(30 ILCS 235/2)
(from Ch. 85, par. 902)
(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, 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
(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
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. 97-129, eff. 7-14-11; 98-297, eff. 1-1-14; 98-390, eff. 8-16-13; 98-756, eff. 7-16-14.)