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Public Act 098-0297 Public Act 0297 98TH GENERAL ASSEMBLY |
Public Act 098-0297 | SB1950 Enrolled | LRB098 10590 HLH 40852 b |
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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 Sections 1 and 2 as follows:
| (30 ILCS 235/1) (from Ch. 85, par. 901)
| 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.
| 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
| created, whether herein specifically mentioned or not.
This Act | does not apply to the Illinois Prepaid Tuition Trust Fund,
| 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.
| 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.)
| (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; 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 , 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.
| (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.
| 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. 96-741, eff. 8-25-09; 97-129, eff. 7-14-11.)
| Section 10. The Illinois Municipal Code is amended by | changing Section 3.1-35-50 as follows:
| (65 ILCS 5/3.1-35-50) (from Ch. 24, par. 3.1-35-50)
| Sec. 3.1-35-50. Treasurer; deposit of funds.
| (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.
| (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
| Corporation or the Federal Savings and Loan Insurance | Corporation.
| (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.
| (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
| participating municipalities, is permitted to:
| (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;
| (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
| participating municipalities for the purpose of jointly | investing the
funds of which the official custodians or | treasurers have custody; and
| (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
| intergovernmental entity funds.
| 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.
| 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,
| 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.
| (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.
| (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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Effective Date: 1/1/2014
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