
credit banks, banks for cooperative, | ||||||
14 | federal farm credit banks, or any other
entity authorized to | ||||||
15 | issue debt obligations under the Farm Credit Act of
1971 (12 | ||||||
16 | U.S.C. 2001 et seq.) and Acts amendatory thereto; (ii) the | ||||||
17 | federal
home loan banks and the federal home loan mortgage | ||||||
18 | corporation; and (iii)
any other agency created by Act of | ||||||
19 | Congress.
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20 | (d) Except for pecuniary interests permitted under | ||||||
21 | subsection (f) of
Section 3-14-4 of the Illinois Municipal Code | ||||||
22 | or under Section 3.2 of
the Public Officer Prohibited Practices | ||||||
23 | Act, no person acting as treasurer
or financial officer or who | ||||||
24 | is employed in any similar capacity by or for a
public agency | ||||||
25 | may do any of the following:
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26 | (1) have any interest, directly or indirectly, in any |
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1 | investments in
which the agency is authorized to invest.
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2 | (2) have any interest, directly or indirectly, in the | ||||||
3 | sellers,
sponsors, or managers of those investments.
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4 | (3) receive, in any manner, compensation of any kind | ||||||
5 | from any
investments in which the agency is authorized to | ||||||
6 | invest.
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7 | (e) Any public agency may also invest any public funds in a | ||||||
8 | Public
Treasurers' Investment Pool created under Section 17 of | ||||||
9 | the State Treasurer
Act. Any public agency may also invest any | ||||||
10 | public funds in a fund managed,
operated, and administered by a | ||||||
11 | bank, subsidiary of a bank, or
subsidiary of a bank holding | ||||||
12 | company or use the services of such an entity to
hold and | ||||||
13 | invest or advise regarding the investment of any public funds.
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14 | (f) To the extent a public agency has custody of funds not | ||||||
15 | owned by it or
another public agency and does not otherwise | ||||||
16 | have authority to invest
such funds, the public agency may | ||||||
17 | invest such funds as if they were its
own. Such funds must be | ||||||
18 | released to the appropriate person at the
earliest reasonable | ||||||
19 | time, but in no case exceeding 31 days, after the
private | ||||||
20 | person becomes entitled to the receipt of them. All earnings
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21 | accruing on any investments or deposits made pursuant to the | ||||||
22 | provisions
of this Act shall be credited to the public agency | ||||||
23 | by or for which such
investments or deposits were made, except | ||||||
24 | as provided otherwise in Section
4.1 of the State Finance Act | ||||||
25 | or the Local Governmental Tax Collection Act,
and except where | ||||||
26 | by specific statutory provisions such earnings are
directed to |
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1 | be credited to and paid to a particular fund.
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2 | (g) A public agency may purchase or invest in repurchase | ||||||
3 | agreements of
government securities having the meaning set out | ||||||
4 | in the Government
Securities Act of 1986 , as now or hereafter | ||||||
5 | amended or succeeded, subject to the provisions of said Act and | ||||||
6 | the
regulations issued thereunder. The government securities, | ||||||
7 | unless
registered or inscribed in the name of the public | ||||||
8 | agency, shall be
purchased through banks or trust companies | ||||||
9 | authorized to do business in the
State of Illinois.
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10 | (h) Except for repurchase agreements of government | ||||||
11 | securities which are
subject to the Government Securities Act | ||||||
12 | of 1986, as now or hereafter amended or succeeded, no public | ||||||
13 | agency may
purchase or invest in instruments which constitute | ||||||
14 | repurchase agreements,
and no financial institution may enter | ||||||
15 | into such an agreement with or on
behalf of any public agency | ||||||
16 | unless the instrument and the transaction meet
the following | ||||||
17 | requirements:
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18 | (1) The securities, unless registered or inscribed in | ||||||
19 | the name of the
public agency, are purchased through banks | ||||||
20 | or trust companies authorized to
do business in the State | ||||||
21 | of Illinois.
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22 | (2) An authorized public officer after ascertaining | ||||||
23 | which firm will give
the most favorable rate of interest, | ||||||
24 | directs the custodial bank to
"purchase" specified | ||||||
25 | securities from a designated institution.
The "custodial | ||||||
26 | bank" is the bank or trust company, or agency of
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1 | government, which acts for the public agency in connection | ||||||
2 | with repurchase
agreements involving the investment of | ||||||
3 | funds by the public agency. The
State Treasurer may act as | ||||||
4 | custodial bank for public agencies executing
repurchase | ||||||
5 | agreements. To the extent the Treasurer acts in this | ||||||
6 | capacity,
he is hereby authorized to pass through to such | ||||||
7 | public agencies any charges
assessed by the Federal Reserve | ||||||
8 | Bank.
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9 | (3) A custodial bank must be a member bank of the | ||||||
10 | Federal Reserve System
or maintain accounts with member | ||||||
11 | banks. All transfers of book-entry
securities must be | ||||||
12 | accomplished on a Reserve Bank's computer records
through a | ||||||
13 | member bank of the Federal Reserve System. These securities | ||||||
14 | must
be credited to the public agency on the records of the | ||||||
15 | custodial bank and
the transaction must be confirmed in | ||||||
16 | writing to the public agency by
the custodial bank.
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17 | (4) Trading partners shall be limited to banks or trust | ||||||
18 | companies
authorized to do business in the State of | ||||||
19 | Illinois or to registered primary
reporting dealers.
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20 | (5) The security interest must be perfected.
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21 | (6) The public agency enters into a written master | ||||||
22 | repurchase agreement
which outlines the basic | ||||||
23 | responsibilities and liabilities of both buyer and
seller.
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24 | (7) Agreements shall be for periods of 330 days or | ||||||
25 | less.
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26 | (8) The authorized public officer of the public agency |
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1 | informs the
custodial bank in writing of the maturity | ||||||
2 | details of the repurchase agreement.
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3 | (9) The custodial bank must take delivery of and | ||||||
4 | maintain the
securities in its custody for the account of | ||||||
5 | the public agency and confirm
the transaction in writing to | ||||||
6 | the public agency. The Custodial Undertaking
shall provide | ||||||
7 | that the custodian takes possession of the securities
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8 | exclusively for the public agency; that the securities are | ||||||
9 | free of any
claims against the trading partner; and any | ||||||
10 | claims by the custodian are
subordinate to the public | ||||||
11 | agency's claims to rights to those securities.
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12 | (10) The obligations purchased by a public agency may | ||||||
13 | only be sold or
presented for redemption or payment by the | ||||||
14 | fiscal agent bank or trust
company holding the obligations | ||||||
15 | upon the written instruction of the
public agency or | ||||||
16 | officer authorized to make such investments.
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17 | (11) The custodial bank shall be liable to the public | ||||||
18 | agency for any
monetary loss suffered by the public agency | ||||||
19 | due to the failure of the
custodial bank to take and | ||||||
20 | maintain possession of such securities.
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21 | (i) Notwithstanding the foregoing restrictions on | ||||||
22 | investment in
instruments constituting repurchase agreements | ||||||
23 | the Illinois Housing
Development Authority may invest in, and | ||||||
24 | any financial institution with
capital of at least $250,000,000 | ||||||
25 | may act as custodian for, instruments
that constitute | ||||||
26 | repurchase agreements, provided that the Illinois Housing
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1 | Development Authority, in making each such investment, | ||||||
2 | complies with the
safety and soundness guidelines for engaging | ||||||
3 | in repurchase transactions
applicable to federally insured | ||||||
4 | banks, savings banks, savings and loan
associations or other | ||||||
5 | depository institutions as set forth in the Federal
Financial | ||||||
6 | Institutions Examination Council Policy Statement Regarding
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7 | Repurchase Agreements and any regulations issued, or which may | ||||||
8 | be issued by the
supervisory federal authority pertaining | ||||||
9 | thereto and any amendments thereto;
provided further that the | ||||||
10 | securities shall be either (i) direct general
obligations of, | ||||||
11 | or obligations the payment of the principal of and/or interest
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12 | on which are unconditionally guaranteed by, the United States | ||||||
13 | of America or
(ii) any obligations of any agency, corporation | ||||||
14 | or subsidiary thereof
controlled or supervised by and acting as | ||||||
15 | an instrumentality of the United
States Government pursuant to | ||||||
16 | authority granted by the Congress of the United
States and | ||||||
17 | provided further that the security interest must be perfected | ||||||
18 | by
either the Illinois Housing Development Authority, its | ||||||
19 | custodian or its agent
receiving possession of the securities | ||||||
20 | either physically or transferred through
a nationally | ||||||
21 | recognized book entry system.
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22 | (j) In addition to all other investments authorized
under | ||||||
23 | this Section, a community college district may
invest public | ||||||
24 | funds in any mutual funds that
invest primarily in corporate | ||||||
25 | investment grade or global government short term
bonds.
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26 | Purchases of mutual funds that invest primarily in global |
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1 | government short
term bonds shall be limited to funds with | ||||||
2 | assets of at least $100 million and
that are rated at the time | ||||||
3 | of purchase as one of the 10 highest classifications
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4 | established by a recognized rating service. The investments | ||||||
5 | shall be subject
to approval by the local community college | ||||||
6 | board of trustees. Each community
college board of trustees | ||||||
7 | shall develop a policy regarding the percentage of
the | ||||||
8 | college's investment portfolio that can be invested in such | ||||||
9 | funds.
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10 | Nothing in this Section shall be construed to authorize an
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11 | intergovernmental risk management entity to accept the deposit | ||||||
12 | of public funds
except for risk management purposes.
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13 | (Source: P.A. 93-360, eff. 7-24-03.)
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14 | Section 99. Effective date. This Act takes effect upon | ||||||
15 | becoming law.".
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