Full Text of SB1950 98th General Assembly
SB1950enr 98TH GENERAL ASSEMBLY |
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| 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 Sections 1 and 2 as follows:
| 6 | | (30 ILCS 235/1) (from Ch. 85, par. 901)
| 7 | | Sec. 1.
The words "public funds", as used in this Act, mean | 8 | | current
operating funds, special funds, interest and sinking | 9 | | funds, and funds of
any kind or character belonging to or in | 10 | | the custody of any public agency.
| 11 | | The words "public agency", as used in this Act, mean the | 12 | | State of
Illinois, the various counties, townships, cities, | 13 | | towns, villages, school
districts, educational service | 14 | | regions, special road districts, public
water supply | 15 | | districts, fire protection districts, drainage districts, | 16 | | levee
districts, sewer districts, housing authorities, the | 17 | | Illinois Bank Examiners'
Education Foundation, the Chicago | 18 | | Park District, and all other political
corporations or | 19 | | subdivisions of the State of Illinois, now or hereafter
| 20 | | created, whether herein specifically mentioned or not.
This Act | 21 | | does not apply to the Illinois Prepaid Tuition Trust Fund,
| 22 | | private funds collected by the Illinois Conservation | 23 | | Foundation, or
pension
funds or retirement systems established
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| 1 | | under the Illinois Pension Code, except as otherwise provided | 2 | | in that Code.
| 3 | | The words "governmental unit", as used in this Act, have | 4 | | the same meaning as in the Local Government Debt Reform Act. | 5 | | (Source: P.A. 91-669, eff. 1-1-00; 92-797, eff. 8-15-02.)
| 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 | 24 | | $500,000,000 if (i)
such obligations are rated at the time | 25 | | of purchase at one of the 3 highest
classifications |
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| 1 | | established by at least 2 standard rating services and
| 2 | | which mature not later than 270 days from the date of | 3 | | purchase, (ii)
such purchases do not exceed 10% of the | 4 | | corporation's outstanding
obligations and (iii) no more | 5 | | than one-third of the public agency's funds
may be invested | 6 | | in short term obligations of corporations; or
| 7 | | (5) in money market mutual funds registered under the | 8 | | Investment
Company Act of 1940, provided that the portfolio | 9 | | of any such money market
mutual fund is limited to | 10 | | obligations described in paragraph (1) or (2) of this
| 11 | | subsection and to agreements to repurchase such | 12 | | obligations.
| 13 | | (a-1) In addition to any other investments authorized under | 14 | | this Act, a
municipality , or a county , or other governmental | 15 | | unit may invest its public funds in interest bearing bonds of | 16 | | any
county, township, city, village, incorporated town, | 17 | | municipal corporation, or
school district, of the State of | 18 | | Illinois, of any other state, or of
any political subdivision | 19 | | or
agency of the State of Illinois or of any other state, | 20 | | whether the interest
earned thereon is taxable or tax-exempt | 21 | | under federal law. The bonds shall
be registered in the name of | 22 | | the municipality , or county , or other governmental unit, or | 23 | | held under a custodial agreement at a bank. The bonds shall be | 24 | | rated at the
time of purchase within the 4 highest general | 25 | | classifications established by a
rating service of nationally | 26 | | recognized expertise in rating bonds of states and
their |
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| 1 | | political subdivisions.
| 2 | | (b) Investments may be made only in banks which are insured | 3 | | by the
Federal Deposit Insurance Corporation. Any public agency | 4 | | may invest any
public funds in short term discount obligations | 5 | | of the Federal National
Mortgage Association or in shares or | 6 | | other forms of securities legally
issuable by savings banks or | 7 | | savings and loan associations incorporated under
the laws of | 8 | | this State or any other state or under the laws of the United
| 9 | | States. Investments may be made only in those savings banks or | 10 | | savings and
loan associations the shares, or investment | 11 | | certificates of which are insured
by the Federal Deposit | 12 | | Insurance Corporation. Any such securities may be
purchased at | 13 | | the offering or market price thereof at the time of such
| 14 | | purchase. All such securities so purchased shall mature or be | 15 | | redeemable on
a date or dates prior to the time when, in the | 16 | | judgment of
such governing authority, the public funds so | 17 | | invested will be required
for expenditure by such public agency | 18 | | or its governing authority. The
expressed judgment of any such | 19 | | governing authority as to the time when
any public funds will | 20 | | be required for expenditure or be redeemable is
final and | 21 | | conclusive. Any public agency may invest any public funds in
| 22 | | dividend-bearing share accounts, share certificate accounts or | 23 | | class of
share accounts of a credit union chartered under the | 24 | | laws of this State
or the laws of the United States; provided, | 25 | | however, the principal office
of any such credit union must be | 26 | | located within the State of Illinois.
Investments may be made |
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| 1 | | only in those credit unions the accounts of which
are insured | 2 | | by applicable law.
| 3 | | (c) For purposes of this Section, the term "agencies of the | 4 | | United States
of America" includes: (i) the federal land banks, | 5 | | federal intermediate
credit banks, banks for cooperative, | 6 | | federal farm credit banks, or any other
entity authorized to | 7 | | issue debt obligations under the Farm Credit Act of
1971 (12 | 8 | | U.S.C. 2001 et seq.) and Acts amendatory thereto; (ii) the | 9 | | federal
home loan banks and the federal home loan mortgage | 10 | | corporation; and (iii)
any other agency created by Act of | 11 | | Congress.
| 12 | | (d) Except for pecuniary interests permitted under | 13 | | subsection (f) of
Section 3-14-4 of the Illinois Municipal Code | 14 | | or under Section 3.2 of
the Public Officer Prohibited Practices | 15 | | Act, no person acting as treasurer
or financial officer or who | 16 | | is employed in any similar capacity by or for a
public agency | 17 | | may do any of the following:
| 18 | | (1) have any interest, directly or indirectly, in any | 19 | | investments in
which the agency is authorized to invest.
| 20 | | (2) have any interest, directly or indirectly, in the | 21 | | sellers,
sponsors, or managers of those investments.
| 22 | | (3) receive, in any manner, compensation of any kind | 23 | | from any
investments in which the agency is authorized to | 24 | | invest.
| 25 | | (e) Any public agency may also invest any public funds in a | 26 | | Public
Treasurers' Investment Pool created under Section 17 of |
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| 1 | | the State Treasurer
Act. Any public agency may also invest any | 2 | | public funds in a fund managed,
operated, and administered by a | 3 | | bank, subsidiary of a bank, or
subsidiary of a bank holding | 4 | | company or use the services of such an entity to
hold and | 5 | | invest or advise regarding the investment of any public funds.
| 6 | | (f) To the extent a public agency has custody of funds not | 7 | | owned by it or
another public agency and does not otherwise | 8 | | have authority to invest
such funds, the public agency may | 9 | | invest such funds as if they were its
own. Such funds must be | 10 | | released to the appropriate person at the
earliest reasonable | 11 | | time, but in no case exceeding 31 days, after the
private | 12 | | person becomes entitled to the receipt of them. All earnings
| 13 | | accruing on any investments or deposits made pursuant to the | 14 | | provisions
of this Act shall be credited to the public agency | 15 | | by or for which such
investments or deposits were made, except | 16 | | as provided otherwise in Section
4.1 of the State Finance Act | 17 | | or the Local Governmental Tax Collection Act,
and except where | 18 | | by specific statutory provisions such earnings are
directed to | 19 | | be credited to and paid to a particular fund.
| 20 | | (g) A public agency may purchase or invest in repurchase | 21 | | agreements of
government securities having the meaning set out | 22 | | in the Government
Securities Act of 1986, as now or hereafter | 23 | | amended or succeeded, subject to the provisions of said Act and | 24 | | the
regulations issued thereunder. The government securities, | 25 | | unless
registered or inscribed in the name of the public | 26 | | agency, shall be
purchased through banks or trust companies |
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| 1 | | authorized to do business in the
State of Illinois.
| 2 | | (h) Except for repurchase agreements of government | 3 | | securities which are
subject to the Government Securities Act | 4 | | of 1986, as now or hereafter amended or succeeded, no public | 5 | | agency may
purchase or invest in instruments which constitute | 6 | | repurchase agreements,
and no financial institution may enter | 7 | | into such an agreement with or on
behalf of any public agency | 8 | | unless the instrument and the transaction meet
the following | 9 | | requirements:
| 10 | | (1) The securities, unless registered or inscribed in | 11 | | the name of the
public agency, are purchased through banks | 12 | | or trust companies authorized to
do business in the State | 13 | | of Illinois.
| 14 | | (2) An authorized public officer after ascertaining | 15 | | which firm will give
the most favorable rate of interest, | 16 | | directs the custodial bank to
"purchase" specified | 17 | | securities from a designated institution.
The "custodial | 18 | | bank" is the bank or trust company, or agency of
| 19 | | government, which acts for the public agency in connection | 20 | | with repurchase
agreements involving the investment of | 21 | | funds by the public agency. The
State Treasurer may act as | 22 | | custodial bank for public agencies executing
repurchase | 23 | | agreements. To the extent the Treasurer acts in this | 24 | | capacity,
he is hereby authorized to pass through to such | 25 | | public agencies any charges
assessed by the Federal Reserve | 26 | | Bank.
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| 1 | | (3) A custodial bank must be a member bank of the | 2 | | Federal Reserve System
or maintain accounts with member | 3 | | banks. All transfers of book-entry
securities must be | 4 | | accomplished on a Reserve Bank's computer records
through a | 5 | | member bank of the Federal Reserve System. These securities | 6 | | must
be credited to the public agency on the records of the | 7 | | custodial bank and
the transaction must be confirmed in | 8 | | writing to the public agency by
the custodial bank.
| 9 | | (4) Trading partners shall be limited to banks or trust | 10 | | companies
authorized to do business in the State of | 11 | | Illinois or to registered primary
reporting dealers.
| 12 | | (5) The security interest must be perfected.
| 13 | | (6) The public agency enters into a written master | 14 | | repurchase agreement
which outlines the basic | 15 | | responsibilities and liabilities of both buyer and
seller.
| 16 | | (7) Agreements shall be for periods of 330 days or | 17 | | less.
| 18 | | (8) The authorized public officer of the public agency | 19 | | informs the
custodial bank in writing of the maturity | 20 | | details of the repurchase agreement.
| 21 | | (9) The custodial bank must take delivery of and | 22 | | maintain the
securities in its custody for the account of | 23 | | the public agency and confirm
the transaction in writing to | 24 | | the public agency. The Custodial Undertaking
shall provide | 25 | | that the custodian takes possession of the securities
| 26 | | exclusively for the public agency; that the securities are |
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| 1 | | free of any
claims against the trading partner; and any | 2 | | claims by the custodian are
subordinate to the public | 3 | | agency's claims to rights to those securities.
| 4 | | (10) The obligations purchased by a public agency may | 5 | | only be sold or
presented for redemption or payment by the | 6 | | fiscal agent bank or trust
company holding the obligations | 7 | | upon the written instruction of the
public agency or | 8 | | officer authorized to make such investments.
| 9 | | (11) The custodial bank shall be liable to the public | 10 | | agency for any
monetary loss suffered by the public agency | 11 | | due to the failure of the
custodial bank to take and | 12 | | maintain possession of such securities.
| 13 | | (i) Notwithstanding the foregoing restrictions on | 14 | | investment in
instruments constituting repurchase agreements | 15 | | the Illinois Housing
Development Authority may invest in, and | 16 | | any financial institution with
capital of at least $250,000,000 | 17 | | may act as custodian for, instruments
that constitute | 18 | | repurchase agreements, provided that the Illinois Housing
| 19 | | Development Authority, in making each such investment, | 20 | | complies with the
safety and soundness guidelines for engaging | 21 | | in repurchase transactions
applicable to federally insured | 22 | | banks, savings banks, savings and loan
associations or other | 23 | | depository institutions as set forth in the Federal
Financial | 24 | | Institutions Examination Council Policy Statement Regarding
| 25 | | Repurchase Agreements and any regulations issued, or which may | 26 | | be issued by the
supervisory federal authority pertaining |
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| 1 | | thereto and any amendments thereto;
provided further that the | 2 | | securities shall be either (i) direct general
obligations of, | 3 | | or obligations the payment of the principal of and/or interest
| 4 | | on which are unconditionally guaranteed by, the United States | 5 | | of America or
(ii) any obligations of any agency, corporation | 6 | | or subsidiary thereof
controlled or supervised by and acting as | 7 | | an instrumentality of the United
States Government pursuant to | 8 | | authority granted by the Congress of the United
States and | 9 | | provided further that the security interest must be perfected | 10 | | by
either the Illinois Housing Development Authority, its | 11 | | custodian or its agent
receiving possession of the securities | 12 | | either physically or transferred through
a nationally | 13 | | recognized book entry system.
| 14 | | (j) In addition to all other investments authorized
under | 15 | | this Section, a community college district may
invest public | 16 | | funds in any mutual funds that
invest primarily in corporate | 17 | | investment grade or global government short term
bonds.
| 18 | | Purchases of mutual funds that invest primarily in global | 19 | | government short
term bonds shall be limited to funds with | 20 | | assets of at least $100 million and
that are rated at the time | 21 | | of purchase as one of the 10 highest classifications
| 22 | | established by a recognized rating service. The investments | 23 | | shall be subject
to approval by the local community college | 24 | | board of trustees. Each community
college board of trustees | 25 | | shall develop a policy regarding the percentage of
the | 26 | | college's investment portfolio that can be invested in such |
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| 1 | | funds.
| 2 | | Nothing in this Section shall be construed to authorize an
| 3 | | intergovernmental risk management entity to accept the deposit | 4 | | of public funds
except for risk management purposes.
| 5 | | (Source: P.A. 96-741, eff. 8-25-09; 97-129, eff. 7-14-11.)
| 6 | | Section 10. The Illinois Municipal Code is amended by | 7 | | changing Section 3.1-35-50 as follows:
| 8 | | (65 ILCS 5/3.1-35-50) (from Ch. 24, par. 3.1-35-50)
| 9 | | Sec. 3.1-35-50. Treasurer; deposit of funds.
| 10 | | (a) The municipal treasurer may be required to keep all | 11 | | funds and
money in the treasurer's custody belonging to the | 12 | | municipality in places of
deposit designated by ordinance. When | 13 | | requested by the
municipal treasurer, the corporate | 14 | | authorities shall designate one or
more banks or savings and | 15 | | loan associations in which may be kept the funds
and money of | 16 | | the municipality in the custody of the treasurer. When a
bank | 17 | | or savings and loan association has been designated as a | 18 | | depository,
it shall continue as a depository until 10 days | 19 | | have elapsed after a new
depository
is designated and has | 20 | | qualified by furnishing the statements of resources
and | 21 | | liabilities as required by this Section. When a new depository | 22 | | is
designated, the corporate authorities shall notify the | 23 | | sureties of the
municipal treasurer of that fact in writing at | 24 | | least 5 days before the
transfer of funds. The treasurer shall |
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| 1 | | be discharged from responsibility
for all funds or money that | 2 | | the treasurer deposits in a designated bank or
savings and loan | 3 | | association while the funds and money are so deposited.
| 4 | | (b) The municipal treasurer may require any bank or savings | 5 | | and loan
association to deposit with the treasurer securities | 6 | | or mortgages that
have a market value at least equal to the | 7 | | amount of the funds or moneys of the
municipality deposited | 8 | | with the bank or savings and loan association that
exceeds the | 9 | | insurance limitation provided by the Federal Deposit Insurance
| 10 | | Corporation or the Federal Savings and Loan Insurance | 11 | | Corporation.
| 12 | | (c) The municipal treasurer may enter into agreements of | 13 | | any
definite or indefinite term regarding the deposit, | 14 | | redeposit, investment,
reinvestment, or withdrawal of | 15 | | municipal funds.
| 16 | | (d) Notwithstanding any other provision of this Act or any | 17 | | other law, each
official custodian of municipal funds, | 18 | | including, without limitation, each
municipal treasurer or | 19 | | finance director or each person properly designated as
the | 20 | | official custodian for municipal funds, including, without | 21 | | limitation, each
person properly designated as official | 22 | | custodian for funds held by an
intergovernmental risk | 23 | | management entity, self-insurance pool, waste
management | 24 | | agency, or other intergovernmental entity composed solely of
| 25 | | participating municipalities, is permitted to:
| 26 | | (i) combine moneys from more than
one fund of a single |
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| 1 | | municipality, risk management entity, self-insurance
pool, | 2 | | or other intergovernmental entity composed solely of | 3 | | participating
municipalities for the purpose of investing | 4 | | such moneys;
| 5 | | (ii) join with any other official custodians or | 6 | | treasurers of municipal,
intergovernmental risk management | 7 | | entity, self-insurance pool, waste
management agency, or | 8 | | other intergovernmental entity composed solely of
| 9 | | participating municipalities for the purpose of jointly | 10 | | investing the
funds of which the official custodians or | 11 | | treasurers have custody; and
| 12 | | (iii) enter into agreements of any definite or | 13 | | indefinite term regarding
the redeposit, investment, or | 14 | | withdrawal of municipal, risk management
entity, | 15 | | self-insurance agency, waste management agency, or other
| 16 | | intergovernmental entity funds.
| 17 | | When funds are combined for investment
purposes as | 18 | | authorized in this Section, the moneys combined for those | 19 | | purposes
shall be accounted for separately in all respects, and | 20 | | the earnings from such
investment shall be separately and | 21 | | individually computed, recorded, and
credited to the fund, | 22 | | municipality, intergovernmental risk management
entity, | 23 | | self-insurance pool, waste
management agency, or other | 24 | | intergovernmental entity, as the case may be, for
which the | 25 | | investment was acquired.
| 26 | | Joint investments shall be made only in investments |
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| 1 | | authorized by law for
investment of municipal funds.
The grant | 2 | | of authority contained in this subsection is cumulative,
| 3 | | supplemental, and in addition to all other power or authority | 4 | | granted by any
other law and shall not be construed as a | 5 | | limitation of any power and authority
otherwise granted.
| 6 | | (e) No bank or savings and loan association shall receive | 7 | | public funds as
permitted by this Section unless it has | 8 | | complied with the requirements
established by Section 6 of the | 9 | | Public Funds Investment Act.
| 10 | | (f) In addition to any other investments or deposits | 11 | | authorized under this Code, municipalities are authorized to | 12 | | invest the funds and public moneys in the custody of the | 13 | | municipal treasurer in accordance with the Public Funds | 14 | | Investment Act. | 15 | | (Source: P.A. 89-592, eff. 8-1-96.)
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