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Public Act 103-0880 | ||||
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AN ACT concerning finance. | ||||
Be it enacted by the People of the State of Illinois, | ||||
represented in the General Assembly: | ||||
Section 5. The Public Funds Investment Act is amended by | ||||
changing Section 2 as follows: | ||||
(30 ILCS 235/2) (from Ch. 85, par. 902) | ||||
Sec. 2. Authorized investments. | ||||
(a) Any public agency may invest any public funds as | ||||
follows: | ||||
(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; | ||||
(2) in bonds, notes, debentures, or other similar | ||||
obligations of the United States of America, its agencies, | ||||
and its instrumentalities; | ||||
(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; | ||||
(4) in short-term obligations of corporations |
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 | ||
which mature not later than 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 under | ||
this paragraph (4); | ||
(4.5) in obligations of corporations 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 which mature more than 270 | ||
days but less than 10 3 years 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 | ||
obligations of corporations under this paragraph (4.5); or | ||
(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 | ||
subsection and to agreements to repurchase such | ||
obligations. |
(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. | ||
(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 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 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 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. | ||
(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. | ||
(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: | ||
(1) have any interest, directly or indirectly, in any | ||
investments in which the agency is authorized to invest. | ||
(2) have any interest, directly or indirectly, in the | ||
sellers, sponsors, or managers of those investments. | ||
(3) receive, in any manner, compensation of any kind | ||
from any investments in which the agency is authorized to | ||
invest. | ||
(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. | ||
(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 | ||
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. | ||
(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. | ||
(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: | ||
(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. | ||
(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 | ||
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. | ||
(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. | ||
(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. | ||
(5) The security interest must be perfected. | ||
(6) The public agency enters into a written master | ||
repurchase agreement which outlines the basic | ||
responsibilities and liabilities of both buyer and seller. | ||
(7) Agreements shall be for periods of 330 days or | ||
less. | ||
(8) The authorized public officer of the public agency | ||
informs the custodial bank in writing of the maturity | ||
details of the repurchase agreement. | ||
(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 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. | ||
(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. |
(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. | ||
(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 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 | ||
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 | ||
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. | ||
(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. | ||
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 | ||
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. | ||
(k) In addition to all other investments authorized under | ||
this Section, a public agency may adopt an ordinance or | ||
resolution to allow for investment of public funds in other | ||
instruments not specifically listed in this Section provided | ||
that those investments comply with (i) any other law that | ||
authorizes public agencies to invest funds and (ii) the | ||
investment policy adopted by the public agency under Section |
2.5 of this Act. | ||
Nothing in this Section shall be construed to authorize an | ||
intergovernmental risk management entity to accept the deposit | ||
of public funds except for risk management purposes. | ||
(Source: P.A. 102-285, eff. 8-6-21.) |