(30 ILCS 440/2)
Findings and Declaration of Policy.
It is hereby found and
A. It is an essential governmental function to
maintain funds in an amount sufficient to pay unemployment benefits when due;
B. At the time of the enactment of this Act,
unemployment benefits payments are made from Illinois' account in the Unemployment Trust Fund of the United States Treasury and are funded by employer contributions;
C. At the time of the enactment of this Act,
borrowing from the Federal government is the only option available to obtain sufficient funds to pay benefits when the balance in Illinois' account in the Unemployment Trust Fund of the United States Treasury is insufficient to make necessary payments;
D. Alternative methods of replenishing Illinois'
account in the Unemployment Trust Fund of the United States Treasury may reduce the costs of providing unemployment benefits and employers' cost of doing business in the State;
E. It is in the State's best interests to authorize
the issuance of bonds when appropriate for the purpose of continuing the unemployment insurance program at the lowest possible cost to the State and employers in Illinois; and
F. It is the public policy of this State to promote
and encourage the full participation of female- and minority-owned firms with regard to bonds issued by State departments, agencies, and authorities. The Director shall, therefore, ensure that the process for procuring contracts with regard to Bonds includes outreach to female- and minority-owned firms and gives due consideration to those firms in the selection and approval of any contracts with any parties necessary to issue Bonds.
(Source: P.A. 93-634, eff. 1-1-04.)
(30 ILCS 440/3)
For purposes of this Act:
A. "Act" shall mean the Illinois Unemployment Insurance Trust Fund
B. "Benefits" shall have the meaning provided in the Unemployment
C. "Bond" means any type of revenue obligation, including, without
rate, variable rate, auction rate or similar bond, note, certificate, or other
without limitation, an interest rate exchange agreement, an interest rate lock
currency exchange agreement, a forward payment conversion agreement, an
provide payments based on levels of or changes in interest rates or currency
exchange rates, an
agreement to exchange cash flows or a series of payments, an option, put, or
call to hedge
payment, currency, interest rate, or other exposure, payable from and secured
a pledge of
Fund Building Receipts collected pursuant to the Unemployment Insurance Act,
and other earnings upon such amounts held in the Master Bond Fund, to the
the proceedings authorizing the obligation.
D. "Bond Administrative Expenses" means expenses and fees incurred to
and issue, upon a conversion of any of the Bonds from one mode to another and
from taxable to
tax-exempt, the Bonds issued pursuant to this Act, including fees for paying
financial advisors, underwriters, remarketing agents, attorneys and for other
necessary to ensure compliance with applicable state or federal law.
E. "Bond Obligations" means the principal of a Bond and any premium and
on a Bond issued pursuant to this Act, together with any amount owed under a
F. "Credit Agreement" means, without limitation, a loan agreement, a
credit agreement, an agreement establishing a line of credit, a letter of
credit, notes, municipal
bond insurance, standby bond purchase agreements, surety bonds, remarketing
the like, by which the Department may borrow funds to pay or redeem or purchase
and hold its
bonds, agreements for the purchase or remarketing of bonds or any other
enhances the marketability, security, or creditworthiness of a Bond issued
1. Such Credit Agreement shall provide the following:
a. The choice of law for the obligations of a
financial provider may be made for any state of these United States, but the law which shall apply to the Bonds shall be the law of the State of Illinois, and jurisdiction to enforce such Credit Agreement as against the Department shall be exclusively in the courts of the State of Illinois or in the applicable federal court having jurisdiction and located within the State of Illinois.
b. Any such Credit Agreement shall be fully
enforceable as a valid and binding contract as and to the extent provided by applicable law.
2. Without limiting the foregoing, such Credit
Agreement, may include any of the following:
a. Interest rates on the Bonds may vary from time
to time depending upon criteria established by the Director, which may include, without limitation:
(i) A variation in interest rates as may be
necessary to cause the Bonds to be remarketed from time to time at a price equal to their principal amount plus any accrued interest;
(ii) Rates set by auctions; or
(iii) Rates set by formula.
b. A national banking association, bank, trust
company, investment banker or other financial institution may be appointed to serve as a remarketing agent in that connection, and such remarketing agent may be delegated authority by the Department to determine interest rates in accordance with criteria established by the Department.
c. Alternative interest rates or provisions may
apply during such times as the Bonds are held by the financial providers or similar persons or entities providing a Credit Agreement for those Bonds and, during such times, the interest on the Bonds may be deemed not exempt from income taxation under the Internal Revenue Code for purposes of State law, as contained in the Bond Authorization Act, relating to the permissible rate of interest to be borne thereon.
d. Fees may be paid to the financial providers or
similar persons or entities providing a Credit Agreement, including all reasonably related costs, including therein costs of enforcement and litigation (all such fees and costs being financial provider payments) and financial provider payments may be paid, without limitation, from proceeds of the Bonds being the subject of such agreements, or from Bonds issued to refund such Bonds, provided that such financial provider payments shall be made subordinate to the payments on the Bonds.
e. The Bonds need not be held in physical form by
the financial providers or similar persons or entities providing a Credit Agreement when providing funds to purchase or carry the Bonds from others but may be represented in uncertificated form in the Credit Agreement.
f. The debt or obligation of the Department
represented by a Bond tendered for purchase to or otherwise made available to the Department thereupon acquired by either the Department or a financial provider shall not be deemed to be extinguished for purposes of State law until cancelled by the Department or its agent.
g. Such Credit Agreement may provide for
acceleration of the principal amounts due on the Bonds.
G. "Department" means the Illinois Department of
H. "Director" means the Director of the Illinois Department of
I. "Fund Building Rates" are those rates imposed pursuant to Section
1506.3 of the
Unemployment Insurance Act.
J. "Fund Building Receipts" shall have the meaning provided in the
Insurance Act and includes earnings on such receipts.
K. "Master Bond Fund" shall mean, for any particular issuance of Bonds
Act, the fund established for the deposit of Fund Building Receipts upon or
prior to the issuance
of Bonds under this Act, and during the time that any Bonds are outstanding
under this Act and from
payment of Bond Obligations and the related Bond Administrative Expenses
connection with such Bonds shall be made. That portion of the Master Bond
containing the Required Fund Building Receipts Amount shall be irrevocably
pledged to the
timely payment of Bond Obligations and Bond Administrative Expenses due on any
issued pursuant to this Act and any Credit Agreement entered in connection with
The Master Bond Fund shall be held separate and apart from all other
Moneys in the Master Bond Fund shall not be commingled with other State
funds, but they
shall be deposited as required by law and maintained in a separate account on
the books of a
savings and loan association, bank or other qualified financial institution.
All interest earnings on amounts within
the Master Bond
Fund shall accrue to the Master Bond Fund.
The Master Bond Fund may include such funds and accounts as are necessary
deposit of bond proceeds, Fund Building Receipts, payment of principal,
expenses, costs of issuance, in the case of bonds which are exempt from Federal
payments, and such other funds and accounts which may be necessary for the
and administration of this Act.
The Director shall be liable on her or his general official bond for the
performance of her or his duties as custodian of the Master Bond Fund. Such
her or his official bond shall exist in addition to the liability upon any
bond given by
her or him. All sums recovered for losses sustained by the Master Bond Fund
be deposited into
The Director shall report quarterly in writing to the Employment Security
Advisory Board concerning the
anticipated deposits into and expenditures and transfers made from the Master
Notwithstanding any other provision to the contrary, no report is required under this subsection K if (i) the Master Bond Fund held a net balance of zero as of the close of the immediately preceding calendar quarter, (ii) there have been no deposits into the Master Bond Fund within any of the immediately preceding 4 calendar quarters, and (iii) there have been no expenditures or transfers from the Master Bond Fund within any of the immediately preceding 4 calendar quarters.
L. "Required Fund Building Receipts Amount" means the aggregate amount of
Building Receipts required to be maintained in the Master Bond Fund as set
in Section 4I
of this Act.
(Source: P.A. 97-621, eff. 11-18-11.)
(30 ILCS 440/4)
Authority to Issue Revenue Bonds.
A. The Department shall have the continuing power to borrow money for
of carrying out the following:
1. To reduce or avoid the need to borrow or obtain a
federal advance under Section 1201, et seq., of the Social Security Act (42 U.S.C. Section 1321), as amended, or any similar federal law; or
2. To refinance a previous advance received by the
Department with respect to the payment of Benefits; or
3. To refinance, purchase, redeem, refund, advance
refund or defease (including, any combination of the foregoing) any outstanding Bonds issued pursuant to this Act; or
4. To fund a surplus in Illinois' account in the
Unemployment Trust Fund of the United States Treasury.
Paragraphs 1, 2 and 4 are inoperative on and after January 1, 2022.
B. As evidence of the obligation of the Department to repay money
borrowed for the
purposes set forth in Section 4A above, the Department may issue and dispose of
bearing revenue Bonds and may also, from time-to-time, issue and dispose of its
revenue Bonds to purchase, redeem, refund, advance refund or defease
combination of the foregoing) any Bonds at maturity or pursuant to redemption
provisions or at
any time before maturity. The Director, in consultation with the Department's
Security Advisory Board, shall have the power to direct that the Bonds be
issued. Bonds may be
issued in one or more series and under terms and conditions as needed in
furtherance of the
purposes of this Act. The Illinois Finance Authority shall provide any
technical, legal, or
administrative services if and when requested by the Director and the
Advisory Board with regard to the issuance of Bonds. The Governor's Office of Management and Budget may, upon the written request of the Director, issue the bonds authorized pursuant to this Act on behalf of the Department and, for that purpose, may retain such underwriters, financial advisors, and counsel as may be appropriate from the Office's then-existing roster of prequalified vendors. Such
Bonds shall be
issued in the name of the State of Illinois for the benefit of the Department
and shall be executed
by the Director. In case any Director whose signature appears on any Bond
attaching his or her signature) to hold that office, her or his signature shall
nevertheless be valid
and effective for all purposes.
C. No Bonds shall be issued without the Director's written
certification that, based
upon a reasonable financial analysis, the issuance of Bonds is reasonably
(i) Result in a savings to the State as compared to
the cost of borrowing or obtaining an advance under Section 1201, et seq., Social Security Act (42 U.S.C. Section 1321), as amended, or any similar federal law;
(ii) Result in terms which are advantageous to the
State through refunding, advance refunding or other similar restructuring of outstanding Bonds;
(iii) Allow the State to avoid an anticipated
deficiency in the State's account in the Unemployment Trust Fund of the United States Treasury by funding a surplus in the State's account in the Unemployment Trust Fund of the United States Treasury; or
(iv) Prevent the reduction of the employer credit
provided under Section 3302 of the Federal Unemployment Tax Act with respect to employers subject to the Unemployment Insurance Act.
D. All such Bonds shall be payable from Fund Building Receipts. Bonds
be paid from (i) to the extent allowable by law, from monies in the State's
Unemployment Trust Fund of the United States Treasury; and (ii) to the extent
allowable by law, a
federal advance under Section 1201, et seq., of the Social Security Act (42
U.S.C. Section 1321);
and (iii) proceeds of Bonds and receipts from related credit and exchange
agreements to the extent allowed by this Act and applicable
E. The maximum principal amount of the Bonds, when combined with the
outstanding principal of all other Bonds issued pursuant to this Act, shall not
at any time exceed
$2,400,000,000, excluding all of the outstanding principal of any other Bonds
issued pursuant to
for which payment
has been irrevocably provided by refunding or other manner of defeasance. It is
the intent of this
Act that the outstanding Bond authorization limits provided for in this Section
4E shall be
revolving in nature, such that the amount of Bonds outstanding that are not
refunded or otherwise
defeased shall be included in determining the maximum amount of Bonds
to be issued
pursuant to the Act.
F. Such Bonds and refunding Bonds issued pursuant to this Act may bear
or dates, may mature at such time or times not exceeding 10 years from their
respective dates of
issuance, and may bear interest at such rate or rates not exceeding the maximum
by the Bond Authorization Act, as amended and in effect at the time of the
issuance of the
G. The Department may enter into a Credit Agreement pertaining to the
the Bonds, upon terms which are not inconsistent with this Act and any other
laws, provided that
the term of such Credit Agreement shall not exceed the term of the Bonds, plus
any time period
necessary to cure any defaults under such Credit Agreement.
H. Interest earnings paid to holders of the Bonds shall not be exempt
taxes imposed by the State.
I. While any Bond Obligations are outstanding or anticipated to come
due as a result
of Bonds expected to be issued in either or both of the 2 immediately
succeeding calendar quarters, the
collect and deposit Fund Building Receipts into the Master Bond Fund in an
amount necessary to
satisfy the Required Fund Building Receipts Amount prior to expending Fund
for any other purpose. The Required Fund Building Receipts Amount shall be that
necessary to ensure the marketability of the Bonds, which shall be specified in
the Bond Sale
Order executed by the Director in connection with the issuance of the Bonds.
J. Holders of the Bonds shall have a first and priority claim on all
Receipts in the Master Bond Fund in parity with all other holders of the Bonds,
such claim may be subordinated to the provider of any Credit Agreement for any
of the Bonds.
K. To the extent that Fund Building Receipts in
Bond Fund are not otherwise needed to satisfy the requirements of this Act and
authorizing the issuance of the Bonds, such monies shall be used by the
Department, in such
amounts as determined by the Director to do any one or a combination of the following:
1. To purchase, refinance, redeem, refund, advance
refund or defease (or any combination of the foregoing) outstanding Bonds, to the extent such action is legally available and does not impair the tax exempt status of any of the Bonds which are, in fact, exempt from Federal income taxation; or
2. As a deposit in the State's account in the
Unemployment Trust Fund of the United States Treasury; or
3. As a deposit into the Special Programs Fund
provided for under Section 2107 of the Unemployment Insurance Act.
L. The Director shall determine the method of sale, type of bond, bond
redemption provisions and other terms of the Bonds that, in the Director's
judgment, best achieve
the purposes of this Act and effect the borrowing at the lowest practicable
cost, provided that
those determinations are not inconsistent with this Act or other applicable
Those determinations shall be set forth in a document entitled "Bond Sale
form and substance, to the attorney or attorneys acting as bond counsel for the
connection with the rendering of opinions necessary for the issuance of the
Bonds and executed
by the Director.
(Source: P.A. 96-30, eff. 6-30-09; 97-621, eff. 11-18-11.)
(30 ILCS 440/5)
A. The proceeds of any Bonds issued pursuant to this Act, including
income thereon, shall be held in trust in the Master Bond Fund for the
purpose and in
such amounts as determined by the Director:
1. Paying the principal and interest on any
outstanding federal advance received by the Department under Section 1201, et seq., of the Social Security Act (42 U.S.C. Section 1321), as amended, or any similar federal law;
2. Being deposited into the State's account in the
Unemployment Trust Fund of the United States Treasury for the purpose of: (i) avoiding anticipated deficiencies in that account or (ii) funding a surplus in that account, when doing either (i) or (ii) will result in a savings to the State or employers or both;
3. Paying the costs of issuing or refinancing any
4. Providing an appropriate reserve for any such
Bonds to the extent that the Department determines that an appropriate reserve is warranted; and
5. Paying capitalized interest on the Bonds for the
period determined necessary by the Department, not to exceed 2 years.
B. Excess Bond proceeds remaining available after the payments and
required pursuant to Section 5A1 through 5A5 above have been made, may be used
following manner as determined by the Director:
1. To purchase, redeem or defease outstanding Bonds,
to the extent such action is legally available and does not impair the tax-exempt status of any of the Bonds which are, in fact, tax-exempt; or
2. To pay any scheduled interest payment or payments
due on any outstanding Bonds; or
3. Deposited in the State's account in the
Unemployment Trust Fund of the United States Treasury.
(Source: P.A. 93-634, eff. 1-1-04.)