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90_HB2630enr
30 ILCS 235/2.5 new
Amends the Public Funds Investment Act. Requires public
agencies to develop and implement an investment policy for
public funds within their custody or control. Includes areas
the policy must cover to address investment safety,
liquidity, and rate of return. Requires that policies be in
effect by January 1, 2000. Effective immediately.
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1 AN ACT concerning the safety and soundness of public
2 investments.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Public Funds Investment Act is amended by
6 adding Section 2.5 as follows:
7 (30 ILCS 235/2.5 new)
8 Sec. 2.5. Investment policy.
9 (a) Investment of public funds by a public agency shall
10 be governed by a written investment policy adopted by the
11 public agency. The level of detail and complexity of the
12 investment policy shall be appropriate to the nature of the
13 funds, the purpose for the funds, and the amount of the
14 public funds within the investment portfolio. The policy
15 shall address safety of principal, liquidity of funds, and
16 return on investment and shall require that the investment
17 portfolio be structured in such manner as to provide
18 sufficient liquidity to pay obligations as they come due. In
19 addition, the investment policy shall include or address the
20 following:
21 (1) a listing of authorized investments;
22 (2) a rule, such as the "prudent person rule",
23 establishing the standard of care that must be maintained
24 by the persons investing the public funds;
25 (3) investment guidelines that are appropriate to
26 the nature of the funds, the purpose for the funds, and
27 the amount of the public funds within the investment
28 portfolio;
29 (4) a policy regarding diversification of the
30 investment portfolio that is appropriate to the nature of
31 the funds, the purpose for the funds, and the amount of
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1 the public funds within the investment portfolio;
2 (5) guidelines regarding collateral requirements,
3 if any, for the deposit of public funds in a financial
4 institution made pursuant to this Act, and, if
5 applicable, guidelines for contractual arrangements for
6 the custody and safekeeping of that collateral;
7 (6) a policy regarding the establishment of a
8 system of internal controls and written operational
9 procedures designed to prevent losses of funds that might
10 arise from fraud, employee error, misrepresentation by
11 third parties, or imprudent actions by employees of the
12 entity;
13 (7) identification of the chief investment officer
14 who is responsible for establishing the internal controls
15 and written procedures for the operation of the
16 investment program;
17 (8) performance measures that are appropriate to
18 the nature of the funds, the purpose for the funds, and
19 the amount of the public funds within the investment
20 portfolio;
21 (9) a policy regarding appropriate periodic review
22 of the investment portfolio, its effectiveness in meeting
23 the public agency's needs for safety, liquidity, rate of
24 return, and diversification, and its general performance;
25 (10) a policy establishing at least quarterly
26 written reports of investment activities by the public
27 agency's chief financial officer for submission to the
28 governing body and chief executive officer of the public
29 agency. The reports shall include information regarding
30 securities in the portfolio by class or type, book value,
31 income earned, and market value as of the report date;
32 (11) a policy regarding the selection of investment
33 advisors, money managers, and financial institutions; and
34 (12) a policy regarding ethics and conflicts of
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1 interest.
2 (b) For purposes of the State or a county, the
3 investment policy shall be adopted by the elected treasurer
4 and presented to the chief executive officer and the
5 governing body. For purposes of any other public agency, the
6 investment policy shall be adopted by the governing body of
7 the public agency.
8 (c) The investment policy shall be made available to the
9 public at the main administrative office of the public
10 agency.
11 (d) The written investment policy required under this
12 Section shall be developed and implemented by January 1,
13 2000.
14 Section 99. Effective date. This Act takes effect upon
15 becoming law.