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92_HB3336eng HB3336 Engrossed LRB9207099JMmb 1 AN ACT concerning public moneys. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Deposit of State Moneys Act is amended by 5 changing Sections 11 and 11.1 as follows: 6 (15 ILCS 520/11) (from Ch. 130, par. 30) 7 Sec. 11. Protection of public deposits; eligible 8 collateral. 9 (a) For deposits not insured by an agency of the federal 10 government, the State Treasurer, in his discretion, may 11 accept as collateral any of the following classes of 12 securities, provided there has been no default in the payment 13 of principal or interest thereon: 14 (1) Bonds, notes, or other securities constituting 15 direct and general obligations of the United States, the 16 bonds, notes, or other securities constituting the direct 17 and general obligation of any agency or instrumentality 18 of the United States, the interest and principal of which 19 is unconditionally guaranteed by the United States, and 20 bonds, notes, or other securities or evidence of 21 indebtedness constituting the obligation of a U.S. agency 22 or instrumentality. 23 (2) Direct and general obligation bonds of the 24 State of Illinois or of any other state of the United 25 States. 26 (3) Revenue bonds of this State or any authority, 27 board, commission, or similar agency thereof. 28 (4) Direct and general obligation bonds of any 29 city, town, county, school district, or other taxing body 30 of any state, the debt service of which is payable from 31 general ad valorem taxes. HB3336 Engrossed -2- LRB9207099JMmb 1 (5) Revenue bonds of any city, town, county, or 2 school district of the State of Illinois. 3 (6) Obligations issued, assumed, or guaranteed by 4 the International Finance Corporation, the principal of 5 which is not amortized during the life of the obligation, 6 but no such obligation shall be accepted at more than 90% 7 of its market value. 8 (7) Illinois Affordable Housing Program Trust Fund 9 Bonds or Notes as defined in and issued pursuant to the 10 Illinois Housing Development Act. 11 (8) Any collateral acceptable to the Federal Home 12 Loan Bank of Chicago or the Federal Home Loan Bank of Des 13 Moines, Iowa. 14 (9) Any securities or other eligible collateral 15 allowed under Section 1 of the Public Funds Deposit Act 16 (30 ILCS 225/1) or subsection (d) of Section 6 of the 17 Public Funds Investment Act (30 ILCS 235/6(d)). 18 (b) The State Treasurer may establish a system to 19 aggregate permissible securities received as collateral from 20 financial institutions in a collateral pool to secure State 21 deposits of the institutions that have pledged securities to 22 the pool. 23 (c) The Treasurer may at any time declare any particular 24 security ineligible to qualify as collateral when, in the 25 Treasurer's judgment, it is deemed desirable to do so. 26 (d) Notwithstanding any other provision of this Section, 27 as security the State Treasurer may, in his discretion, 28 accept a bond, executed by a company authorized to transact 29 the kinds of business described in clause (g) of Section 4 of 30 the Illinois Insurance Code, in an amount not less than the 31 amount of the deposits required by this Section to be 32 secured, payable to the State Treasurer for the benefit of 33 the People of the State of Illinois, in a form that is 34 acceptable to the State Treasurer. HB3336 Engrossed -3- LRB9207099JMmb 1 (e) Notwithstanding any other provision of this Section, 2 as security the State Treasurer may, in his or her 3 discretion, accept a guaranty arrangement established among 4 participating financial institutions. 5 (Source: P.A. 87-510; 87-575; 87-895; 88-93.) 6 (15 ILCS 520/11.1) (from Ch. 130, par. 30.1) 7 Sec. 11.1. The State Treasurer may, in his discretion, 8 accept as security for State deposits insured certificates of 9 deposit or share certificates issued to the depository 10 institution pledging them as security and may require 11 security in the amount of 125% of the value of the State 12 deposit. Such certificate of deposit or share certificate 13 shall: 14 (1) be fully insured by the Federal Deposit Insurance 15 Corporation, the Federal Savings and Loan Insurance 16 Corporation or the National Credit Union Share Insurance Fund 17 or issued by a depository institution which is rated within 18 the 3 highest classifications established by at least one of 19 the 2 standard rating services; 20 (2) be issued by a financial institution having assets 21 of $15,000,000$30,000,000or more; and 22 (3) be issued by either a savings and loan association 23 having a capital to asset ratio of at least 2%, by a bank 24 having a capital to asset ratio of at least 6% or by a credit 25 union having a capital to asset ratio of at least 4%. 26 The depository institution shall effect the assignment of 27 the certificate of deposit or share certificate to the State 28 Treasurer and shall agree, that in the event the issuer of 29 the certificate fails to maintain the capital to asset ratio 30 required by this Section, such certificate of deposit or 31 share certificate shall be replaced by additional suitable 32 security. 33 (Source: P.A. 85-803.) HB3336 Engrossed -4- LRB9207099JMmb 1 Section 10. The Public Funds Deposit Act is amended by 2 changing Section 1 as follows: 3 (30 ILCS 225/1) (from Ch. 102, par. 34) 4 Sec. 1. Deposits. Any treasurer or other custodian of 5 public funds may deposit such funds in a savings and loan 6 association, savings bank, or State or national bank in this 7 State. When such deposits become collected funds and are not 8 needed for immediate disbursement, they shall be invested 9 within 2 working days at prevailing rates or better. The 10 treasurer or other custodian of public funds may require such 11 bank, savings bank, or savings and loan association to 12 deposit with him or her securities guaranteed by agencies and 13 instrumentalities of the federal government equal in market 14 value to the amount by which the funds deposited exceed the 15 federally insured amount. Any treasurer or other custodian of 16 public funds may accept as security for public funds 17 deposited in such bank, savings bank, or savings and loan 18 association (i) any collateral acceptable to the Federal Home 19 Loan Bank of Chicago or the Federal Home Loan Bank of Des 20 Moines, Iowa, or (ii) any securities or other eligible 21 collateral authorized by Section 11 of the Deposit of State 22 Moneys Act (15 ILCS 520/11) or subsection (d) of Section 6 of 23 the Public Funds Investment Act (30 ILCS 235/6(d)). Such 24 treasurer or other custodian is authorized to enter into an 25 agreement with any such bank, savings bank, or savings and 26 loan association, with any federally insured financial 27 institution or trust company, or with any agency of the U.S. 28 government relating to the deposit of such securities. Any 29 such treasurer or other custodian shall be discharged from 30 responsibility for any funds for which securities are so 31 deposited with him or her, and the funds for which securities 32 are so deposited shall not be subject to any otherwise 33 applicable limitation as to amount. HB3336 Engrossed -5- LRB9207099JMmb 1 No bank, savings bank, or savings and loan association 2 shall receive public funds as permitted by this Section, 3 unless it has complied with the requirements established 4 pursuant to Section 6 of the Public Funds Investment Act. 5 (Source: P.A. 91-211, eff. 7-20-99.) 6 Section 15. The State Officers and Employees Money 7 Disposition Act is amended by changing Section 2c as follows: 8 (30 ILCS 230/2c) (from Ch. 127, par. 173a) 9 Sec. 2c. Every such officer, board, commission, 10 commissioner, department, institution, arm or agency is 11 authorized to demand and receive a bond and securities in 12 amount and kind satisfactory to him from any bank or savings 13 and loan association in which moneys held by such officer, 14 board, commission, commissioner, department, institution, arm 15 or agency for or on behalf of the State of Illinois, may be 16 on deposit, such securities to be held by the officer, board, 17 commission, commissioner, department, institution, arm or 18 agency for the period that such moneys are so on deposit and 19 then returned together with interest, dividends and other 20 accruals to the bank or savings and loan association. The 21 bond or undertaking and such securities shall be conditioned 22 for the return of the moneys deposited in conformity with the 23 terms of the deposit. 24 Whenever funds deposited with a bank or savings and loan 25 association exceed the amount of federal deposit insurance 26 coverage, a bond,orpledged securities, or other eligible 27 collateral shall be obtained. Only the types of securities or 28 other collateral which the State Treasurer may, in his or her 29 discretion, accept for amounts not insured by the Federal 30 Deposit Insurance Corporation or the Federal Savings and Loan 31 Insurance Corporation under Section 11 of "An Act in relation 32 to State moneys", approved June 28, 1919, as amended, may be HB3336 Engrossed -6- LRB9207099JMmb 1 accepted as pledged securities. The market value of the bond 2 or pledged securities shall at all times be equal to or 3 greater than the uninsured portion of the deposit unless the 4 funds deposited are collateralized pursuant to a system 5 established by the State Treasurer to aggregate permissible 6 securities received as collateral from financial institutions 7 in a collateral pool to secure State deposits of the 8 institutions that have pledged securities to the pool. 9 All securities deposited by a bank or savings and loan 10 association under the provisions of this Section shall remain 11 the property of the depositary and may be stamped by the 12 depositary so as to indicate that such securities are 13 deposited as collateral. Should the bank or savings and loan 14 association fail or refuse to pay over the moneys, or any 15 part thereof, deposited with it, the officer, board, 16 commission, commissioner, department, institution, arm or 17 agency may sell such securities upon giving 5 days notice to 18 the depositary of his intention to so sell such securities. 19 Such sale shall transfer absolute ownership of the securities 20 so sold to the vendee thereof. The surplus, if any, over the 21 amount due to the State and the expenses of the sale shall be 22 paid to the bank or savings and loan association. Actions may 23 be brought in the name of the People of the State of Illinois 24 to enforce the claims of the State with respect to any 25 securities deposited by a bank or savings and loan 26 association. 27 No bank or savings and loan association shall receive 28 public funds as permitted by this Section, unless it has 29 complied with the requirements established pursuant to 30 Section 6 of "An Act relating to certain investments of 31 public funds by public agencies", approved July 23, 1943, as 32 now or hereafter amended. 33 (Source: P.A. 85-257.) HB3336 Engrossed -7- LRB9207099JMmb 1 Section 20. The Public Funds Investment Act is amended 2 by changing Section 6 as follows: 3 (30 ILCS 235/6) (from Ch. 85, par. 906) 4 Sec. 6. Report of financial institutions. 5 (a) No bank shall receive any public funds unless it has 6 furnished the corporate authorities of a public agency 7 submitting a deposit with copies of the last two sworn 8 statements of resources and liabilities which the bank is 9 required to furnish to the Commissioner of Banks and Real 10 Estate or to the Comptroller of the Currency. Each bank 11 designated as a depository for public funds shall, while 12 acting as such depository, furnish the corporate authorities 13 of a public agency with a copy of all statements of resources 14 and liabilities which it is required to furnish to the 15 Commissioner of Banks and Real Estate or to the Comptroller 16 of the Currency; provided, that if such funds or moneys are 17 deposited in a bank, the amount of all such deposits not 18 collateralized or insured by an agency of the federal 19 government shall not exceed 75% of the capital stock and 20 surplus of such bank, and the corporate authorities of a 21 public agency submitting a deposit shall not be discharged 22 from responsibility for any funds or moneys deposited in any 23 bank in excess of such limitation. 24 (b) No savings bank or savings and loan association 25 shall receive public funds unless it has furnished the 26 corporate authorities of a public agency submitting a deposit 27 with copies of the last 2 sworn statements of resources and 28 liabilities which the savings bank or savings and loan 29 association is required to furnish to the Commissioner of 30 Banks and Real Estate or the Federal Deposit Insurance 31 Corporation. Each savings bank or savings and loan 32 association designated as a depository for public funds 33 shall, while acting as such depository, furnish the corporate HB3336 Engrossed -8- LRB9207099JMmb 1 authorities of a public agency with a copy of all statements 2 of resources and liabilities which it is required to furnish 3 to the Commissioner of Banks and Real Estate or the Federal 4 Deposit Insurance Corporation; provided, that if such funds 5 or moneys are deposited in a savings bank or savings and loan 6 association, the amount of all such deposits not 7 collateralized or insured by an agency of the federal 8 government shall not exceed 75% of the net worth of such 9 savings bank or savings and loan association as defined by 10 the Federal Deposit Insurance Corporation, and the corporate 11 authorities of a public agency submitting a deposit shall not 12 be discharged from responsibility for any funds or moneys 13 deposited in any savings bank or savings and loan association 14 in excess of such limitation. 15 (c) No credit union shall receive public funds unless it 16 has furnished the corporate authorities of a public agency 17 submitting a share deposit with copies of the last two 18 reports of examination prepared by or submitted to the 19 Illinois Department of Financial Institutions or the National 20 Credit Union Administration. Each credit union designated as 21 a depository for public funds shall, while acting as such 22 depository, furnish the corporate authorities of a public 23 agency with a copy of all reports of examination prepared by 24 or furnished to the Illinois Department of Financial 25 Institutions or the National Credit Union Administration; 26 provided that if such funds or moneys are invested in a 27 credit union account, the amount of all such investments not 28 collateralized or insured by an agency of the federal 29 government or other approved share insurer shall not exceed 30 50% of the unimpaired capital and surplus of such credit 31 union, which shall include shares, reserves and undivided 32 earnings and the corporate authorities of a public agency 33 making an investment shall not be discharged from 34 responsibility for any funds or moneys invested in a credit HB3336 Engrossed -9- LRB9207099JMmb 1 union in excess of such limitation. 2 (d) Whenever a public agency deposits any public funds 3 in a financial institution, the public agency may enter into 4 an agreement with the financial institution requiring any 5 funds not insured by the Federal Deposit Insurance 6 Corporation or the National Credit Union Administration or 7 other approved share insurer to be collateralized by 8 securities, mortgages, letters of credit issued by a Federal 9 Home Loan Bank, a collateral pool established in accordance 10 with the Deposit of State Moneys Act (15 ILCS 520/), any 11 collateral acceptable to the Federal Home Loan Bank of 12 Chicago or the Federal Home Loan Bank of Des Moines, Iowa, or 13 loans covered by a State Guaranty under the Illinois Farm 14 Development Act in an amount equal to at least market value 15 of that amount of funds deposited exceeding the insurance 16 limitation provided by the Federal Deposit Insurance 17 Corporation or the National Credit Union Administration or 18 other approved share insurer. 19 Notwithstanding any other provision of this Section, as 20 security the State Treasurer may, in his or her discretion, 21 accept a guaranty arrangement established among participating 22 financial institutions. 23 Notwithstanding any other provision of this Section, a 24 public agency may enter into an agreement with the financial 25 institution requiring any funds not insured by the Federal 26 Deposit Insurance Corporation, the National Credit Union 27 Administration, or other approved share insurer to be 28 collateralized by a bond, executed by a company authorized to 29 transact the kinds of business described in subsection (g) of 30 Section 4 of the Illinois Insurance Code (215 ILCS 5/4(g)), 31 in an amount not less than the amount of the deposits 32 required by this Section to be secured, payable to the public 33 agency for the benefit of the public agency, in a form that 34 is acceptable to the public agency. HB3336 Engrossed -10- LRB9207099JMmb 1 (e) Paragraphs (a), (b), (c), and (d) of this Section do 2 not apply to the University of Illinois, Southern Illinois 3 University, Chicago State University, Eastern Illinois 4 University, Governors State University, Illinois State 5 University, Northeastern Illinois University, Northern 6 Illinois University, Western Illinois University, the 7 Cooperative Computer Center and public community colleges. 8 (Source: P.A. 91-324, eff. 1-1-00; 91-773, eff. 6-9-00.) 9 Section 99. Effective date. This Act takes effect upon 10 becoming law.