State of Illinois
90th General Assembly
Legislation

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[ Engrossed ][ Enrolled ][ Senate Amendment 001 ]

90_SB1555

      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.
                                                     LRB9011612JMmb
                                               LRB9011612JMmb
 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
                            -2-                LRB9011612JMmb
 1        the public funds within the investment portfolio;
 2             (5)  a  policy  regarding   appropriate   collateral
 3        requirements and appropriate contractual arrangements for
 4        the custody and safekeeping of portfolio assets;
 5             (6)  a  policy  regarding  the  establishment  of  a
 6        system  of  internal  controls  and  written  operational
 7        procedures designed to prevent losses of funds that might
 8        arise  from  fraud,  employee error, misrepresentation by
 9        third parties, or imprudent actions by employees  of  the
10        entity;
11             (7)  identification  of the chief investment officer
12        who is responsible for establishing the internal controls
13        and  written  procedures  for  the   operation   of   the
14        investment program;
15             (8)  performance  measures  that  are appropriate to
16        the nature of the funds, the purpose for the  funds,  and
17        the  amount  of  the  public  funds within the investment
18        portfolio;
19             (9)  a policy regarding appropriate periodic  review
20        of the investment portfolio, its effectiveness in meeting
21        the  public agency's needs for safety, liquidity, rate of
22        return, and diversification, and its general performance;
23             (10)  a  policy  establishing  at  least   quarterly
24        written  reports  of  investment activities by the public
25        agency's chief financial officer for  submission  to  the
26        governing  body and chief executive officer of the public
27        agency.  The reports shall include information  regarding
28        securities in the portfolio by class or type, book value,
29        income earned, and market value as of the report date;
30             (11)  a policy regarding the selection of investment
31        advisors, money managers, and financial institutions; and
32             (12)  a  policy  regarding  ethics  and conflicts of
33        interest.
34        (b)  For  purposes  of  the  State  or  a   county,   the
                            -3-                LRB9011612JMmb
 1    investment  policy  shall be adopted by the elected treasurer
 2    and  presented  to  the  chief  executive  officer  and   the
 3    governing body.  For purposes of any other public agency, the
 4    investment  policy  shall be adopted by the governing body of
 5    the public agency.
 6        (c)  The investment policy shall be made available to the
 7    public at  the  main  administrative  office  of  the  public
 8    agency.
 9        (d)  The  written  investment  policy required under this
10    Section shall be developed  and  implemented  by  January  1,
11    2000.
12        Section  99.  Effective date.  This Act takes effect upon
13    becoming law.

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