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| Public Act 098-0297 | ||||
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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 Sections 1 and 2 as follows:
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(30 ILCS 235/1) (from Ch. 85, par. 901)
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Sec. 1.
The words "public funds", as used in this Act, mean | ||||
current
operating funds, special funds, interest and sinking | ||||
funds, and funds of
any kind or character belonging to or in | ||||
the custody of any public agency.
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The words "public agency", as used in this Act, mean the | ||||
State of
Illinois, the various counties, townships, cities, | ||||
towns, villages, school
districts, educational service | ||||
regions, special road districts, public
water supply | ||||
districts, fire protection districts, drainage districts, | ||||
levee
districts, sewer districts, housing authorities, the | ||||
Illinois Bank Examiners'
Education Foundation, the Chicago | ||||
Park District, and all other political
corporations or | ||||
subdivisions of the State of Illinois, now or hereafter
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created, whether herein specifically mentioned or not.
This Act | ||||
does not apply to the Illinois Prepaid Tuition Trust Fund,
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private funds collected by the Illinois Conservation | ||||
Foundation, or
pension
funds or retirement systems established
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under the Illinois Pension Code, except as otherwise provided | ||
in that Code.
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The words "governmental unit", as used in this Act, have | ||
the same meaning as in the Local Government Debt Reform Act. | ||
(Source: P.A. 91-669, eff. 1-1-00; 92-797, eff. 8-15-02.)
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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 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, or a 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, or 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. 96-741, eff. 8-25-09; 97-129, eff. 7-14-11.)
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Section 10. The Illinois Municipal Code is amended by | ||
changing Section 3.1-35-50 as follows:
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(65 ILCS 5/3.1-35-50) (from Ch. 24, par. 3.1-35-50)
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Sec. 3.1-35-50. Treasurer; deposit of funds.
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(a) The municipal treasurer may be required to keep all | ||
funds and
money in the treasurer's custody belonging to the | ||
municipality in places of
deposit designated by ordinance. When | ||
requested by the
municipal treasurer, the corporate | ||
authorities shall designate one or
more banks or savings and | ||
loan associations in which may be kept the funds
and money of | ||
the municipality in the custody of the treasurer. When a
bank | ||
or savings and loan association has been designated as a | ||
depository,
it shall continue as a depository until 10 days | ||
have elapsed after a new
depository
is designated and has | ||
qualified by furnishing the statements of resources
and | ||
liabilities as required by this Section. When a new depository | ||
is
designated, the corporate authorities shall notify the | ||
sureties of the
municipal treasurer of that fact in writing at | ||
least 5 days before the
transfer of funds. The treasurer shall | ||
be discharged from responsibility
for all funds or money that | ||
the treasurer deposits in a designated bank or
savings and loan | ||
association while the funds and money are so deposited.
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(b) The municipal treasurer may require any bank or savings | ||
and loan
association to deposit with the treasurer securities | ||
or mortgages that
have a market value at least equal to the | ||
amount of the funds or moneys of the
municipality deposited | ||
with the bank or savings and loan association that
exceeds the | ||
insurance limitation provided by the Federal Deposit Insurance
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Corporation or the Federal Savings and Loan Insurance | ||
Corporation.
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(c) The municipal treasurer may enter into agreements of | ||
any
definite or indefinite term regarding the deposit, | ||
redeposit, investment,
reinvestment, or withdrawal of | ||
municipal funds.
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(d) Notwithstanding any other provision of this Act or any | ||
other law, each
official custodian of municipal funds, | ||
including, without limitation, each
municipal treasurer or | ||
finance director or each person properly designated as
the | ||
official custodian for municipal funds, including, without | ||
limitation, each
person properly designated as official | ||
custodian for funds held by an
intergovernmental risk | ||
management entity, self-insurance pool, waste
management | ||
agency, or other intergovernmental entity composed solely of
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participating municipalities, is permitted to:
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(i) combine moneys from more than
one fund of a single | ||
municipality, risk management entity, self-insurance
pool, | ||
or other intergovernmental entity composed solely of | ||
participating
municipalities for the purpose of investing | ||
such moneys;
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(ii) join with any other official custodians or | ||
treasurers of municipal,
intergovernmental risk management | ||
entity, self-insurance pool, waste
management agency, or | ||
other intergovernmental entity composed solely of
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participating municipalities for the purpose of jointly | ||
investing the
funds of which the official custodians or | ||
treasurers have custody; and
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(iii) enter into agreements of any definite or | ||
indefinite term regarding
the redeposit, investment, or | ||
withdrawal of municipal, risk management
entity, | ||
self-insurance agency, waste management agency, or other
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intergovernmental entity funds.
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When funds are combined for investment
purposes as | ||
authorized in this Section, the moneys combined for those | ||
purposes
shall be accounted for separately in all respects, and | ||
the earnings from such
investment shall be separately and | ||
individually computed, recorded, and
credited to the fund, | ||
municipality, intergovernmental risk management
entity, | ||
self-insurance pool, waste
management agency, or other | ||
intergovernmental entity, as the case may be, for
which the | ||
investment was acquired.
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Joint investments shall be made only in investments | ||
authorized by law for
investment of municipal funds.
The grant | ||
of authority contained in this subsection is cumulative,
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supplemental, and in addition to all other power or authority | ||
granted by any
other law and shall not be construed as a | ||
limitation of any power and authority
otherwise granted.
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(e) No bank or savings and loan association shall receive | ||
public funds as
permitted by this Section unless it has | ||
complied with the requirements
established by Section 6 of the | ||
Public Funds Investment Act.
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(f) In addition to any other investments or deposits | ||
authorized under this Code, municipalities are authorized to | ||
invest the funds and public moneys in the custody of the | ||
municipal treasurer in accordance with the Public Funds | ||
Investment Act. | ||
(Source: P.A. 89-592, eff. 8-1-96.)
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