Public Act 90-0688 of the 90th General Assembly
Public Act 90-0688
SB1555 Enrolled LRB9011612JMmb
AN ACT concerning the safety and soundness of public
investments.
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
adding Section 2.5 as follows:
(30 ILCS 235/2.5 new)
Sec. 2.5. Investment policy.
(a) Investment of public funds by a public agency shall
be governed by a written investment policy adopted by the
public agency. The level of detail and complexity of the
investment policy shall be appropriate to the nature of the
funds, the purpose for the funds, and the amount of the
public funds within the investment portfolio. The policy
shall address safety of principal, liquidity of funds, and
return on investment and shall require that the investment
portfolio be structured in such manner as to provide
sufficient liquidity to pay obligations as they come due. In
addition, the investment policy shall include or address the
following:
(1) a listing of authorized investments;
(2) a rule, such as the "prudent person rule",
establishing the standard of care that must be maintained
by the persons investing the public funds;
(3) investment guidelines that are appropriate to
the nature of the funds, the purpose for the funds, and
the amount of the public funds within the investment
portfolio;
(4) a policy regarding diversification of the
investment portfolio that is appropriate to the nature of
the funds, the purpose for the funds, and the amount of
the public funds within the investment portfolio;
(5) guidelines regarding collateral requirements,
if any, for the deposit of public funds in a financial
institution made pursuant to this Act, and, if
applicable, guidelines for contractual arrangements for
the custody and safekeeping of that collateral;
(6) a policy regarding the establishment of a
system of internal controls and written operational
procedures designed to prevent losses of funds that might
arise from fraud, employee error, misrepresentation by
third parties, or imprudent actions by employees of the
entity;
(7) identification of the chief investment officer
who is responsible for establishing the internal controls
and written procedures for the operation of the
investment program;
(8) performance measures that are appropriate to
the nature of the funds, the purpose for the funds, and
the amount of the public funds within the investment
portfolio;
(9) a policy regarding appropriate periodic review
of the investment portfolio, its effectiveness in meeting
the public agency's needs for safety, liquidity, rate of
return, and diversification, and its general performance;
(10) a policy establishing at least quarterly
written reports of investment activities by the public
agency's chief financial officer for submission to the
governing body and chief executive officer of the public
agency. The reports shall include information regarding
securities in the portfolio by class or type, book value,
income earned, and market value as of the report date;
(11) a policy regarding the selection of investment
advisors, money managers, and financial institutions; and
(12) a policy regarding ethics and conflicts of
interest.
(b) For purposes of the State or a county, the
investment policy shall be adopted by the elected treasurer
and presented to the chief executive officer and the
governing body. For purposes of any other public agency, the
investment policy shall be adopted by the governing body of
the public agency.
(c) The investment policy shall be made available to the
public at the main administrative office of the public
agency.
(d) The written investment policy required under this
Section shall be developed and implemented by January 1,
2000.
Section 99. Effective date. This Act takes effect upon
becoming law.