(30 ILCS 235/2) (from Ch. 85, par. 902) (Text of Section before amendment by P.A. 103-880) Sec. 2. Authorized investments. (a) Any public agency may invest any public funds as follows: (1) in bonds, notes, certificates of indebtedness, |
| treasury bills or other securities now or hereafter issued, which are guaranteed by the full faith and credit of the United States of America as to principal and interest;
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(2) in bonds, notes, debentures, or other similar
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| obligations of the United States of America, its agencies, and its instrumentalities;
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(3) in interest-bearing savings accounts,
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| interest-bearing certificates of deposit or interest-bearing time deposits or any other investments constituting direct obligations of any bank as defined by the Illinois Banking Act;
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(4) in short-term obligations of corporations
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| organized in the United States with assets exceeding $500,000,000 if (i) such obligations are rated at the time of purchase at one of the 3 highest classifications established by at least 2 standard rating services and which mature not later than 270 days from the date of purchase, (ii) such purchases do not exceed 10% of the corporation's outstanding obligations, and (iii) no more than one-third of the public agency's funds may be invested in short-term obligations of corporations under this paragraph (4);
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(4.5) in obligations of corporations organized in the
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| United States with assets exceeding $500,000,000 if (i) such obligations are rated at the time of purchase at one of the 3 highest classifications established by at least 2 standard rating services and which mature more than 270 days but less than 3 years from the date of purchase, (ii) such purchases do not exceed 10% of the corporation's outstanding obligations, and (iii) no more than one-third of the public agency's funds may be invested in obligations of corporations under this paragraph (4.5); or
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(5) in money market mutual funds registered under the
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| Investment Company Act of 1940, provided that the portfolio of any such money market mutual fund is limited to obligations described in paragraph (1) or (2) of this subsection and to agreements to repurchase such obligations.
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(a-1) In addition to any other investments authorized under this Act, a
municipality, park district, forest preserve district, conservation district, county, or other governmental unit may invest its public funds in interest bearing bonds of any
county, township, city, village, incorporated town, municipal corporation, or
school district, of the State of Illinois, of any other state, or of
any political subdivision or
agency of the State of Illinois or of any other state, whether the interest
earned thereon is taxable or tax-exempt under federal law. The bonds shall
be registered in the name of the municipality, park district, forest preserve district, conservation district, county, or other governmental unit, or held under a custodial agreement at a bank. The bonds shall be rated at the
time of purchase within the 4 highest general classifications established by a
rating service of nationally recognized expertise in rating bonds of states and
their political subdivisions.
(b) Investments may be made only in banks which are insured by the
Federal Deposit Insurance Corporation. Any public agency may invest any
public funds in short term discount obligations of the Federal National
Mortgage Association or in shares or other forms of securities legally
issuable by savings banks or savings and loan associations incorporated under
the laws of this State or any other state or under the laws of the United
States. Investments may be made only in those savings banks or savings and
loan associations the shares, or investment certificates of which are insured
by the Federal Deposit Insurance Corporation. Any such securities may be
purchased at the offering or market price thereof at the time of such
purchase. All such securities so purchased shall mature or be redeemable on
a date or dates prior to the time when, in the judgment of
such governing authority, the public funds so invested will be required
for expenditure by such public agency or its governing authority. The
expressed judgment of any such governing authority as to the time when
any public funds will be required for expenditure or be redeemable is
final and conclusive. Any public agency may invest any public funds in
dividend-bearing share accounts, share certificate accounts or class of
share accounts of a credit union chartered under the laws of this State
or the laws of the United States; provided, however, the principal office
of any such credit union must be located within the State of Illinois.
Investments may be made only in those credit unions the accounts of which
are insured by applicable law.
(c) For purposes of this Section, the term "agencies of the United States
of America" includes: (i) the federal land banks, federal intermediate
credit banks, banks for cooperative, federal farm credit banks, or any other
entity authorized to issue debt obligations under the Farm Credit Act of
1971 (12 U.S.C. 2001 et seq.) and Acts amendatory thereto; (ii) the federal
home loan banks and the federal home loan mortgage corporation; and (iii)
any other agency created by Act of Congress.
(d) Except for pecuniary interests permitted under subsection (f) of
Section 3-14-4 of the Illinois Municipal Code or under Section 3.2 of
the Public Officer Prohibited Practices Act, no person acting as treasurer
or financial officer or who is employed in any similar capacity by or for a
public agency may do any of the following:
(1) have any interest, directly or indirectly, in any
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| investments in which the agency is authorized to invest.
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(2) have any interest, directly or indirectly, in the
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| sellers, sponsors, or managers of those investments.
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(3) receive, in any manner, compensation of any kind
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| from any investments in which the agency is authorized to invest.
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(e) Any public agency may also invest any public funds in a Public
Treasurers' Investment Pool created under Section 17 of the State Treasurer
Act. Any public agency may also invest any public funds in a fund managed,
operated, and administered by a bank, subsidiary of a bank, or
subsidiary of a bank holding company or use the services of such an entity to
hold and invest or advise regarding the investment of any public funds.
(f) To the extent a public agency has custody of funds not owned by it or
another public agency and does not otherwise have authority to invest
such funds, the public agency may invest such funds as if they were its
own. Such funds must be released to the appropriate person at the
earliest reasonable time, but in no case exceeding 31 days, after the
private person becomes entitled to the receipt of them. All earnings
accruing on any investments or deposits made pursuant to the provisions
of this Act shall be credited to the public agency by or for which such
investments or deposits were made, except as provided otherwise in Section
4.1 of the State Finance Act or the Local Governmental Tax Collection Act,
and except where by specific statutory provisions such earnings are
directed to be credited to and paid to a particular fund.
(g) A public agency may purchase or invest in repurchase agreements of
government securities having the meaning set out in the Government
Securities Act of 1986, as now or hereafter amended or succeeded, subject to the provisions of said Act and the
regulations issued thereunder. The government securities, unless
registered or inscribed in the name of the public agency, shall be
purchased through banks or trust companies authorized to do business in the
State of Illinois.
(h) Except for repurchase agreements of government securities which are
subject to the Government Securities Act of 1986, as now or hereafter amended or succeeded, no public agency may
purchase or invest in instruments which constitute repurchase agreements,
and no financial institution may enter into such an agreement with or on
behalf of any public agency unless the instrument and the transaction meet
the following requirements:
(1) The securities, unless registered or inscribed in
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| the name of the public agency, are purchased through banks or trust companies authorized to do business in the State of Illinois.
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(2) An authorized public officer after ascertaining
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| which firm will give the most favorable rate of interest, directs the custodial bank to "purchase" specified securities from a designated institution. The "custodial bank" is the bank or trust company, or agency of government, which acts for the public agency in connection with repurchase agreements involving the investment of funds by the public agency. The State Treasurer may act as custodial bank for public agencies executing repurchase agreements. To the extent the Treasurer acts in this capacity, he is hereby authorized to pass through to such public agencies any charges assessed by the Federal Reserve Bank.
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(3) A custodial bank must be a member bank of the
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| Federal Reserve System or maintain accounts with member banks. All transfers of book-entry securities must be accomplished on a Reserve Bank's computer records through a member bank of the Federal Reserve System. These securities must be credited to the public agency on the records of the custodial bank and the transaction must be confirmed in writing to the public agency by the custodial bank.
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(4) Trading partners shall be limited to banks or
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| trust companies authorized to do business in the State of Illinois or to registered primary reporting dealers.
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(5) The security interest must be perfected.
(6) The public agency enters into a written master
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| repurchase agreement which outlines the basic responsibilities and liabilities of both buyer and seller.
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(7) Agreements shall be for periods of 330 days or
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(8) The authorized public officer of the public
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| agency informs the custodial bank in writing of the maturity details of the repurchase agreement.
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(9) The custodial bank must take delivery of and
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| maintain the securities in its custody for the account of the public agency and confirm the transaction in writing to the public agency. The Custodial Undertaking shall provide that the custodian takes possession of the securities exclusively for the public agency; that the securities are free of any claims against the trading partner; and any claims by the custodian are subordinate to the public agency's claims to rights to those securities.
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(10) The obligations purchased by a public agency may
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| only be sold or presented for redemption or payment by the fiscal agent bank or trust company holding the obligations upon the written instruction of the public agency or officer authorized to make such investments.
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(11) The custodial bank shall be liable to the public
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| agency for any monetary loss suffered by the public agency due to the failure of the custodial bank to take and maintain possession of such securities.
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(i) Notwithstanding the foregoing restrictions on investment in
instruments constituting repurchase agreements the Illinois Housing
Development Authority may invest in, and any financial institution with
capital of at least $250,000,000 may act as custodian for, instruments
that constitute repurchase agreements, provided that the Illinois Housing
Development Authority, in making each such investment, complies with the
safety and soundness guidelines for engaging in repurchase transactions
applicable to federally insured banks, savings banks, savings and loan
associations or other depository institutions as set forth in the Federal
Financial Institutions Examination Council Policy Statement Regarding
Repurchase Agreements and any regulations issued, or which may be issued by the
supervisory federal authority pertaining thereto and any amendments thereto;
provided further that the securities shall be either (i) direct general
obligations of, or obligations the payment of the principal of and/or interest
on which are unconditionally guaranteed by, the United States of America or
(ii) any obligations of any agency, corporation or subsidiary thereof
controlled or supervised by and acting as an instrumentality of the United
States Government pursuant to authority granted by the Congress of the United
States and provided further that the security interest must be perfected by
either the Illinois Housing Development Authority, its custodian or its agent
receiving possession of the securities either physically or transferred through
a nationally recognized book entry system.
(j) In addition to all other investments authorized
under this Section, a community college district may
invest public funds in any mutual funds that
invest primarily in corporate investment grade or global government short term
bonds.
Purchases of mutual funds that invest primarily in global government short
term bonds shall be limited to funds with assets of at least $100 million and
that are rated at the time of purchase as one of the 10 highest classifications
established by a recognized rating service. The investments shall be subject
to approval by the local community college board of trustees. Each community
college board of trustees shall develop a policy regarding the percentage of
the college's investment portfolio that can be invested in such funds.
Nothing in this Section shall be construed to authorize an
intergovernmental risk management entity to accept the deposit of public funds
except for risk management purposes.
(Source: P.A. 102-285, eff. 8-6-21.)
(Text of Section after amendment by P.A. 103-880)
Sec. 2. Authorized investments.
(a) Any public agency may invest any public funds as follows:
(1) in bonds, notes, certificates of indebtedness,
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| treasury bills or other securities now or hereafter issued, which are guaranteed by the full faith and credit of the United States of America as to principal and interest;
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(2) in bonds, notes, debentures, or other similar
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| obligations of the United States of America, its agencies, and its instrumentalities;
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(3) in interest-bearing savings accounts,
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| interest-bearing certificates of deposit or interest-bearing time deposits or any other investments constituting direct obligations of any bank as defined by the Illinois Banking Act;
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(4) in short-term obligations of corporations
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| organized in the United States with assets exceeding $500,000,000 if (i) such obligations are rated at the time of purchase at one of the 3 highest classifications established by at least 2 standard rating services and which mature not later than 270 days from the date of purchase, (ii) such purchases do not exceed 10% of the corporation's outstanding obligations, and (iii) no more than one-third of the public agency's funds may be invested in short-term obligations of corporations under this paragraph (4);
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(4.5) in obligations of corporations organized in the
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| United States with assets exceeding $500,000,000 if (i) such obligations are rated at the time of purchase at one of the 3 highest classifications established by at least 2 standard rating services and which mature more than 270 days but less than 10 years from the date of purchase, (ii) such purchases do not exceed 10% of the corporation's outstanding obligations, and (iii) no more than one-third of the public agency's funds may be invested in obligations of corporations under this paragraph (4.5); or
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(5) in money market mutual funds registered under the
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| Investment Company Act of 1940, provided that the portfolio of any such money market mutual fund is limited to obligations described in paragraph (1) or (2) of this subsection and to agreements to repurchase such obligations.
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(a-1) In addition to any other investments authorized under this Act, a municipality, park district, forest preserve district, conservation district, county, or other governmental unit may invest its public funds in interest bearing bonds of any county, township, city, village, incorporated town, municipal corporation, or school district, of the State of Illinois, of any other state, or of any political subdivision or agency of the State of Illinois or of any other state, whether the interest earned thereon is taxable or tax-exempt under federal law. The bonds shall be registered in the name of the municipality, park district, forest preserve district, conservation district, county, or other governmental unit, or held under a custodial agreement at a bank. The bonds shall be rated at the time of purchase within the 4 highest general classifications established by a rating service of nationally recognized expertise in rating bonds of states and their political subdivisions.
(b) Investments may be made only in banks which are insured by the Federal Deposit Insurance Corporation. Any public agency may invest any public funds in short term discount obligations of the Federal National Mortgage Association or in shares or other forms of securities legally issuable by savings banks or savings and loan associations incorporated under the laws of this State or any other state or under the laws of the United States. Investments may be made only in those savings banks or savings and loan associations the shares, or investment certificates of which are insured by the Federal Deposit Insurance Corporation. Any such securities may be purchased at the offering or market price thereof at the time of such purchase. All such securities so purchased shall mature or be redeemable on a date or dates prior to the time when, in the judgment of such governing authority, the public funds so invested will be required for expenditure by such public agency or its governing authority. The expressed judgment of any such governing authority as to the time when any public funds will be required for expenditure or be redeemable is final and conclusive. Any public agency may invest any public funds in dividend-bearing share accounts, share certificate accounts or class of share accounts of a credit union chartered under the laws of this State or the laws of the United States; provided, however, the principal office of any such credit union must be located within the State of Illinois. Investments may be made only in those credit unions the accounts of which are insured by applicable law.
(c) For purposes of this Section, the term "agencies of the United States of America" includes: (i) the federal land banks, federal intermediate credit banks, banks for cooperative, federal farm credit banks, or any other entity authorized to issue debt obligations under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) and Acts amendatory thereto; (ii) the federal home loan banks and the federal home loan mortgage corporation; and (iii) any other agency created by Act of Congress.
(d) Except for pecuniary interests permitted under subsection (f) of Section 3-14-4 of the Illinois Municipal Code or under Section 3.2 of the Public Officer Prohibited Practices Act, no person acting as treasurer or financial officer or who is employed in any similar capacity by or for a public agency may do any of the following:
(1) have any interest, directly or indirectly, in any
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| investments in which the agency is authorized to invest.
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(2) have any interest, directly or indirectly, in the
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| sellers, sponsors, or managers of those investments.
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(3) receive, in any manner, compensation of any kind
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| from any investments in which the agency is authorized to invest.
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(e) Any public agency may also invest any public funds in a Public Treasurers' Investment Pool created under Section 17 of the State Treasurer Act. Any public agency may also invest any public funds in a fund managed, operated, and administered by a bank, subsidiary of a bank, or subsidiary of a bank holding company or use the services of such an entity to hold and invest or advise regarding the investment of any public funds.
(f) To the extent a public agency has custody of funds not owned by it or another public agency and does not otherwise have authority to invest such funds, the public agency may invest such funds as if they were its own. Such funds must be released to the appropriate person at the earliest reasonable time, but in no case exceeding 31 days, after the private person becomes entitled to the receipt of them. All earnings accruing on any investments or deposits made pursuant to the provisions of this Act shall be credited to the public agency by or for which such investments or deposits were made, except as provided otherwise in Section 4.1 of the State Finance Act or the Local Governmental Tax Collection Act, and except where by specific statutory provisions such earnings are directed to be credited to and paid to a particular fund.
(g) A public agency may purchase or invest in repurchase agreements of government securities having the meaning set out in the Government Securities Act of 1986, as now or hereafter amended or succeeded, subject to the provisions of said Act and the regulations issued thereunder. The government securities, unless registered or inscribed in the name of the public agency, shall be purchased through banks or trust companies authorized to do business in the State of Illinois.
(h) Except for repurchase agreements of government securities which are subject to the Government Securities Act of 1986, as now or hereafter amended or succeeded, no public agency may purchase or invest in instruments which constitute repurchase agreements, and no financial institution may enter into such an agreement with or on behalf of any public agency unless the instrument and the transaction meet the following requirements:
(1) The securities, unless registered or inscribed in
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| the name of the public agency, are purchased through banks or trust companies authorized to do business in the State of Illinois.
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(2) An authorized public officer after ascertaining
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| which firm will give the most favorable rate of interest, directs the custodial bank to "purchase" specified securities from a designated institution. The "custodial bank" is the bank or trust company, or agency of government, which acts for the public agency in connection with repurchase agreements involving the investment of funds by the public agency. The State Treasurer may act as custodial bank for public agencies executing repurchase agreements. To the extent the Treasurer acts in this capacity, he is hereby authorized to pass through to such public agencies any charges assessed by the Federal Reserve Bank.
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(3) A custodial bank must be a member bank of the
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| Federal Reserve System or maintain accounts with member banks. All transfers of book-entry securities must be accomplished on a Reserve Bank's computer records through a member bank of the Federal Reserve System. These securities must be credited to the public agency on the records of the custodial bank and the transaction must be confirmed in writing to the public agency by the custodial bank.
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(4) Trading partners shall be limited to banks or
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| trust companies authorized to do business in the State of Illinois or to registered primary reporting dealers.
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(5) The security interest must be perfected.
(6) The public agency enters into a written master
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| repurchase agreement which outlines the basic responsibilities and liabilities of both buyer and seller.
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(7) Agreements shall be for periods of 330 days or
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(8) The authorized public officer of the public
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| agency informs the custodial bank in writing of the maturity details of the repurchase agreement.
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(9) The custodial bank must take delivery of and
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| maintain the securities in its custody for the account of the public agency and confirm the transaction in writing to the public agency. The Custodial Undertaking shall provide that the custodian takes possession of the securities exclusively for the public agency; that the securities are free of any claims against the trading partner; and any claims by the custodian are subordinate to the public agency's claims to rights to those securities.
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(10) The obligations purchased by a public agency may
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| only be sold or presented for redemption or payment by the fiscal agent bank or trust company holding the obligations upon the written instruction of the public agency or officer authorized to make such investments.
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(11) The custodial bank shall be liable to the public
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| agency for any monetary loss suffered by the public agency due to the failure of the custodial bank to take and maintain possession of such securities.
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(i) Notwithstanding the foregoing restrictions on investment in instruments constituting repurchase agreements the Illinois Housing Development Authority may invest in, and any financial institution with capital of at least $250,000,000 may act as custodian for, instruments that constitute repurchase agreements, provided that the Illinois Housing Development Authority, in making each such investment, complies with the safety and soundness guidelines for engaging in repurchase transactions applicable to federally insured banks, savings banks, savings and loan associations or other depository institutions as set forth in the Federal Financial Institutions Examination Council Policy Statement Regarding Repurchase Agreements and any regulations issued, or which may be issued by the supervisory federal authority pertaining thereto and any amendments thereto; provided further that the securities shall be either (i) direct general obligations of, or obligations the payment of the principal of and/or interest on which are unconditionally guaranteed by, the United States of America or (ii) any obligations of any agency, corporation or subsidiary thereof controlled or supervised by and acting as an instrumentality of the United States Government pursuant to authority granted by the Congress of the United States and provided further that the security interest must be perfected by either the Illinois Housing Development Authority, its custodian or its agent receiving possession of the securities either physically or transferred through a nationally recognized book entry system.
(j) In addition to all other investments authorized under this Section, a community college district may invest public funds in any mutual funds that invest primarily in corporate investment grade or global government short term bonds. Purchases of mutual funds that invest primarily in global government short term bonds shall be limited to funds with assets of at least $100 million and that are rated at the time of purchase as one of the 10 highest classifications established by a recognized rating service. The investments shall be subject to approval by the local community college board of trustees. Each community college board of trustees shall develop a policy regarding the percentage of the college's investment portfolio that can be invested in such funds.
(k) In addition to all other investments authorized under this Section, a public agency may adopt an ordinance or resolution to allow for investment of public funds in other instruments not specifically listed in this Section provided that those investments comply with (i) any other law that authorizes public agencies to invest funds and (ii) the investment policy adopted by the public agency under Section 2.5 of this Act.
Nothing in this Section shall be construed to authorize an intergovernmental risk management entity to accept the deposit of public funds except for risk management purposes.
(Source: P.A. 102-285, eff. 8-6-21; 103-880, eff. 1-1-25.)
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(30 ILCS 235/2.5)
Sec. 2.5. Investment policy.
(a) Investment of public funds by a public
agency shall be
governed by a written investment policy adopted by the
public
agency. The level of detail and complexity of the investment policy shall be
appropriate to the
nature of the funds, the purpose for the funds, and the amount of the public
funds within the
investment portfolio. The policy shall address safety of principal, liquidity
of funds, and return
on investment and shall require that the investment portfolio be structured in
such manner as to
provide sufficient liquidity to pay obligations as they come due. In addition,
the investment
policy shall include or address the following:
(1) a listing of authorized investments;
(2) a rule, such as the "prudent person rule", |
| establishing the standard of care that must be maintained by the persons investing the public funds;
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(3) investment guidelines that are appropriate to the
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| nature of the funds, the purpose for the funds, and the amount of the public funds within the investment portfolio;
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(4) a policy regarding diversification of the
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| investment portfolio that is appropriate to the nature of the funds, the purpose for the funds, and the amount of the public funds within the investment portfolio;
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(5) guidelines regarding collateral requirements, if
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| any, for the deposit of public funds in a financial institution made pursuant to this Act, and, if applicable, guidelines for contractual arrangements for the custody and safekeeping of that collateral;
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(6) a policy regarding the establishment of a system
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| of internal controls and written operational procedures designed to prevent losses of funds that might arise from fraud, employee error, misrepresentation by third parties, or imprudent actions by employees of the entity;
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(7) identification of the chief investment officer
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| who is responsible for establishing the internal controls and written procedures for the operation of the investment program;
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(8) performance measures that are appropriate to the
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| nature of the funds, the purpose for the funds, and the amount of the public funds within the investment portfolio;
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(9) a policy regarding appropriate periodic review of
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| the investment portfolio, its effectiveness in meeting the public agency's needs for safety, liquidity, rate of return, and diversification, and its general performance;
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(10) a policy establishing at least quarterly written
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| reports of investment activities by the public agency's chief financial officer for submission to the governing body and chief executive officer of the public agency. The reports shall include information regarding securities in the portfolio by class or type, book value, income earned, and market value as of the report date;
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(11) a policy regarding the selection of investment
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| advisors, money managers, and financial institutions; and
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(12) a policy regarding ethics and conflicts of
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(a-5) The investment policy shall include a statement that material, relevant, and decision-useful sustainability factors have been or are regularly considered by the agency, within the bounds of financial and fiduciary prudence, in evaluating investment decisions. Such factors include, but are not limited to: (i) corporate governance and leadership factors; (ii) environmental factors; (iii) social capital factors; (iv) human capital factors; and (v) business model and innovation factors, as provided under the Illinois Sustainable Investing Act.
(b) For purposes of the State or a county, the investment policy shall be
adopted by the elected treasurer and presented to the chief executive officer
and the governing body. For purposes of any other public agency, the
investment policy shall be adopted by the governing body of the public agency.
(c) The investment policy shall be made available to the public at the main
administrative office of the public agency.
(d) The written investment policy required under this Section shall be
developed and implemented by
January 1, 2000.
(Source: P.A. 101-473, eff. 1-1-20.)
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(30 ILCS 235/6) (from Ch. 85, par. 906)
Sec. 6. Report of financial institutions.
(a) No bank shall receive any public funds unless it has furnished
the corporate authorities of a public agency submitting a deposit with copies
of the last two sworn statements of resources and liabilities which the
bank is required to furnish to the Commissioner of Banks and Real Estate or to
the Comptroller of the Currency. Each bank
designated as a depository for public funds shall, while acting as such
depository, furnish the corporate authorities of a public agency with a copy of
all statements of resources and liabilities which it is required to furnish to
the Commissioner of Banks and Real Estate or to the
Comptroller of the Currency; provided, that if such funds or moneys are
deposited in a bank, the amount of all such deposits not collateralized or
insured by an agency of the federal government shall not exceed 75% of the
capital stock and surplus of such bank, and the corporate authorities of a
public agency submitting a deposit shall not be discharged from responsibility
for any funds or moneys deposited in any bank in excess of such limitation.
(b) No savings bank or savings and loan association shall receive
public funds unless it has furnished the corporate authorities of a public
agency submitting a deposit with copies of the last 2 sworn statements of
resources and liabilities which the savings bank or savings and loan
association is required to furnish to the Commissioner of Banks and Real
Estate or the Federal Deposit Insurance
Corporation. Each savings bank or savings and loan association designated as a
depository for public funds shall, while acting as such depository, furnish the
corporate authorities of a public agency with a copy of all statements of
resources and liabilities which it is required to furnish to the Commissioner
of Banks and Real Estate or the Federal
Deposit Insurance Corporation; provided, that if such
funds or moneys are deposited in a savings bank or savings and loan
association, the amount of all such deposits not collateralized or insured
by an agency of the federal government shall not exceed 75% of the net
worth of such savings bank or savings and loan association as defined by the
Federal Deposit Insurance Corporation, and the corporate authorities of a
public agency submitting a deposit shall not be discharged from responsibility
for any funds or moneys deposited in any savings bank or savings and loan
association in excess of such limitation.
(c) No credit union shall receive public funds unless it has furnished
the corporate authorities of a public agency submitting a share deposit
with copies of the last two reports of examination prepared by or submitted
to the Illinois Department of Financial Institutions or the National Credit
Union Administration. Each credit union designated as a depository for
public funds shall, while acting as such depository, furnish the corporate
authorities of a public agency with a copy of all reports of examination
prepared by or furnished to the Illinois Department of Financial Institutions
or the National Credit Union Administration; provided that if such funds
or moneys are invested in a credit union account, the amount of all such
investments not collateralized or insured by an agency of the federal
government or other approved share insurer shall not exceed 50% of the
unimpaired capital and surplus of such credit union, which shall include
shares, reserves and undivided earnings and the corporate authorities of a
public agency making an investment shall not be discharged from
responsibility for any funds or moneys invested in a credit union in excess of
such limitation.
(d) Whenever a public agency deposits any public funds in a financial
institution, the public agency may enter into an agreement with the financial
institution requiring any funds not insured by the Federal Deposit Insurance
Corporation or the National Credit Union Administration or other approved share
insurer to be collateralized by
any of the following classes of securities, provided there
has been no default in the payment of principal or interest
thereon:
(1) Bonds, notes, or other securities constituting |
| direct and general obligations of the United States, the bonds, notes, or other securities constituting the direct and general obligation of any agency or instrumentality of the United States, the interest and principal of which is unconditionally guaranteed by the United States, and bonds, notes, or other securities or evidence of indebtedness constituting the obligation of a U.S. agency or instrumentality.
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(2) Direct and general obligation bonds of the State
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| of Illinois or of any other state of the United States.
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(3) Revenue bonds of this State or any authority,
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| board, commission, or similar agency thereof.
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(4) Direct and general obligation bonds of any city,
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| town, county, school district, or other taxing body of any state, the debt service of which is payable from general ad valorem taxes.
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(5) Revenue bonds of any city, town, county, or
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| school district of the State of Illinois.
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(6) Obligations issued, assumed, or guaranteed by the
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| International Finance Corporation, the principal of which is not amortized during the life of the obligation, but no such obligation shall be accepted at more than 90% of its market value.
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(7) Illinois Affordable Housing Program Trust Fund
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| Bonds or Notes as defined in and issued pursuant to the Illinois Housing Development Act.
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(8) In an amount equal to at least market value of
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| that amount of funds deposited exceeding the insurance limitation provided by the Federal Deposit Insurance Corporation or the National Credit Union Administration or other approved share insurer: (i) securities, (ii) mortgages, (iii) letters of credit issued by a Federal Home Loan Bank, or (iv) loans covered by a State Guarantee under the Illinois Farm Development Act, if that guarantee has been assumed by the Illinois Finance Authority under Section 845-75 of the Illinois Finance Authority Act, and loans covered by a State Guarantee under Article 830 of the Illinois Finance Authority Act.
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(9) Certificates of deposit or share certificates
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| issued to the depository institution pledging them as security. The public agency may require security in the amount of 125% of the value of the public agency deposit. Such certificate of deposit or share certificate shall:
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(i) be fully insured by the Federal Deposit
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| Insurance Corporation, the Federal Savings and Loan Insurance Corporation, or the National Credit Union Share Insurance Fund or issued by a depository institution which is rated within the 3 highest classifications established by at least one of the 2 standard rating services;
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(ii) be issued by a financial institution having
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| assets of $15,000,000 or more; and
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(iii) be issued by either a savings and loan
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| association having a capital to asset ratio of at least 2%, by a bank having a capital to asset ratio of at least 6% or by a credit union having a capital to asset ratio of at least 4%.
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The depository institution shall effect the assignment of the
certificate of deposit or share certificate to the public agency
and shall agree that, in the event the issuer of the certificate
fails to maintain the capital to asset ratio required by this
Section, such certificate of deposit or share certificate shall
be replaced by additional suitable security.
(e) The public agency may accept a system established by the State
Treasurer to aggregate permissible securities received as collateral
from financial institutions in a collateral pool to secure public
deposits of the institutions that have pledged securities to the pool.
(f) The public agency may at any time declare any particular
security ineligible to qualify as collateral when, in the public
agency's judgment, it is deemed desirable to do so.
(g) Notwithstanding any other provision of this Section, as
security a public agency may, at its discretion, accept a bond,
executed by a company authorized to transact the kinds of business
described in clause (g) of Section 4 of the Illinois Insurance Code, in
an amount not less than the amount of the deposits required by
this Section to be secured, payable to the public agency for the
benefit of the People of the unit of government, in a form that is
acceptable to the public agency.
(h) Paragraphs (a), (b), (c), (d), (e), (f), and
(g) of this Section
do not apply to the University of Illinois, Southern Illinois University,
Chicago State University, Eastern Illinois University, Governors State
University, Illinois State University, Northeastern Illinois University,
Northern Illinois University, Western Illinois University, the Cooperative
Computer Center
and public community colleges.
(Source: P.A. 95-331, eff. 8-21-07.)
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