State of Illinois
90th General Assembly
Legislation

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[ Introduced ][ Engrossed ][ Senate Amendment 001 ]

90_SB1555enr

      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
SB1555 Enrolled                                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
SB1555 Enrolled             -2-                LRB9011612JMmb
 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
SB1555 Enrolled             -3-                LRB9011612JMmb
 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.

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