Full Text of HB2636 99th General Assembly
HB2636sam001 99TH GENERAL ASSEMBLY | Sen. Karen McConnaughay Filed: 5/20/2015
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| 1 | | AMENDMENT TO HOUSE BILL 2636
| 2 | | AMENDMENT NO. ______. Amend House Bill 2636 on page 1, line | 3 | | 16, after "amended by", by inserting "changing Section 2 and | 4 | | by"; and
| 5 | | on page 1, below line 17, by inserting the following:
| 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;
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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;
| 6 | | (4) in short term obligations of corporations
| 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
| 11 | | which mature not later than 3 years 270 days from the date | 12 | | of 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
| 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
| 20 | | subsection and to agreements to repurchase such | 21 | | obligations.
| 22 | | (a-1) In addition to any other investments authorized under | 23 | | this Act, a
municipality, park district, forest preserve | 24 | | district, conservation district, county, or other governmental | 25 | | unit may invest its public funds in interest bearing bonds of | 26 | | any
county, township, city, village, incorporated town, |
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| 1 | | municipal corporation, or
school district, of the State of | 2 | | Illinois, of any other state, or of
any political subdivision | 3 | | or
agency of the State of Illinois or of any other state, | 4 | | whether the interest
earned thereon is taxable or tax-exempt | 5 | | under federal law. The bonds shall
be registered in the name of | 6 | | the municipality, park district, forest preserve district, | 7 | | conservation district, county, or other governmental unit, or | 8 | | held under a custodial agreement at a bank. The bonds shall be | 9 | | rated at the
time of purchase within the 4 highest general | 10 | | classifications established by a
rating service of nationally | 11 | | recognized expertise in rating bonds of states and
their | 12 | | political subdivisions.
| 13 | | (b) Investments may be made only in banks which are insured | 14 | | by the
Federal Deposit Insurance Corporation. Any public agency | 15 | | may invest any
public funds in short term discount obligations | 16 | | of the Federal National
Mortgage Association or in shares or | 17 | | other forms of securities legally
issuable by savings banks or | 18 | | savings and loan associations incorporated under
the laws of | 19 | | this State or any other state or under the laws of the United
| 20 | | States. Investments may be made only in those savings banks or | 21 | | savings and
loan associations the shares, or investment | 22 | | certificates of which are insured
by the Federal Deposit | 23 | | Insurance Corporation. Any such securities may be
purchased at | 24 | | the offering or market price thereof at the time of such
| 25 | | purchase. All such securities so purchased shall mature or be | 26 | | redeemable on
a date or dates prior to the time when, in the |
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| 1 | | judgment of
such governing authority, the public funds so | 2 | | invested will be required
for expenditure by such public agency | 3 | | or its governing authority. The
expressed judgment of any such | 4 | | governing authority as to the time when
any public funds will | 5 | | be required for expenditure or be redeemable is
final and | 6 | | conclusive. Any public agency may invest any public funds in
| 7 | | dividend-bearing share accounts, share certificate accounts or | 8 | | class of
share accounts of a credit union chartered under the | 9 | | laws of this State
or the laws of the United States; provided, | 10 | | however, the principal office
of any such credit union must be | 11 | | located within the State of Illinois.
Investments may be made | 12 | | only in those credit unions the accounts of which
are insured | 13 | | by applicable law.
| 14 | | (c) For purposes of this Section, the term "agencies of the | 15 | | United States
of America" includes: (i) the federal land banks, | 16 | | federal intermediate
credit banks, banks for cooperative, | 17 | | federal farm credit banks, or any other
entity authorized to | 18 | | issue debt obligations under the Farm Credit Act of
1971 (12 | 19 | | U.S.C. 2001 et seq.) and Acts amendatory thereto; (ii) the | 20 | | federal
home loan banks and the federal home loan mortgage | 21 | | corporation; and (iii)
any other agency created by Act of | 22 | | Congress.
| 23 | | (d) Except for pecuniary interests permitted under | 24 | | subsection (f) of
Section 3-14-4 of the Illinois Municipal Code | 25 | | or under Section 3.2 of
the Public Officer Prohibited Practices | 26 | | Act, no person acting as treasurer
or financial officer or who |
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| 1 | | is employed in any similar capacity by or for a
public agency | 2 | | may do any of the following:
| 3 | | (1) have any interest, directly or indirectly, in any | 4 | | investments in
which the agency is authorized to invest.
| 5 | | (2) have any interest, directly or indirectly, in the | 6 | | sellers,
sponsors, or managers of those investments.
| 7 | | (3) receive, in any manner, compensation of any kind | 8 | | from any
investments in which the agency is authorized to | 9 | | invest.
| 10 | | (e) Any public agency may also invest any public funds in a | 11 | | Public
Treasurers' Investment Pool created under Section 17 of | 12 | | the State Treasurer
Act. Any public agency may also invest any | 13 | | public funds in a fund managed,
operated, and administered by a | 14 | | bank, subsidiary of a bank, or
subsidiary of a bank holding | 15 | | company or use the services of such an entity to
hold and | 16 | | invest or advise regarding the investment of any public funds.
| 17 | | (f) To the extent a public agency has custody of funds not | 18 | | owned by it or
another public agency and does not otherwise | 19 | | have authority to invest
such funds, the public agency may | 20 | | invest such funds as if they were its
own. Such funds must be | 21 | | released to the appropriate person at the
earliest reasonable | 22 | | time, but in no case exceeding 31 days, after the
private | 23 | | person becomes entitled to the receipt of them. All earnings
| 24 | | accruing on any investments or deposits made pursuant to the | 25 | | provisions
of this Act shall be credited to the public agency | 26 | | by or for which such
investments or deposits were made, except |
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| 1 | | as provided otherwise in Section
4.1 of the State Finance Act | 2 | | or the Local Governmental Tax Collection Act,
and except where | 3 | | by specific statutory provisions such earnings are
directed to | 4 | | be credited to and paid to a particular fund.
| 5 | | (g) A public agency may purchase or invest in repurchase | 6 | | agreements of
government securities having the meaning set out | 7 | | in the Government
Securities Act of 1986, as now or hereafter | 8 | | amended or succeeded, subject to the provisions of said Act and | 9 | | the
regulations issued thereunder. The government securities, | 10 | | unless
registered or inscribed in the name of the public | 11 | | agency, shall be
purchased through banks or trust companies | 12 | | authorized to do business in the
State of Illinois.
| 13 | | (h) Except for repurchase agreements of government | 14 | | securities which are
subject to the Government Securities Act | 15 | | of 1986, as now or hereafter amended or succeeded, no public | 16 | | agency may
purchase or invest in instruments which constitute | 17 | | repurchase agreements,
and no financial institution may enter | 18 | | into such an agreement with or on
behalf of any public agency | 19 | | unless the instrument and the transaction meet
the following | 20 | | requirements:
| 21 | | (1) The securities, unless registered or inscribed in | 22 | | the name of the
public agency, are purchased through banks | 23 | | or trust companies authorized to
do business in the State | 24 | | of Illinois.
| 25 | | (2) An authorized public officer after ascertaining | 26 | | which firm will give
the most favorable rate of interest, |
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| 1 | | directs the custodial bank to
"purchase" specified | 2 | | securities from a designated institution.
The "custodial | 3 | | bank" is the bank or trust company, or agency of
| 4 | | government, which acts for the public agency in connection | 5 | | with repurchase
agreements involving the investment of | 6 | | funds by the public agency. The
State Treasurer may act as | 7 | | custodial bank for public agencies executing
repurchase | 8 | | agreements. To the extent the Treasurer acts in this | 9 | | capacity,
he is hereby authorized to pass through to such | 10 | | public agencies any charges
assessed by the Federal Reserve | 11 | | Bank.
| 12 | | (3) A custodial bank must be a member bank of the | 13 | | Federal Reserve System
or maintain accounts with member | 14 | | banks. All transfers of book-entry
securities must be | 15 | | accomplished on a Reserve Bank's computer records
through a | 16 | | member bank of the Federal Reserve System. These securities | 17 | | must
be credited to the public agency on the records of the | 18 | | custodial bank and
the transaction must be confirmed in | 19 | | writing to the public agency by
the custodial bank.
| 20 | | (4) Trading partners shall be limited to banks or trust | 21 | | companies
authorized to do business in the State of | 22 | | Illinois or to registered primary
reporting dealers.
| 23 | | (5) The security interest must be perfected.
| 24 | | (6) The public agency enters into a written master | 25 | | repurchase agreement
which outlines the basic | 26 | | responsibilities and liabilities of both buyer and
seller.
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| 1 | | (7) Agreements shall be for periods of 330 days or | 2 | | less.
| 3 | | (8) The authorized public officer of the public agency | 4 | | informs the
custodial bank in writing of the maturity | 5 | | details of the repurchase agreement.
| 6 | | (9) The custodial bank must take delivery of and | 7 | | maintain the
securities in its custody for the account of | 8 | | the public agency and confirm
the transaction in writing to | 9 | | the public agency. The Custodial Undertaking
shall provide | 10 | | that the custodian takes possession of the securities
| 11 | | exclusively for the public agency; that the securities are | 12 | | free of any
claims against the trading partner; and any | 13 | | claims by the custodian are
subordinate to the public | 14 | | agency's claims to rights to those securities.
| 15 | | (10) The obligations purchased by a public agency may | 16 | | only be sold or
presented for redemption or payment by the | 17 | | fiscal agent bank or trust
company holding the obligations | 18 | | upon the written instruction of the
public agency or | 19 | | officer authorized to make such investments.
| 20 | | (11) The custodial bank shall be liable to the public | 21 | | agency for any
monetary loss suffered by the public agency | 22 | | due to the failure of the
custodial bank to take and | 23 | | maintain possession of such securities.
| 24 | | (i) Notwithstanding the foregoing restrictions on | 25 | | investment in
instruments constituting repurchase agreements | 26 | | the Illinois Housing
Development Authority may invest in, and |
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| 1 | | any financial institution with
capital of at least $250,000,000 | 2 | | may act as custodian for, instruments
that constitute | 3 | | repurchase agreements, provided that the Illinois Housing
| 4 | | Development Authority, in making each such investment, | 5 | | complies with the
safety and soundness guidelines for engaging | 6 | | in repurchase transactions
applicable to federally insured | 7 | | banks, savings banks, savings and loan
associations or other | 8 | | depository institutions as set forth in the Federal
Financial | 9 | | Institutions Examination Council Policy Statement Regarding
| 10 | | Repurchase Agreements and any regulations issued, or which may | 11 | | be issued by the
supervisory federal authority pertaining | 12 | | thereto and any amendments thereto;
provided further that the | 13 | | securities shall be either (i) direct general
obligations of, | 14 | | or obligations the payment of the principal of and/or interest
| 15 | | on which are unconditionally guaranteed by, the United States | 16 | | of America or
(ii) any obligations of any agency, corporation | 17 | | or subsidiary thereof
controlled or supervised by and acting as | 18 | | an instrumentality of the United
States Government pursuant to | 19 | | authority granted by the Congress of the United
States and | 20 | | provided further that the security interest must be perfected | 21 | | by
either the Illinois Housing Development Authority, its | 22 | | custodian or its agent
receiving possession of the securities | 23 | | either physically or transferred through
a nationally | 24 | | recognized book entry system.
| 25 | | (j) In addition to all other investments authorized
under | 26 | | this Section, a community college district may
invest public |
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| 1 | | funds in any mutual funds that
invest primarily in corporate | 2 | | investment grade or global government short term
bonds.
| 3 | | Purchases of mutual funds that invest primarily in global | 4 | | government short
term bonds shall be limited to funds with | 5 | | assets of at least $100 million and
that are rated at the time | 6 | | of purchase as one of the 10 highest classifications
| 7 | | established by a recognized rating service. The investments | 8 | | shall be subject
to approval by the local community college | 9 | | board of trustees. Each community
college board of trustees | 10 | | shall develop a policy regarding the percentage of
the | 11 | | college's investment portfolio that can be invested in such | 12 | | funds.
| 13 | | Nothing in this Section shall be construed to authorize an
| 14 | | intergovernmental risk management entity to accept the deposit | 15 | | of public funds
except for risk management purposes.
| 16 | | (Source: P.A. 97-129, eff. 7-14-11; 98-297, eff. 1-1-14; | 17 | | 98-390, eff. 8-16-13; 98-756, eff. 7-16-14.)".
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