101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB2968

 

Introduced 2/4/2020, by Sen. Robert Peters

 

SYNOPSIS AS INTRODUCED:
 
15 ILCS 520/7  from Ch. 130, par. 26
15 ILCS 520/22.5  from Ch. 130, par. 41a

    Amends the Deposit of State Moneys Act. Provides that the State Treasurer may allow an eligible financial institution (rather than a bank or savings and loan association) to become a State depository. Provides that State depositories may submit proposals or applications that may be approved or rejected by the State Treasurer. Provides that the State Treasurer may accept a proposal from an eligible financial institution which provides for a reduced rate of interest provided that the financial institution documents the use of deposited funds for specified economic development projects (currently, economic community development projects). Removes provisions concerning proposals for a reduced rate of interest with moneys to be expended for specified purposes. Modifies provisions concerning proposals from an eligible financial institution that provides for interest earnings on deposits of State moneys to be held by the financial institution in a separate account that the State Treasurer may use to secure up to 10% of any specified home loan to Illinois citizens. Modifies provisions concerning permitted investments. Allows the State Treasurer to make specified investments without the approval of the Governor. Expands the items upon which the State Treasurer may invest State moneys. Makes conforming and other changes. Effective immediately.


LRB101 16828 RJF 66227 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2968LRB101 16828 RJF 66227 b

1    AN ACT concerning State government.
 
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
5changing Sections 7 and 22.5 as follows:
 
6    (15 ILCS 520/7)  (from Ch. 130, par. 26)
7    Sec. 7. (a) The State Treasurer may, in his or her
8discretion, allow an eligible financial institution to become a
9State depository. State depositories may submit proposals or
10applications that may Proposals made may either be approved or
11rejected by the State Treasurer. A bank or savings and loan
12association whose proposal is approved shall be eligible to
13become a State depositary for the class or classes of funds
14covered by its proposal. A bank or savings and loan association
15whose proposal is rejected shall not be so eligible. The State
16Treasurer shall seek to have at all times a total of not less
17than 20 banks or savings and loan associations which are
18approved as State depositaries for time deposits.
19    (b) The State Treasurer may, in his or her discretion,
20accept a proposal from an eligible financial institution which
21provides for a reduced rate of interest provided that the
22financial such institution documents the use of deposited funds
23for economic community development projects, including, but

 

 

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1not limited to, agricultural, business, and community
2development projects.
3    (b-5) (Blank). The State Treasurer may, in his or her
4discretion, accept a proposal from an eligible institution that
5provides for a reduced rate of interest, provided that such
6institution agrees to expend an amount of money equal to the
7amount of the reduction for the preservation of Cahokia Mounds.
8    (b-10) (Blank). The State Treasurer may, in his or her
9discretion, accept a proposal from an eligible institution that
10provides for a reduced rate of interest, provided that the
11institution agrees to expend an amount of money equal to the
12amount of the reduction for senior centers.
13    (c) The State Treasurer may, in his or her discretion,
14accept a proposal from an eligible financial institution that
15provides for interest earnings on deposits of State moneys to
16be held by the financial institution in a separate account that
17the State Treasurer may use to secure up to 10% of any (i) home
18loans to Illinois citizens purchasing or refinancing a home in
19Illinois in situations where the participating financial
20institution would not offer the borrower a home loan under the
21financial institution's prevailing credit standards without
22the incentive of the 10% guarantee for the first 5 years of the
23loan a reduced rate of interest on deposits of State moneys,
24(ii) existing home loans of Illinois citizens who have failed
25to make payments on a home loan as a result of a financial
26hardship due to circumstances beyond the control of the

 

 

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1borrower where there is a reasonable prospect that the borrower
2will be able to resume full mortgage payments, and (iii) loans
3in amounts that do not exceed the amount of arrearage on a
4mortgage and that are extended to enable a borrower to become
5current on his or her mortgage obligation.
6    The following factors shall be considered by the
7participating financial institution to determine whether the
8financial hardship is due to circumstances beyond the control
9of the borrower: (i) loss, reduction, or delay in the receipt
10of income because of the death or disability of a person who
11contributed to the household income, (ii) expenses actually
12incurred related to the uninsured damage or costly repairs to
13the mortgaged premises affecting its habitability, (iii)
14expenses related to the death or illness in the borrower's
15household or of family members living outside the household
16that reduce the amount of household income, (iv) loss of income
17or a substantial increase in total housing expenses because of
18divorce, abandonment, separation from a spouse, or failure to
19support a spouse or child, (v) unemployment or underemployment,
20(vi) loss, reduction, or delay in the receipt of federal,
21State, or other government benefits, and (vii) participation by
22the homeowner in a recognized labor action such as a strike. In
23determining whether there is a reasonable prospect that the
24borrower will be able to resume full mortgage payments, the
25participating financial institution shall consider factors
26including, but not necessarily limited to the following: (i) a

 

 

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1favorable work and credit history, (ii) the borrower's ability
2to and history of paying the mortgage when employed, (iii) the
3lack of an impediment or disability that prevents reemployment,
4(iv) new education and training opportunities, (v) non-cash
5benefits that may reduce household expenses, and (vi) other
6debts.
7    For the purposes of this Section, "home loan" means a loan,
8other than an open-end credit plan or a reverse mortgage
9transaction, for which (i) the principal amount of the loan
10does not exceed the conforming loan size limit as established
11from time to time by the Federal National Mortgage Association,
12(ii) the borrower is a natural person, (iii) the debt is
13incurred by the borrower primarily for personal, family, or
14household purposes, and (iv) the loan is secured by a mortgage
15or deed of trust on real estate upon which there is located or
16there is to be located a structure designed principally for the
17occupancy of no more than 4 families and that is or will be
18occupied by the borrower as the borrower's principal dwelling.
19    (d) If there is an agreement between the State Treasurer
20and an eligible financial institution that details the use of
21deposited funds, the agreement may not require the gift of
22money, goods, or services to a third party; this provision does
23not restrict the eligible financial institution from
24contracting with third parties in order to carry out the intent
25of the agreement or restrict the State Treasurer from placing
26requirements upon third-party contracts entered into by the

 

 

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1eligible financial institution.
2(Source: P.A. 95-834, eff. 8-15-08.)
 
3    (15 ILCS 520/22.5)  (from Ch. 130, par. 41a)
4    (For force and effect of certain provisions, see Section 90
5of P.A. 94-79)
6    Sec. 22.5. Permitted investments. The State Treasurer may,
7with the approval of the Governor, invest and reinvest any
8State money in the State Treasury treasury which is not needed
9for current expenditures due or about to become due, in
10obligations of the United States government or its agencies or
11of National Mortgage Associations established by or under the
12National Housing Act, 12 U.S.C. 1701 et seq., or in mortgage
13participation certificates representing undivided interests in
14specified, first-lien conventional residential Illinois
15mortgages that are underwritten, insured, guaranteed, or
16purchased by the Federal Home Loan Mortgage Corporation or in
17Affordable Housing Program Trust Fund Bonds or Notes as defined
18in and issued pursuant to the Illinois Housing Development Act.
19All such obligations shall be considered as cash and may be
20delivered over as cash by a State Treasurer to his successor.
21    The State Treasurer may, with the approval of the Governor,
22purchase any state bonds with any money in the State Treasury
23that has been set aside and held for the payment of the
24principal of and interest on the bonds. The bonds shall be
25considered as cash and may be delivered over as cash by the

 

 

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1State Treasurer to his successor.
2    The State Treasurer may, with the approval of the Governor,
3invest or reinvest any State money in the State Treasury
4treasury that is not needed for current expenditure due or
5about to become due, or any money in the State Treasury that
6has been set aside and held for the payment of the principal of
7and the interest on any State bonds, in shares, withdrawable
8accounts, and investment certificates of savings and building
9and loan associations, incorporated under the laws of this
10State or any other state or under the laws of the United
11States; provided, however, that investments may be made only in
12those savings and loan or building and loan associations the
13shares and withdrawable accounts or other forms of investment
14securities of which are insured by the Federal Deposit
15Insurance Corporation.
16    The State Treasurer may not invest State money in any
17savings and loan or building and loan association unless a
18commitment by the savings and loan (or building and loan)
19association, executed by the president or chief executive
20officer of that association, is submitted in the following
21form:
22        The .................. Savings and Loan (or Building
23    and Loan) Association pledges not to reject arbitrarily
24    mortgage loans for residential properties within any
25    specific part of the community served by the savings and
26    loan (or building and loan) association because of the

 

 

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1    location of the property. The savings and loan (or building
2    and loan) association also pledges to make loans available
3    on low and moderate income residential property throughout
4    the community within the limits of its legal restrictions
5    and prudent financial practices.
6    The State Treasurer may, with the approval of the Governor,
7invest or reinvest any State money in the State Treasury
8treasury that is not needed for current expenditures due or
9about to become due, or any money in the State Treasury that
10has been set aside and held for the payment of the principal of
11and interest on any State bonds, in bonds issued by counties or
12municipal corporations of the State of Illinois.
13    The State Treasurer may invest or reinvest up to 5% of the
14College Savings Pool Administrative Trust Fund, the Illinois
15Public Treasurer Investment Pool (IPTIP) Administrative Trust
16Fund, and the State Treasurer's Administrative Fund that is not
17needed for current expenditures due or about to become due, in
18common or preferred stocks of publicly traded corporations,
19partnerships, or limited liability companies, organized in the
20United States, with assets exceeding $500,000,000 if: (i) the
21purchases do not exceed 1% of the corporation's or the limited
22liability company's outstanding common and preferred stock;
23(ii) no more than 10% of the total funds are invested in any
24one publicly traded corporation, partnership, or limited
25liability company; and (iii) the corporation or the limited
26liability company has not been placed on the list of restricted

 

 

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1companies by the Illinois Investment Policy Board under Section
21-110.16 of the Illinois Pension Code.
3    The State Treasurer may, with the approval of the Governor,
4invest or reinvest any State money in the State Treasury which
5is not needed for current expenditure, due or about to become
6due, or any money in the State Treasury which has been set
7aside and held for the payment of the principal of and the
8interest on any State bonds, in participations in loans, the
9principal of which participation is fully guaranteed by an
10agency or instrumentality of the United States government;
11provided, however, that such loan participations are
12represented by certificates issued only by banks which are
13incorporated under the laws of this State or any other state or
14under the laws of the United States, and such banks, but not
15the loan participation certificates, are insured by the Federal
16Deposit Insurance Corporation.
17    Whenever the total amount of vouchers presented to the
18Comptroller under Section 9 of the State Comptroller Act
19exceeds the funds available in the General Revenue Fund by
20$1,000,000,000 or more, then the State Treasurer may invest any
21State money in the Treasury, other than money in the General
22Revenue Fund, Health Insurance Reserve Fund, Attorney General
23Court Ordered and Voluntary Compliance Payment Projects Fund,
24Attorney General Whistleblower Reward and Protection Fund, and
25Attorney General's State Projects and Court Ordered
26Distribution Fund, which is not needed for current

 

 

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1expenditures, due or about to become due, or any money in the
2State Treasury which has been set aside and held for the
3payment of the principal of and the interest on any State bonds
4with the Office of the Comptroller in order to enable the
5Comptroller to pay outstanding vouchers. At any time, and from
6time to time outstanding, such investment shall not be greater
7than $2,000,000,000. Such investment shall be deposited into
8the General Revenue Fund or Health Insurance Reserve Fund as
9determined by the Comptroller. Such investment shall be repaid
10by the Comptroller with an interest rate tied to the London
11Interbank Offered Rate (LIBOR) or the Federal Funds Rate or an
12equivalent market established variable rate, but in no case
13shall such interest rate exceed the lesser of the penalty rate
14established under the State Prompt Payment Act or the timely
15pay interest rate under Section 368a of the Illinois Insurance
16Code. The State Treasurer and the Comptroller shall enter into
17an intergovernmental agreement to establish procedures for
18such investments, which market established variable rate to
19which the interest rate for the investments should be tied, and
20other terms which the State Treasurer and Comptroller
21reasonably believe to be mutually beneficial concerning these
22investments by the State Treasurer. The State Treasurer and
23Comptroller shall also enter into a written agreement for each
24such investment that specifies the period of the investment,
25the payment interval, the interest rate to be paid, the funds
26in the State Treasury from which the Treasurer will draw the

 

 

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1investment, and other terms upon which the State Treasurer and
2Comptroller mutually agree. Such investment agreements shall
3be public records and the State Treasurer shall post the terms
4of all such investment agreements on the State Treasurer's
5official website. In compliance with the intergovernmental
6agreement, the Comptroller shall order and the State Treasurer
7shall transfer amounts sufficient for the payment of principal
8and interest invested by the State Treasurer with the Office of
9the Comptroller under this paragraph from the General Revenue
10Fund or the Health Insurance Reserve Fund to the respective
11funds in the State Treasury from which the State Treasurer drew
12the investment. Public Act 100-1107 shall constitute an
13irrevocable and continuing authority for all amounts necessary
14for the payment of principal and interest on the investments
15made with the Office of the Comptroller by the State Treasurer
16under this paragraph, and the irrevocable and continuing
17authority for and direction to the Comptroller and Treasurer to
18make the necessary transfers.
19    The State Treasurer may, with the approval of the Governor,
20invest or reinvest any State money in the State Treasury that
21is not needed for current expenditure, due or about to become
22due, or any money in the State Treasury that has been set aside
23and held for the payment of the principal of and the interest
24on any State bonds, in any of the following:
25        (1) Bonds, notes, certificates of indebtedness, State
26    Treasury bills, or other securities now or hereafter issued

 

 

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1    that are guaranteed by the full faith and credit of the
2    United States of America as to principal and interest.
3        (2) Bonds, notes, debentures, or other similar
4    obligations of the United States of America, its agencies,
5    and instrumentalities, or other obligations that are
6    issued or guaranteed by supranational entities; provided
7    that, at the time of investment, the entity has the United
8    States government as a shareholder.
9        (2.5) Bonds, notes, debentures, or other similar
10    obligations of a foreign government, other than the
11    Republic of the Sudan, that are guaranteed by the full
12    faith and credit of that government as to principal and
13    interest, but only if the foreign government has not
14    defaulted and has met its payment obligations in a timely
15    manner on all similar obligations for a period of at least
16    25 years immediately before the time of acquiring those
17    obligations.
18        (3) Interest-bearing savings accounts,
19    interest-bearing certificates of deposit, interest-bearing
20    time deposits, or any other investments constituting
21    direct obligations of any bank as defined by the Illinois
22    Banking Act.
23        (4) Interest-bearing accounts, certificates of
24    deposit, or any other investments constituting direct
25    obligations of any savings and loan associations
26    incorporated under the laws of this State or any other

 

 

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1    state or under the laws of the United States.
2        (5) Dividend-bearing share accounts, share certificate
3    accounts, or class of share accounts of a credit union
4    chartered under the laws of this State or the laws of the
5    United States; provided, however, the principal office of
6    the credit union must be located within the State of
7    Illinois.
8        (6) Bankers' acceptances of banks whose senior
9    obligations are rated in the top 2 rating categories by 2
10    national rating agencies and maintain that rating during
11    the term of the investment and the bank has not been placed
12    on the list of restricted companies by the Illinois
13    Investment Policy Board under Section 1-110.16 of the
14    Illinois Pension Code.
15        (7) Short-term obligations of either corporations or
16    limited liability companies organized in the United States
17    with assets exceeding $500,000,000 if (i) the obligations
18    are rated at the time of purchase at one of the 3 highest
19    classifications established by at least 2 standard rating
20    services and mature not later than 270 days from the date
21    of purchase, (ii) the purchases do not exceed 10% of the
22    corporation's or the limited liability company's
23    outstanding obligations, (iii) no more than one-third of
24    the public agency's funds are invested in short-term
25    obligations of either corporations or limited liability
26    companies, and (iv) the corporation or the limited

 

 

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1    liability company has not been placed on the list of
2    restricted companies by the Illinois Investment Policy
3    Board under Section 1-110.16 of the Illinois Pension Code.
4        (7.5) Obligations of either corporations or limited
5    liability companies organized in the United States, that
6    have a significant presence in this State, with assets
7    exceeding $500,000,000 if: (i) the obligations are rated at
8    the time of purchase at one of the 3 highest
9    classifications established by at least 2 standard rating
10    services and mature more than 270 days, but less than 10
11    years, from the date of purchase; (ii) the purchases do not
12    exceed 10% of the corporation's or the limited liability
13    company's outstanding obligations; (iii) no more than
14    one-third of the public agency's funds are invested in such
15    obligations of corporations or limited liability
16    companies; and (iv) the corporation or the limited
17    liability company has not been placed on the list of
18    restricted companies by the Illinois Investment Policy
19    Board under Section 1-110.16 of the Illinois Pension Code.
20        (8) Money market mutual funds registered under the
21    Investment Company Act of 1940.
22        (9) The Public Treasurers' Investment Pool created
23    under Section 17 of the State Treasurer Act or in a fund
24    managed, operated, and administered by a bank.
25        (10) Repurchase agreements of government securities
26    having the meaning set out in the Government Securities Act

 

 

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1    of 1986, as now or hereafter amended or succeeded, subject
2    to the provisions of that Act and the regulations issued
3    thereunder.
4        (11) Investments made in accordance with the
5    Technology Development Act.
6        (12) Investments made in accordance with the Student
7    Investment Account Act.
8    For purposes of this Section, "agencies" of the United
9States Government includes:
10        (i) the federal land banks, federal intermediate
11    credit banks, banks for cooperatives, federal farm credit
12    banks, or any other entity authorized to issue debt
13    obligations under the Farm Credit Act of 1971 (12 U.S.C.
14    2001 et seq.) and Acts amendatory thereto;
15        (ii) the federal home loan banks and the federal home
16    loan mortgage corporation;
17        (iii) the Commodity Credit Corporation; and
18        (iv) any other agency created by Act of Congress.
19    The Treasurer may, with the approval of the Governor, lend
20any securities acquired under this Act. However, securities may
21be lent under this Section only in accordance with Federal
22Financial Institution Examination Council guidelines and only
23if the securities are collateralized at a level sufficient to
24assure the safety of the securities, taking into account market
25value fluctuation. The securities may be collateralized by cash
26or collateral acceptable under Sections 11 and 11.1.

 

 

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1(Source: P.A. 100-1107, eff. 8-27-18; 101-81, eff. 7-12-19;
2101-206, eff. 8-2-19; 101-586, eff. 8-26-19; revised 9-25-19.)
 
3    Section 99. Effective date. This Act takes effect upon
4becoming law.