| |||||||
| |||||||
| |||||||
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 issued, | ||||||
12 | which are guaranteed by the full
faith and credit of the | ||||||
13 | United States of America as to principal and interest;
| ||||||
14 | (2) in bonds, notes, debentures, or other similar | ||||||
15 | obligations of the
United States of America, its agencies, | ||||||
16 | and its instrumentalities;
| ||||||
17 | (3) in interest-bearing savings accounts, | ||||||
18 | interest-bearing
certificates of deposit or | ||||||
19 | interest-bearing time deposits or any other
investments | ||||||
20 | constituting direct obligations of any bank as defined by | ||||||
21 | the
Illinois Banking Act;
| ||||||
22 | (4) in short term obligations of corporations
| ||||||
23 | organized in the United States with assets exceeding |
| |||||||
| |||||||
1 | $500,000,000 if (i)
such obligations are rated at the time | ||||||
2 | of purchase at one of the 3 highest
classifications | ||||||
3 | established by at least 2 standard rating services and
| ||||||
4 | which mature not later than 3 years 270 days from the date | ||||||
5 | of purchase, (ii)
such purchases do not exceed 10% of the | ||||||
6 | corporation's outstanding
obligations and (iii) no more | ||||||
7 | than one-third of the public agency's funds
may be invested | ||||||
8 | in short term obligations of corporations; or
| ||||||
9 | (5) in money market mutual funds registered under the | ||||||
10 | Investment
Company Act of 1940, provided that the portfolio | ||||||
11 | of any such money market
mutual fund is limited to | ||||||
12 | obligations described in paragraph (1) or (2) of this
| ||||||
13 | subsection and to agreements to repurchase such | ||||||
14 | obligations.
| ||||||
15 | (a-1) In addition to any other investments authorized under | ||||||
16 | this Act, a
municipality, park district, forest preserve | ||||||
17 | district, conservation district, county, or other governmental | ||||||
18 | unit may invest its public funds in interest bearing bonds of | ||||||
19 | any
county, township, city, village, incorporated town, | ||||||
20 | municipal corporation, or
school district, of the State of | ||||||
21 | Illinois, of any other state, or of
any political subdivision | ||||||
22 | or
agency of the State of Illinois or of any other state, | ||||||
23 | whether the interest
earned thereon is taxable or tax-exempt | ||||||
24 | under federal law. The bonds shall
be registered in the name of | ||||||
25 | the municipality, park district, forest preserve district, | ||||||
26 | conservation district, county, or other governmental unit, or |
| |||||||
| |||||||
1 | held under a custodial agreement at a bank. The bonds shall be | ||||||
2 | rated at the
time of purchase within the 4 highest general | ||||||
3 | classifications established by a
rating service of nationally | ||||||
4 | recognized expertise in rating bonds of states and
their | ||||||
5 | political subdivisions.
| ||||||
6 | (b) Investments may be made only in banks which are insured | ||||||
7 | by the
Federal Deposit Insurance Corporation. Any public agency | ||||||
8 | may invest any
public funds in short term discount obligations | ||||||
9 | of the Federal National
Mortgage Association or in shares or | ||||||
10 | other forms of securities legally
issuable by savings banks or | ||||||
11 | savings and loan associations incorporated under
the laws of | ||||||
12 | this State or any other state or under the laws of the United
| ||||||
13 | States. Investments may be made only in those savings banks or | ||||||
14 | savings and
loan associations the shares, or investment | ||||||
15 | certificates of which are insured
by the Federal Deposit | ||||||
16 | Insurance Corporation. Any such securities may be
purchased at | ||||||
17 | the offering or market price thereof at the time of such
| ||||||
18 | purchase. All such securities so purchased shall mature or be | ||||||
19 | redeemable on
a date or dates prior to the time when, in the | ||||||
20 | judgment of
such governing authority, the public funds so | ||||||
21 | invested will be required
for expenditure by such public agency | ||||||
22 | or its governing authority. The
expressed judgment of any such | ||||||
23 | governing authority as to the time when
any public funds will | ||||||
24 | be required for expenditure or be redeemable is
final and | ||||||
25 | conclusive. Any public agency may invest any public funds in
| ||||||
26 | dividend-bearing share accounts, share certificate accounts or |
| |||||||
| |||||||
1 | class of
share accounts of a credit union chartered under the | ||||||
2 | laws of this State
or the laws of the United States; provided, | ||||||
3 | however, the principal office
of any such credit union must be | ||||||
4 | located within the State of Illinois.
Investments may be made | ||||||
5 | only in those credit unions the accounts of which
are insured | ||||||
6 | by applicable law.
| ||||||
7 | (c) For purposes of this Section, the term "agencies of the | ||||||
8 | United States
of America" includes: (i) the federal land banks, | ||||||
9 | federal intermediate
credit banks, banks for cooperative, | ||||||
10 | federal farm credit banks, or any other
entity authorized to | ||||||
11 | issue debt obligations under the Farm Credit Act of
1971 (12 | ||||||
12 | U.S.C. 2001 et seq.) and Acts amendatory thereto; (ii) the | ||||||
13 | federal
home loan banks and the federal home loan mortgage | ||||||
14 | corporation; and (iii)
any other agency created by Act of | ||||||
15 | Congress.
| ||||||
16 | (d) Except for pecuniary interests permitted under | ||||||
17 | subsection (f) of
Section 3-14-4 of the Illinois Municipal Code | ||||||
18 | or under Section 3.2 of
the Public Officer Prohibited Practices | ||||||
19 | Act, no person acting as treasurer
or financial officer or who | ||||||
20 | is employed in any similar capacity by or for a
public agency | ||||||
21 | may do any of the following:
| ||||||
22 | (1) have any interest, directly or indirectly, in any | ||||||
23 | investments in
which the agency is authorized to invest.
| ||||||
24 | (2) have any interest, directly or indirectly, in the | ||||||
25 | sellers,
sponsors, or managers of those investments.
| ||||||
26 | (3) receive, in any manner, compensation of any kind |
| |||||||
| |||||||
1 | from any
investments in which the agency is authorized to | ||||||
2 | invest.
| ||||||
3 | (e) Any public agency may also invest any public funds in a | ||||||
4 | Public
Treasurers' Investment Pool created under Section 17 of | ||||||
5 | the State Treasurer
Act. Any public agency may also invest any | ||||||
6 | public funds in a fund managed,
operated, and administered by a | ||||||
7 | bank, subsidiary of a bank, or
subsidiary of a bank holding | ||||||
8 | company or use the services of such an entity to
hold and | ||||||
9 | invest or advise regarding the investment of any public funds.
| ||||||
10 | (f) To the extent a public agency has custody of funds not | ||||||
11 | owned by it or
another public agency and does not otherwise | ||||||
12 | have authority to invest
such funds, the public agency may | ||||||
13 | invest such funds as if they were its
own. Such funds must be | ||||||
14 | released to the appropriate person at the
earliest reasonable | ||||||
15 | time, but in no case exceeding 31 days, after the
private | ||||||
16 | person becomes entitled to the receipt of them. All earnings
| ||||||
17 | accruing on any investments or deposits made pursuant to the | ||||||
18 | provisions
of this Act shall be credited to the public agency | ||||||
19 | by or for which such
investments or deposits were made, except | ||||||
20 | as provided otherwise in Section
4.1 of the State Finance Act | ||||||
21 | or the Local Governmental Tax Collection Act,
and except where | ||||||
22 | by specific statutory provisions such earnings are
directed to | ||||||
23 | be credited to and paid to a particular fund.
| ||||||
24 | (g) A public agency may purchase or invest in repurchase | ||||||
25 | agreements of
government securities having the meaning set out | ||||||
26 | in the Government
Securities Act of 1986, as now or hereafter |
| |||||||
| |||||||
1 | amended or succeeded, subject to the provisions of said Act and | ||||||
2 | the
regulations issued thereunder. The government securities, | ||||||
3 | unless
registered or inscribed in the name of the public | ||||||
4 | agency, shall be
purchased through banks or trust companies | ||||||
5 | authorized to do business in the
State of Illinois.
| ||||||
6 | (h) Except for repurchase agreements of government | ||||||
7 | securities which are
subject to the Government Securities Act | ||||||
8 | of 1986, as now or hereafter amended or succeeded, no public | ||||||
9 | agency may
purchase or invest in instruments which constitute | ||||||
10 | repurchase agreements,
and no financial institution may enter | ||||||
11 | into such an agreement with or on
behalf of any public agency | ||||||
12 | unless the instrument and the transaction meet
the following | ||||||
13 | requirements:
| ||||||
14 | (1) The securities, unless registered or inscribed in | ||||||
15 | the name of the
public agency, are purchased through banks | ||||||
16 | or trust companies authorized to
do business in the State | ||||||
17 | of Illinois.
| ||||||
18 | (2) An authorized public officer after ascertaining | ||||||
19 | which firm will give
the most favorable rate of interest, | ||||||
20 | directs the custodial bank to
"purchase" specified | ||||||
21 | securities from a designated institution.
The "custodial | ||||||
22 | bank" is the bank or trust company, or agency of
| ||||||
23 | government, which acts for the public agency in connection | ||||||
24 | with repurchase
agreements involving the investment of | ||||||
25 | funds by the public agency. The
State Treasurer may act as | ||||||
26 | custodial bank for public agencies executing
repurchase |
| |||||||
| |||||||
1 | agreements. To the extent the Treasurer acts in this | ||||||
2 | capacity,
he is hereby authorized to pass through to such | ||||||
3 | public agencies any charges
assessed by the Federal Reserve | ||||||
4 | Bank.
| ||||||
5 | (3) A custodial bank must be a member bank of the | ||||||
6 | Federal Reserve System
or maintain accounts with member | ||||||
7 | banks. All transfers of book-entry
securities must be | ||||||
8 | accomplished on a Reserve Bank's computer records
through a | ||||||
9 | member bank of the Federal Reserve System. These securities | ||||||
10 | must
be credited to the public agency on the records of the | ||||||
11 | custodial bank and
the transaction must be confirmed in | ||||||
12 | writing to the public agency by
the custodial bank.
| ||||||
13 | (4) Trading partners shall be limited to banks or trust | ||||||
14 | companies
authorized to do business in the State of | ||||||
15 | Illinois or to registered primary
reporting dealers.
| ||||||
16 | (5) The security interest must be perfected.
| ||||||
17 | (6) The public agency enters into a written master | ||||||
18 | repurchase agreement
which outlines the basic | ||||||
19 | responsibilities and liabilities of both buyer and
seller.
| ||||||
20 | (7) Agreements shall be for periods of 330 days or | ||||||
21 | less.
| ||||||
22 | (8) The authorized public officer of the public agency | ||||||
23 | informs the
custodial bank in writing of the maturity | ||||||
24 | details of the repurchase agreement.
| ||||||
25 | (9) The custodial bank must take delivery of and | ||||||
26 | maintain the
securities in its custody for the account of |
| |||||||
| |||||||
1 | the public agency and confirm
the transaction in writing to | ||||||
2 | the public agency. The Custodial Undertaking
shall provide | ||||||
3 | that the custodian takes possession of the securities
| ||||||
4 | exclusively for the public agency; that the securities are | ||||||
5 | free of any
claims against the trading partner; and any | ||||||
6 | claims by the custodian are
subordinate to the public | ||||||
7 | agency's claims to rights to those securities.
| ||||||
8 | (10) The obligations purchased by a public agency may | ||||||
9 | only be sold or
presented for redemption or payment by the | ||||||
10 | fiscal agent bank or trust
company holding the obligations | ||||||
11 | upon the written instruction of the
public agency or | ||||||
12 | officer authorized to make such investments.
| ||||||
13 | (11) The custodial bank shall be liable to the public | ||||||
14 | agency for any
monetary loss suffered by the public agency | ||||||
15 | due to the failure of the
custodial bank to take and | ||||||
16 | maintain possession of such securities.
| ||||||
17 | (i) Notwithstanding the foregoing restrictions on | ||||||
18 | investment in
instruments constituting repurchase agreements | ||||||
19 | the Illinois Housing
Development Authority may invest in, and | ||||||
20 | any financial institution with
capital of at least $250,000,000 | ||||||
21 | may act as custodian for, instruments
that constitute | ||||||
22 | repurchase agreements, provided that the Illinois Housing
| ||||||
23 | Development Authority, in making each such investment, | ||||||
24 | complies with the
safety and soundness guidelines for engaging | ||||||
25 | in repurchase transactions
applicable to federally insured | ||||||
26 | banks, savings banks, savings and loan
associations or other |
| |||||||
| |||||||
1 | depository institutions as set forth in the Federal
Financial | ||||||
2 | Institutions Examination Council Policy Statement Regarding
| ||||||
3 | Repurchase Agreements and any regulations issued, or which may | ||||||
4 | be issued by the
supervisory federal authority pertaining | ||||||
5 | thereto and any amendments thereto;
provided further that the | ||||||
6 | securities shall be either (i) direct general
obligations of, | ||||||
7 | or obligations the payment of the principal of and/or interest
| ||||||
8 | on which are unconditionally guaranteed by, the United States | ||||||
9 | of America or
(ii) any obligations of any agency, corporation | ||||||
10 | or subsidiary thereof
controlled or supervised by and acting as | ||||||
11 | an instrumentality of the United
States Government pursuant to | ||||||
12 | authority granted by the Congress of the United
States and | ||||||
13 | provided further that the security interest must be perfected | ||||||
14 | by
either the Illinois Housing Development Authority, its | ||||||
15 | custodian or its agent
receiving possession of the securities | ||||||
16 | either physically or transferred through
a nationally | ||||||
17 | recognized book entry system.
| ||||||
18 | (j) In addition to all other investments authorized
under | ||||||
19 | this Section, a community college district may
invest public | ||||||
20 | funds in any mutual funds that
invest primarily in corporate | ||||||
21 | investment grade or global government short term
bonds.
| ||||||
22 | Purchases of mutual funds that invest primarily in global | ||||||
23 | government short
term bonds shall be limited to funds with | ||||||
24 | assets of at least $100 million and
that are rated at the time | ||||||
25 | of purchase as one of the 10 highest classifications
| ||||||
26 | established by a recognized rating service. The investments |
| |||||||
| |||||||
1 | shall be subject
to approval by the local community college | ||||||
2 | board of trustees. Each community
college board of trustees | ||||||
3 | shall develop a policy regarding the percentage of
the | ||||||
4 | college's investment portfolio that can be invested in such | ||||||
5 | funds.
| ||||||
6 | Nothing in this Section shall be construed to authorize an
| ||||||
7 | intergovernmental risk management entity to accept the deposit | ||||||
8 | of public funds
except for risk management purposes.
| ||||||
9 | (Source: P.A. 97-129, eff. 7-14-11; 98-297, eff. 1-1-14; | ||||||
10 | 98-390, eff. 8-16-13; 98-756, eff. 7-16-14.)
| ||||||
11 | Section 99. Effective date. This Act takes effect upon | ||||||
12 | becoming law.
|