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Public Act 100-0752 | ||||
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AN ACT concerning finance.
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Be it enacted by the People of the State of Illinois,
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represented in the General Assembly:
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Section 5. The Public Funds Investment Act is amended by | ||||
changing Section 2 as follows:
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(30 ILCS 235/2) (from Ch. 85, par. 902)
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Sec. 2. Authorized investments.
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(a) Any public agency may invest any public funds as | ||||
follows:
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(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 | ||||
obligations of the
United States of America, its agencies, | ||||
and its instrumentalities;
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(3) in interest-bearing savings accounts, | ||||
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
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which mature not later than 3 years 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; or
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(5) in money market mutual funds registered under the | ||
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
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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.
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(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
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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
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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
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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.
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(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.
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(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:
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(1) have any interest, directly or indirectly, in any | ||
investments in
which the agency is authorized to invest.
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(2) have any interest, directly or indirectly, in the | ||
sellers,
sponsors, or managers of those investments.
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(3) receive, in any manner, compensation of any kind |
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.
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(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
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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.
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(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.
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(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:
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(1) The securities, unless registered or inscribed in | ||
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 | ||
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
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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 | ||
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 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.
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(6) The public agency enters into a written master | ||
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 | ||
less.
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(8) The authorized public officer of the public 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 | ||
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
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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 | ||
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 | ||
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
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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
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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
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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.
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(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.
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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
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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.
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Nothing in this Section shall be construed to authorize an
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intergovernmental risk management entity to accept the deposit | ||
of public funds
except for risk management purposes.
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(Source: P.A. 97-129, eff. 7-14-11; 98-297, eff. 1-1-14; | ||
98-390, eff. 8-16-13; 98-756, eff. 7-16-14.)
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Section 99. Effective date. This Act takes effect upon | ||
becoming law.
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