HB3452 97TH GENERAL ASSEMBLY

LRB097 05455 PJG 45514 b

97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB3452

Introduced 2/24/2011, by Rep. Brandon W. Phelps

SYNOPSIS AS INTRODUCED:

30 ILCS 440/3

Amends the Unemployment Insurance Trust Fund Financing Act. Provides that the quarterly report to the Employment Security Advisory Board concerning the Master Bond Fund is not required if the Master Bond Fund held a net balance of zero at the close of the immediately preceding calendar quarter, there have been no deposits into the Master Bond Fund within any of the immediately preceding 4 calendar quarters, and there have been no expenditures or transfers from the Master Bond Fund within any of the immediately preceding 4 calendar quarters. Effective immediately.

A BILL FOR

AN ACT concerning finance.

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

Section 5. The Illinois Unemployment Insurance Trust Fund Financing Act is amended by changing Section 3 as follows:

(30 ILCS 440/3)

Sec. 3. Definitions. For purposes of this Act:

A. "Act" shall mean the Illinois Unemployment Insurance Trust Fund Financing Act.

B. "Benefits" shall have the meaning provided in the Unemployment Insurance Act.

C. "Bond" means any type of revenue obligation, including, without limitation, fixed rate, variable rate, auction rate or similar bond, note, certificate, or other instrument, including, without limitation, an interest rate exchange agreement, an interest rate lock agreement, a currency exchange agreement, a forward payment conversion agreement, an agreement to provide payments based on levels of or changes in interest rates or currency exchange rates, an agreement to exchange cash flows or a series of payments, an option, put, or call to hedge payment, currency, interest rate, or other exposure, payable from and secured by a pledge of Fund Building Receipts collected pursuant to the Unemployment Insurance Act, and all interest and other earnings upon such amounts held in the Master Bond Fund, to the extent provided in the proceedings authorizing the obligation.

D. "Bond Administrative Expenses" means expenses and fees incurred to administer and issue, upon a conversion of any of the Bonds from one mode to another and from taxable to tax-exempt, the Bonds issued pursuant to this Act, including fees for paying agents, trustees, financial advisors, underwriters, remarketing agents, attorneys and for other professional services necessary to ensure compliance with applicable state or federal law.

E. "Bond Obligations" means the principal of a Bond and any premium and interest on a Bond issued pursuant to this Act, together with any amount owed under a related Credit Agreement.

F. "Credit Agreement" means, without limitation, a loan agreement, a revolving credit agreement, an agreement establishing a line of credit, a letter of credit, notes, municipal bond insurance, standby bond purchase agreements, surety bonds, remarketing agreements and the like, by which the Department may borrow funds to pay or redeem or purchase and hold its bonds, agreements for the purchase or remarketing of bonds or any other agreement that enhances the marketability, security, or creditworthiness of a Bond issued under this Act.

1. Such Credit Agreement shall provide the following:

a. The choice of law for the obligations of a financial provider may be made for any state of these United States, but the law which shall apply to the Bonds shall be the law of the State of Illinois, and jurisdiction to enforce such Credit Agreement as against the Department shall be exclusively in the courts of the State of Illinois or in the applicable federal court having jurisdiction and located within the State of Illinois.

b. Any such Credit Agreement shall be fully enforceable as a valid and binding contract as and to the extent provided by applicable law.

2. Without limiting the foregoing, such Credit Agreement, may include any of the following:

a. Interest rates on the Bonds may vary from time to time depending upon criteria established by the Director, which may include, without limitation:

(i) A variation in interest rates as may be necessary to cause the Bonds to be remarketed from time to time at a price equal to their principal amount plus any accrued interest;

(ii) Rates set by auctions; or

(iii) Rates set by formula.

b. A national banking association, bank, trust company, investment banker or other financial institution may be appointed to serve as a remarketing agent in that connection, and such remarketing agent may be delegated authority by the Department to determine interest rates in accordance with criteria established by the Department.

c. Alternative interest rates or provisions may apply during such times as the Bonds are held by the financial providers or similar persons or entities providing a Credit Agreement for those Bonds and, during such times, the interest on the Bonds may be deemed not exempt from income taxation under the Internal Revenue Code for purposes of State law, as contained in the Bond Authorization Act, relating to the permissible rate of interest to be borne thereon.

d. Fees may be paid to the financial providers or similar persons or entities providing a Credit Agreement, including all reasonably related costs, including therein costs of enforcement and litigation (all such fees and costs being financial provider payments) and financial provider payments may be paid, without limitation, from proceeds of the Bonds being the subject of such agreements, or from Bonds issued to refund such Bonds, provided that such financial provider payments shall be made subordinate to the payments on the Bonds.

e. The Bonds need not be held in physical form by the financial providers or similar persons or entities providing a Credit Agreement when providing funds to purchase or carry the Bonds from others but may be represented in uncertificated form in the Credit Agreement.

f. The debt or obligation of the Department represented by a Bond tendered for purchase to or otherwise made available to the Department thereupon acquired by either the Department or a financial provider shall not be deemed to be extinguished for purposes of State law until cancelled by the Department or its agent.

g. Such Credit Agreement may provide for acceleration of the principal amounts due on the Bonds.

G. "Department" means the Illinois Department of Employment Security.

H. "Director" means the Director of the Illinois Department of Employment Security.

I. "Fund Building Rates" are those rates imposed pursuant to Section 1506.3 of the Unemployment Insurance Act.

J. "Fund Building Receipts" shall have the meaning provided in the Unemployment Insurance Act and includes earnings on such receipts.

K. "Master Bond Fund" shall mean, for any particular issuance of Bonds under this Act, the fund established for the deposit of Fund Building Receipts upon or prior to the issuance of Bonds under this Act, and during the time that any Bonds are outstanding under this Act and from which the payment of Bond Obligations and the related Bond Administrative Expenses incurred in connection with such Bonds shall be made. That portion of the Master Bond Fund containing the Required Fund Building Receipts Amount shall be irrevocably pledged to the timely payment of Bond Obligations and Bond Administrative Expenses due on any Bonds issued pursuant to this Act and any Credit Agreement entered in connection with the Bonds. The Master Bond Fund shall be held separate and apart from all other State funds. Moneys in the Master Bond Fund shall not be commingled with other State funds, but they shall be deposited as required by law and maintained in a separate account on the books of a savings and loan association, bank or other qualified financial institution. All interest earnings on amounts within the Master Bond Fund shall accrue to the Master Bond Fund. The Master Bond Fund may include such funds and accounts as are necessary for the deposit of bond proceeds, Fund Building Receipts, payment of principal, interest, administrative expenses, costs of issuance, in the case of bonds which are exempt from Federal taxation, rebate payments, and such other funds and accounts which may be necessary for the implementation and administration of this Act. The Director shall be liable on her or his general official bond for the faithful performance of her or his duties as custodian of the Master Bond Fund. Such liability on her or his official bond shall exist in addition to the liability upon any separate bond given by her or him. All sums recovered for losses sustained by the Master Bond Fund shall be deposited into the Fund.

The Director shall report quarterly in writing to the Employment Security Advisory Board concerning the actual and anticipated deposits into and expenditures and transfers made from the Master Bond Fund. Notwithstanding any other provision to the contrary, no report is required under this subsection K if (i) the Master Bond Fund held a net balance of zero as of the close of the immediately preceding calendar quarter, (ii) there have been no deposits into the Master Bond Fund within any of the immediately preceding 4 calendar quarters, and (iii) there have been no expenditures or transfers from the Master Bond Fund within any of the immediately preceding 4 calendar quarters.

L. "Required Fund Building Receipts Amount" means the aggregate amount of Fund Building Receipts required to be maintained in the Master Bond Fund as set forth in Section 4I of this Act.

(Source: P.A. 93-634, eff. 1-1-04; 94-1083, eff. 1-19-07.)

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