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1 AN ACT concerning finance.


2 Be it enacted by the People of the State of Illinois,

3represented in the General Assembly:



4 Section 5. The Deposit of State Moneys Act is amended by 
5adding Section 6.1 as follows:

6 (15 ILCS 520/6.1 new)
7 Sec. 6.1. Submission of proposals. Nothing in this Act 
8shall be construed as prohibiting a bank, savings bank, or 
9credit union from submitting a proposal to the State Treasurer 
10on the basis that it does not offer a product or service in 
11this State, unless a specific requirement is noted in the 
12public solicitation that is related to the product or service 
13being solicited. Nothing in this Section is intended to limit 
14the State Treasurer's discretion in the selection of a bank, 
15savings bank, or credit union, as provided in this Act.


16 Section 10. The Public Funds Investment Act is amended by 
17changing Section 2 and by adding Section 6.1 as follows:




18 (30 ILCS 235/2) (from Ch. 85, par. 902)



19 Sec. 2. Authorized investments. 

20 (a) Any public agency may invest any public funds as 
21follows:


 
 
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1  (1) in bonds, notes, certificates of indebtedness, 
2 treasury bills or
other securities now or hereafter issued, 
3 which are guaranteed by the full
faith and credit of the 
4 United States of America as to principal and interest;


5  (2) in bonds, notes, debentures, or other similar 
6 obligations of the
United States of America, its agencies, 
7 and its instrumentalities;


8  (3) in interest-bearing savings accounts, 
9 interest-bearing
certificates of deposit or 
10 interest-bearing time deposits or any other
investments 
11 constituting direct obligations of any bank as defined by 
12 the
Illinois Banking Act;


13  (4) in short term obligations of corporations

14 organized in the United States with assets exceeding 
15 $500,000,000 if (i)
such obligations are rated at the time 
16 of purchase at one of the 3 highest
classifications 
17 established by at least 2 standard rating services and

18 which mature not later than 3 years 270 days from the date 
19 of purchase, (ii)
such purchases do not exceed 10% of the 
20 corporation's outstanding
obligations and (iii) no more 
21 than one-third of the public agency's funds
may be invested 
22 in short term obligations of corporations; or


23  (5) in money market mutual funds registered under the 
24 Investment
Company Act of 1940, provided that the portfolio 
25 of any such money market
mutual fund is limited to 
26 obligations described in paragraph (1) or (2) of this

 
 
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1 subsection and to agreements to repurchase such 
2 obligations.

3 (a-1) In addition to any other investments authorized under 
4this Act, a
municipality, park district, forest preserve 
5district, conservation district, county, or other governmental 
6unit may invest its public funds in interest bearing bonds of 
7any
county, township, city, village, incorporated town, 
8municipal corporation, or
school district, of the State of 
9Illinois, of any other state, or of
any political subdivision 
10or
agency of the State of Illinois or of any other state, 
11whether the interest
earned thereon is taxable or tax-exempt 
12under federal law. The bonds shall
be registered in the name of 
13the municipality, park district, forest preserve district, 
14conservation district, county, or other governmental unit, or 
15held under a custodial agreement at a bank. The bonds shall be 
16rated at the
time of purchase within the 4 highest general 
17classifications established by a
rating service of nationally 
18recognized expertise in rating bonds of states and
their 
19political subdivisions.

20 (b) Investments may be made only in banks which are insured 
21by the
Federal Deposit Insurance Corporation. Any public agency 
22may invest any
public funds in short term discount obligations 
23of the Federal National
Mortgage Association or in shares or 
24other forms of securities legally
issuable by savings banks or 
25savings and loan associations incorporated under
the laws of 
26this State or any other state or under the laws of the United

 
 
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1States. Investments may be made only in those savings banks or 
2savings and
loan associations the shares, or investment 
3certificates of which are insured
by the Federal Deposit 
4Insurance Corporation. Any such securities may be
purchased at 
5the offering or market price thereof at the time of such

6purchase. All such securities so purchased shall mature or be 
7redeemable on
a date or dates prior to the time when, in the 
8judgment of
such governing authority, the public funds so 
9invested will be required
for expenditure by such public agency 
10or its governing authority. The
expressed judgment of any such 
11governing authority as to the time when
any public funds will 
12be required for expenditure or be redeemable is
final and 
13conclusive. Any public agency may invest any public funds in

14dividend-bearing share accounts, share certificate accounts or 
15class of
share accounts of a credit union chartered under the 
16laws of this State
or the laws of the United States; provided, 
17however, the principal office
of any such credit union must be 
18located within the State of Illinois.
Investments may be made 
19only in those credit unions the accounts of which
are insured 
20by applicable law.

21 (c) For purposes of this Section, the term "agencies of the 
22United States
of America" includes: (i) the federal land banks, 
23federal intermediate
credit banks, banks for cooperative, 
24federal farm credit banks, or any other
entity authorized to 
25issue debt obligations under the Farm Credit Act of
1971 (12 
26U.S.C. 2001 et seq.) and Acts amendatory thereto; (ii) the 
 
 
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1federal
home loan banks and the federal home loan mortgage 
2corporation; and (iii)
any other agency created by Act of 
3Congress.

4 (d) Except for pecuniary interests permitted under 
5subsection (f) of
Section 3-14-4 of the Illinois Municipal Code 
6or under Section 3.2 of
the Public Officer Prohibited Practices 
7Act, no person acting as treasurer
or financial officer or who 
8is employed in any similar capacity by or for a
public agency 
9may do any of the following:


10  (1) have any interest, directly or indirectly, in any 
11 investments in
which the agency is authorized to invest.


12  (2) have any interest, directly or indirectly, in the 
13 sellers,
sponsors, or managers of those investments.


14  (3) receive, in any manner, compensation of any kind 
15 from any
investments in which the agency is authorized to 
16 invest.

17 (e) Any public agency may also invest any public funds in a 
18Public
Treasurers' Investment Pool created under Section 17 of 
19the State Treasurer
Act. Any public agency may also invest any 
20public funds in a fund managed,
operated, and administered by a 
21bank, subsidiary of a bank, or
subsidiary of a bank holding 
22company or use the services of such an entity to
hold and 
23invest or advise regarding the investment of any public funds.

24 (f) To the extent a public agency has custody of funds not 
25owned by it or
another public agency and does not otherwise 
26have authority to invest
such funds, the public agency may 
 
 
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1invest such funds as if they were its
own. Such funds must be 
2released to the appropriate person at the
earliest reasonable 
3time, but in no case exceeding 31 days, after the
private 
4person becomes entitled to the receipt of them. All earnings

5accruing on any investments or deposits made pursuant to the 
6provisions
of this Act shall be credited to the public agency 
7by or for which such
investments or deposits were made, except 
8as provided otherwise in Section
4.1 of the State Finance Act 
9or the Local Governmental Tax Collection Act,
and except where 
10by specific statutory provisions such earnings are
directed to 
11be credited to and paid to a particular fund.

12 (g) A public agency may purchase or invest in repurchase 
13agreements of
government securities having the meaning set out 
14in the Government
Securities Act of 1986, as now or hereafter 
15amended or succeeded, subject to the provisions of said Act and 
16the
regulations issued thereunder. The government securities, 
17unless
registered or inscribed in the name of the public 
18agency, shall be
purchased through banks or trust companies 
19authorized to do business in the
State of Illinois.

20 (h) Except for repurchase agreements of government 
21securities which are
subject to the Government Securities Act 
22of 1986, as now or hereafter amended or succeeded, no public 
23agency may
purchase or invest in instruments which constitute 
24repurchase agreements,
and no financial institution may enter 
25into such an agreement with or on
behalf of any public agency 
26unless the instrument and the transaction meet
the following 
 
 
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1requirements:


2  (1) The securities, unless registered or inscribed in 
3 the name of the
public agency, are purchased through banks 
4 or trust companies authorized to
do business in the State 
5 of Illinois.


6  (2) An authorized public officer after ascertaining 
7 which firm will give
the most favorable rate of interest, 
8 directs the custodial bank to
"purchase" specified 
9 securities from a designated institution.
The "custodial 
10 bank" is the bank or trust company, or agency of

11 government, which acts for the public agency in connection 
12 with repurchase
agreements involving the investment of 
13 funds by the public agency. The
State Treasurer may act as 
14 custodial bank for public agencies executing
repurchase 
15 agreements. To the extent the Treasurer acts in this 
16 capacity,
he is hereby authorized to pass through to such 
17 public agencies any charges
assessed by the Federal Reserve 
18 Bank.


19  (3) A custodial bank must be a member bank of the 
20 Federal Reserve System
or maintain accounts with member 
21 banks. All transfers of book-entry
securities must be 
22 accomplished on a Reserve Bank's computer records
through a 
23 member bank of the Federal Reserve System. These securities 
24 must
be credited to the public agency on the records of the 
25 custodial bank and
the transaction must be confirmed in 
26 writing to the public agency by
the custodial bank.


 
 
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1  (4) Trading partners shall be limited to banks or trust 
2 companies
authorized to do business in the State of 
3 Illinois or to registered primary
reporting dealers.


4  (5) The security interest must be perfected.


5  (6) The public agency enters into a written master 
6 repurchase agreement
which outlines the basic 
7 responsibilities and liabilities of both buyer and
seller.


8  (7) Agreements shall be for periods of 330 days or 
9 less.


10  (8) The authorized public officer of the public agency 
11 informs the
custodial bank in writing of the maturity 
12 details of the repurchase agreement.


13  (9) The custodial bank must take delivery of and 
14 maintain the
securities in its custody for the account of 
15 the public agency and confirm
the transaction in writing to 
16 the public agency. The Custodial Undertaking
shall provide 
17 that the custodian takes possession of the securities

18 exclusively for the public agency; that the securities are 
19 free of any
claims against the trading partner; and any 
20 claims by the custodian are
subordinate to the public 
21 agency's claims to rights to those securities.


22  (10) The obligations purchased by a public agency may 
23 only be sold or
presented for redemption or payment by the 
24 fiscal agent bank or trust
company holding the obligations 
25 upon the written instruction of the
public agency or 
26 officer authorized to make such investments.


 
 
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1  (11) The custodial bank shall be liable to the public 
2 agency for any
monetary loss suffered by the public agency 
3 due to the failure of the
custodial bank to take and 
4 maintain possession of such securities.

5 (i) Notwithstanding the foregoing restrictions on 
6investment in
instruments constituting repurchase agreements 
7the Illinois Housing
Development Authority may invest in, and 
8any financial institution with
capital of at least $250,000,000 
9may act as custodian for, instruments
that constitute 
10repurchase agreements, provided that the Illinois Housing

11Development Authority, in making each such investment, 
12complies with the
safety and soundness guidelines for engaging 
13in repurchase transactions
applicable to federally insured 
14banks, savings banks, savings and loan
associations or other 
15depository institutions as set forth in the Federal
Financial 
16Institutions Examination Council Policy Statement Regarding

17Repurchase Agreements and any regulations issued, or which may 
18be issued by the
supervisory federal authority pertaining 
19thereto and any amendments thereto;
provided further that the 
20securities shall be either (i) direct general
obligations of, 
21or obligations the payment of the principal of and/or interest

22on which are unconditionally guaranteed by, the United States 
23of America or
(ii) any obligations of any agency, corporation 
24or subsidiary thereof
controlled or supervised by and acting as 
25an instrumentality of the United
States Government pursuant to 
26authority granted by the Congress of the United
States and 
 
 
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1provided further that the security interest must be perfected 
2by
either the Illinois Housing Development Authority, its 
3custodian or its agent
receiving possession of the securities 
4either physically or transferred through
a nationally 
5recognized book entry system.

6 (j) In addition to all other investments authorized
under 
7this Section, a community college district may
invest public 
8funds in any mutual funds that
invest primarily in corporate 
9investment grade or global government short term
bonds.

10Purchases of mutual funds that invest primarily in global 
11government short
term bonds shall be limited to funds with 
12assets of at least $100 million and
that are rated at the time 
13of purchase as one of the 10 highest classifications

14established by a recognized rating service. The investments 
15shall be subject
to approval by the local community college 
16board of trustees. Each community
college board of trustees 
17shall develop a policy regarding the percentage of
the 
18college's investment portfolio that can be invested in such 
19funds.

20 Nothing in this Section shall be construed to authorize an

21intergovernmental risk management entity to accept the deposit 
22of public funds
except for risk management purposes.

23(Source: P.A. 97-129, eff. 7-14-11; 98-297, eff. 1-1-14; 
2498-390, eff. 8-16-13; 98-756, eff. 7-16-14.)


25 (30 ILCS 235/6.1 new)
 
 
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1 Sec. 6.1. Submission of proposals. Nothing in this Act 
2shall be construed as prohibiting a bank, savings bank, or 
3credit union from submitting a proposal to a public agency on 
4the basis that it does not offer a product or service in this 
5State, unless a specific requirement is noted in the public 
6solicitation that is related to the product or service being 
7solicited. Nothing in this Section is intended to limit a 
8public agency's discretion in the selection of a bank, savings 
9bank, or credit union as provided in this Act.