HB2101 EngrossedLRB097 09042 KMW 49176 b

1    AN ACT concerning local government.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Public Funds Investment Act is amended by
5changing Section 2 as follows:
 
6    (30 ILCS 235/2)  (from Ch. 85, par. 902)
7    Sec. 2. Authorized investments.
8    (a) Any public agency may invest any public funds as
9follows:
10        (1) in bonds, notes, certificates of indebtedness,
11    treasury bills or other securities now or hereafter issued,
12    which are guaranteed by the full faith and credit of the
13    United States of America as to principal and interest;
14        (2) in bonds, notes, debentures, or other similar
15    obligations of the United States of America, its agencies,
16    and its instrumentalities;
17        (3) in interest-bearing savings accounts,
18    interest-bearing certificates of deposit or
19    interest-bearing time deposits or any other investments
20    constituting direct obligations of any bank as defined by
21    the Illinois Banking Act;
22        (4) in short term obligations of corporations
23    organized in the United States with assets exceeding

 

 

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1    $500,000,000 if (i) such obligations are rated at the time
2    of purchase at one of the 3 highest classifications
3    established by at least 2 standard rating services and
4    which mature not later than 270 days from the date of
5    purchase, (ii) such purchases do not exceed 10% of the
6    corporation's outstanding obligations and (iii) no more
7    than one-third of the public agency's funds may be invested
8    in short term obligations of corporations; or
9        (5) in money market mutual funds registered under the
10    Investment Company Act of 1940, provided that the portfolio
11    of any such money market mutual fund is limited to
12    obligations described in paragraph (1) or (2) of this
13    subsection and to agreements to repurchase such
14    obligations.
15    (a-1) In addition to any other investments authorized under
16this Act, a municipality or a county may invest its public
17funds in interest bearing bonds of any county, township, city,
18village, incorporated town, municipal corporation, or school
19district, of the State of Illinois, of any other state, or of
20any political subdivision or agency of the State of Illinois or
21of any other state, whether the interest earned thereon is
22taxable or tax-exempt under federal law. The bonds shall be
23registered in the name of the municipality or county or held
24under a custodial agreement at a bank. The bonds shall be rated
25at the time of purchase within the 4 highest general
26classifications established by a rating service of nationally

 

 

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1recognized expertise in rating bonds of states and their
2political subdivisions.
3    (b) Investments may be made only in banks which are insured
4by the Federal Deposit Insurance Corporation. Any public agency
5may invest any public funds in short term discount obligations
6of the Federal National Mortgage Association or in shares or
7other forms of securities legally issuable by savings banks or
8savings and loan associations incorporated under the laws of
9this State or any other state or under the laws of the United
10States. Investments may be made only in those savings banks or
11savings and loan associations the shares, or investment
12certificates of which are insured by the Federal Deposit
13Insurance Corporation. Any such securities may be purchased at
14the offering or market price thereof at the time of such
15purchase. All such securities so purchased shall mature or be
16redeemable on a date or dates prior to the time when, in the
17judgment of such governing authority, the public funds so
18invested will be required for expenditure by such public agency
19or its governing authority. The expressed judgment of any such
20governing authority as to the time when any public funds will
21be required for expenditure or be redeemable is final and
22conclusive. Any public agency may invest any public funds in
23dividend-bearing share accounts, share certificate accounts or
24class of share accounts of a credit union chartered under the
25laws of this State or the laws of the United States; provided,
26however, the principal office of any such credit union must be

 

 

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1located within the State of Illinois. Investments may be made
2only in those credit unions the accounts of which are insured
3by applicable law.
4    (c) For purposes of this Section, the term "agencies of the
5United States of America" includes: (i) the federal land banks,
6federal intermediate credit banks, banks for cooperative,
7federal farm credit banks, or any other entity authorized to
8issue debt obligations under the Farm Credit Act of 1971 (12
9U.S.C. 2001 et seq.) and Acts amendatory thereto; (ii) the
10federal home loan banks and the federal home loan mortgage
11corporation; and (iii) any other agency created by Act of
12Congress.
13    (d) Except for pecuniary interests permitted under
14subsection (f) of Section 3-14-4 of the Illinois Municipal Code
15or under Section 3.2 of the Public Officer Prohibited Practices
16Act, no person acting as treasurer or financial officer or who
17is employed in any similar capacity by or for a public agency
18may do any of the following:
19        (1) have any interest, directly or indirectly, in any
20    investments in which the agency is authorized to invest.
21        (2) have any interest, directly or indirectly, in the
22    sellers, sponsors, or managers of those investments.
23        (3) receive, in any manner, compensation of any kind
24    from any investments in which the agency is authorized to
25    invest.
26    (e) Any public agency may also invest any public funds in a

 

 

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1Public Treasurers' Investment Pool created under Section 17 of
2the State Treasurer Act. Any public agency may also invest any
3public funds in a fund managed, operated, and administered by a
4bank, subsidiary of a bank, or subsidiary of a bank holding
5company or use the services of such an entity to hold and
6invest or advise regarding the investment of any public funds.
7    (f) To the extent a public agency has custody of funds not
8owned by it or another public agency and does not otherwise
9have authority to invest such funds, the public agency may
10invest such funds as if they were its own. Such funds must be
11released to the appropriate person at the earliest reasonable
12time, but in no case exceeding 31 days, after the private
13person becomes entitled to the receipt of them. All earnings
14accruing on any investments or deposits made pursuant to the
15provisions of this Act shall be credited to the public agency
16by or for which such investments or deposits were made, except
17as provided otherwise in Section 4.1 of the State Finance Act
18or the Local Governmental Tax Collection Act, and except where
19by specific statutory provisions such earnings are directed to
20be credited to and paid to a particular fund.
21    (g) A public agency may purchase or invest in repurchase
22agreements of government securities having the meaning set out
23in the Government Securities Act of 1986, as now or hereafter
24amended or succeeded, subject to the provisions of said Act and
25the regulations issued thereunder. The government securities,
26unless registered or inscribed in the name of the public

 

 

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1agency, shall be purchased through banks or trust companies
2authorized to do business in the State of Illinois.
3    (h) Except for repurchase agreements of government
4securities which are subject to the Government Securities Act
5of 1986, as now or hereafter amended or succeeded, no public
6agency may purchase or invest in instruments which constitute
7repurchase agreements, and no financial institution may enter
8into such an agreement with or on behalf of any public agency
9unless the instrument and the transaction meet the following
10requirements:
11        (1) The securities, unless registered or inscribed in
12    the name of the public agency, are purchased through banks
13    or trust companies authorized to do business in the State
14    of Illinois.
15        (2) An authorized public officer after ascertaining
16    which firm will give the most favorable rate of interest,
17    directs the custodial bank to "purchase" specified
18    securities from a designated institution. The "custodial
19    bank" is the bank or trust company, or agency of
20    government, which acts for the public agency in connection
21    with repurchase agreements involving the investment of
22    funds by the public agency. The State Treasurer may act as
23    custodial bank for public agencies executing repurchase
24    agreements. To the extent the Treasurer acts in this
25    capacity, he is hereby authorized to pass through to such
26    public agencies any charges assessed by the Federal Reserve

 

 

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1    Bank.
2        (3) A custodial bank must be a member bank of the
3    Federal Reserve System or maintain accounts with member
4    banks. All transfers of book-entry securities must be
5    accomplished on a Reserve Bank's computer records through a
6    member bank of the Federal Reserve System. These securities
7    must be credited to the public agency on the records of the
8    custodial bank and the transaction must be confirmed in
9    writing to the public agency by the custodial bank.
10        (4) Trading partners shall be limited to banks or trust
11    companies authorized to do business in the State of
12    Illinois or to registered primary reporting dealers.
13        (5) The security interest must be perfected.
14        (6) The public agency enters into a written master
15    repurchase agreement which outlines the basic
16    responsibilities and liabilities of both buyer and seller.
17        (7) Agreements shall be for periods of 330 days or
18    less.
19        (8) The authorized public officer of the public agency
20    informs the custodial bank in writing of the maturity
21    details of the repurchase agreement.
22        (9) The custodial bank must take delivery of and
23    maintain the securities in its custody for the account of
24    the public agency and confirm the transaction in writing to
25    the public agency. The Custodial Undertaking shall provide
26    that the custodian takes possession of the securities

 

 

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1    exclusively for the public agency; that the securities are
2    free of any claims against the trading partner; and any
3    claims by the custodian are subordinate to the public
4    agency's claims to rights to those securities.
5        (10) The obligations purchased by a public agency may
6    only be sold or presented for redemption or payment by the
7    fiscal agent bank or trust company holding the obligations
8    upon the written instruction of the public agency or
9    officer authorized to make such investments.
10        (11) The custodial bank shall be liable to the public
11    agency for any monetary loss suffered by the public agency
12    due to the failure of the custodial bank to take and
13    maintain possession of such securities.
14    (i) Notwithstanding the foregoing restrictions on
15investment in instruments constituting repurchase agreements
16the Illinois Housing Development Authority may invest in, and
17any financial institution with capital of at least $250,000,000
18may act as custodian for, instruments that constitute
19repurchase agreements, provided that the Illinois Housing
20Development Authority, in making each such investment,
21complies with the safety and soundness guidelines for engaging
22in repurchase transactions applicable to federally insured
23banks, savings banks, savings and loan associations or other
24depository institutions as set forth in the Federal Financial
25Institutions Examination Council Policy Statement Regarding
26Repurchase Agreements and any regulations issued, or which may

 

 

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1be issued by the supervisory federal authority pertaining
2thereto and any amendments thereto; provided further that the
3securities shall be either (i) direct general obligations of,
4or obligations the payment of the principal of and/or interest
5on which are unconditionally guaranteed by, the United States
6of America or (ii) any obligations of any agency, corporation
7or subsidiary thereof controlled or supervised by and acting as
8an instrumentality of the United States Government pursuant to
9authority granted by the Congress of the United States and
10provided further that the security interest must be perfected
11by either the Illinois Housing Development Authority, its
12custodian or its agent receiving possession of the securities
13either physically or transferred through a nationally
14recognized book entry system.
15    (j) In addition to all other investments authorized under
16this Section, a community college district may invest public
17funds in any mutual funds that invest primarily in corporate
18investment grade or global government short term bonds.
19Purchases of mutual funds that invest primarily in global
20government short term bonds shall be limited to funds with
21assets of at least $100 million and that are rated at the time
22of purchase as one of the 10 highest classifications
23established by a recognized rating service. The investments
24shall be subject to approval by the local community college
25board of trustees. Each community college board of trustees
26shall develop a policy regarding the percentage of the

 

 

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1college's investment portfolio that can be invested in such
2funds.
3    Nothing in this Section shall be construed to authorize an
4intergovernmental risk management entity to accept the deposit
5of public funds except for risk management purposes.
6(Source: P.A. 96-741, eff. 8-25-09.)
 
7    Section 10. The Counties Code is amended by changing
8Sections 3-10009, 3-11002, 3-11003, 3-11004, 3-11006, 3-11007,
93-11009, 3-11010, 3-11011, 3-11013, and 3-11018 as follows:
 
10    (55 ILCS 5/3-10009)  (from Ch. 34, par. 3-10009)
11    Sec. 3-10009. Deposit of public funds.
12    (a) In counties having a population of less than 150,000
13the county board, when requested by the county treasurer, shall
14designate one or more banks, or savings and loan associations,
15savings banks, or credit unions in which the funds and other
16public moneys in the custody of the county treasurer may be
17kept and when a bank, or savings and loan association, savings
18bank, or credit union has been designated as a depository it
19shall continue as such until 10 days have elapsed after a new
20depository is designated and has qualified by furnishing the
21statements of resources and liabilities as is required by this
22Section. When a new depository is designated, the county board
23shall notify the sureties of the county treasurer of that fact,
24in writing, at least 5 days before the transfer of funds. The

 

 

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1county treasurer shall be discharged from responsibility for
2all funds and moneys which he deposits in a depository so
3designated while such funds and moneys are so deposited.
4    No bank, or savings and loan association, savings bank, or
5credit union shall receive public funds as permitted by this
6Section, unless it has complied with the requirements
7established pursuant to Section 6 of "An Act relating to
8certain investments of public funds by public agencies",
9approved July 23, 1943, as now or hereafter amended.
10    (b) In addition to any other investments or deposits
11authorized under this Code, counties are authorized to invest
12the funds and public moneys in the custody of the County
13Treasurer in accordance with the Public Funds Investment Act.
14(Source: P.A. 86-962.)
 
15    (55 ILCS 5/3-11002)  (from Ch. 34, par. 3-11002)
16    Sec. 3-11002. Designation of depositories.
17    (a) In counties having a population of more than 150,000
18the county board, when requested by the County Treasurer, shall
19designate one or more banks, or savings and loan associations,
20savings banks, or credit unions in which the funds and other
21public moneys in the custody of the County Treasurer may be
22kept and when a bank, or savings and loan association, savings
23bank, or credit union has been designated as a depository it
24shall continue as such until 10 days have elapsed after a new
25depository is designated and has qualified by furnishing the

 

 

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1statements of resources and liabilities as is required by this
2Section. When a new depository is designated, the county board
3shall notify the sureties of the County Treasurer of that fact,
4in writing, at least 5 days before the transfer of funds. The
5County Treasurer shall be discharged from responsibility for
6all funds and moneys which he deposits in a depository so
7designated while such funds and moneys are so deposited.
8    No bank, or savings and loan association, savings bank, or
9credit union shall receive public funds as permitted by this
10Section, unless it has complied with the requirements
11established pursuant to Section 6 of "An Act relating to
12certain investments of public funds by public agencies",
13approved July 23, 1943, as now or hereafter amended.
14    (b) In addition to any other investments or deposits
15authorized under this Code, counties are authorized to invest
16the funds and public moneys in the custody of the County
17Treasurer in accordance with the Public Funds Investment Act.
18(Source: P.A. 86-962.)
 
19    (55 ILCS 5/3-11003)  (from Ch. 34, par. 3-11003)
20    Sec. 3-11003. Classification of funds. For the purpose of
21establishing a control over the withdrawal, in accordance with
22the provisions of this Division, of all county moneys deposited
23in any bank, or savings and loan association, savings bank, or
24credit union, as hereinafter required, such moneys are hereby
25classified as follows:

 

 

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1    Class A. All taxes and special assessments received by the
2county treasurer in his capacity as ex officio county collector
3or ex officio town collector, and held by him pending
4distribution to the several governments or authorities
5entitled to receive the same, shall be known as "Class A"
6funds.
7    Class B. All other moneys belonging to the State of
8Illinois or to any political or corporate subdivision thereof,
9except the county, shall be known as "Class B" funds.
10    Class C. All moneys belonging to the county in its
11corporate capacity shall be known as "Class C" funds.
12    Class D. All other county moneys as defined in Section
133-11001 shall be known as "Class D" funds.
14(Source: P.A. 86-962.)
 
15    (55 ILCS 5/3-11004)  (from Ch. 34, par. 3-11004)
16    Sec. 3-11004. Deposits by county treasurer. It shall be the
17duty of the county treasurer of such county to deposit daily,
18in separate accounts in accordance with the classification set
19forth in Section 3-11003, to the credit of the county treasurer
20of such county, in one or more banks, or savings and loan
21associations, savings banks, or credit unions as shall have
22been selected and designated under the terms of this Division
23and as shall have complied with the requirements thereof, all
24county moneys as defined in Section 3-11001, received by him
25during banking hours, and also all such county moneys as he may

 

 

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1have received on the day previous after banking hours.
2(Source: P.A. 86-962.)
 
3    (55 ILCS 5/3-11006)  (from Ch. 34, par. 3-11006)
4    Sec. 3-11006. Investment of county moneys; release of
5private funds in custody of county treasurer.
6    (a) All county moneys shall be invested in one or more of
7the following: (1) (a) interest-bearing savings accounts,
8interest-bearing certificates of deposit or interest-bearing
9time deposits constituting direct obligations of any bank as
10shall have been selected and designated under the terms of this
11Division and as shall have complied with the requirements
12thereof; (2) (b) shares or other forms of securities legally
13issuable by savings and loan associations incorporated under
14the laws of this State or any other state or under the laws of
15the United States, provided such shares or securities are
16insured by the Federal Savings and Loan Insurance Corporation;
17(3) (c) bonds, notes, certificates of indebtedness, treasury
18bills or other securities now or hereafter issued, which are
19guaranteed by the full faith and credit of the United States of
20America as to principal and interest; (4) (d) short term
21discount obligations of the Federal National Mortgage
22Association; and (5) dividend-bearing share accounts, share
23certificate accounts, or class of share accounts of a credit
24union chartered under the laws of this State or the laws of the
25United States, provided the accounts of that credit union are

 

 

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1insured by applicable law and the credit union's principal
2office is located within the State of Illinois. The expressed
3judgment of the county treasurer as to the time when any county
4moneys will be required for expenditure or be redeemable is
5final and conclusive. Privately owned funds held in the custody
6of a county treasurer must be released to the appropriate party
7at the earliest reasonable time, but in no case exceeding 31
8days, after the private party becomes entitled to the receipt
9of them.
10    (b) In addition to any other investments or deposits
11authorized under this Code, all counties are authorized to
12invest county moneys in accordance with the Public Funds
13Investment Act.
14(Source: P.A. 86-962.)
 
15    (55 ILCS 5/3-11007)  (from Ch. 34, par. 3-11007)
16    Sec. 3-11007. Monthly report of investments and deposits.
17On the twenty-eighth day of each month the county treasurer
18shall publish a report disclosing the investments and deposits
19of county moneys as of the first day of that month. The report
20shall list, under the name of each bank, or savings and loan
21association, savings bank, or credit union in which the county
22treasurer maintains an account or investment, each separate
23account or investment maintained in that institution, the
24amount of each such account or investment, the rate of interest
25of each such account or investment, and the term of maturity of

 

 

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1each such account or investment. The report shall also disclose
2the total cost and average rate of interest of all other
3investments of county moneys. A copy of the report shall be
4transmitted to each member of the county board, and the report
5shall be a public record.
6(Source: P.A. 86-962.)
 
7    (55 ILCS 5/3-11009)  (from Ch. 34, par. 3-11009)
8    Sec. 3-11009. Petty cash fund. For the purpose of enabling
9the county treasurer to pay in cash such warrants and other
10demands as may be presented to him for payment in cash, he is
11hereby authorized to withhold from the daily deposit of funds
12required of him under Section 3-11004, or to withdraw from the
13one or more banks, or savings and loan associations, savings
14banks, or credit unions holding such county moneys on deposit,
15upon check or draft payable to his own order as county
16treasurer, such amounts as will enable him to maintain a petty
17cash fund sufficient to meet the daily demand for the purpose
18herein indicated: Provided, however, that the amount of said
19petty cash fund shall at no time exceed the sum of $5,000 in
20counties having fewer than 1,000,000 inhabitants or the sum of
21$200,000 in counties having 1,000,000 or more inhabitants. The
22county treasurer shall keep proper records of such petty cash
23fund, showing the amounts so withheld or withdrawn by him daily
24and the amounts paid out by him in cash from day to day. Such
25records shall be open to the inspection of all persons wishing

 

 

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1to examine the same.
2(Source: P.A. 86-962.)
 
3    (55 ILCS 5/3-11010)  (from Ch. 34, par. 3-11010)
4    Sec. 3-11010. Equalization and transfer of deposits. For
5the purpose of facilitating the equalization or apportionment
6of the amount of the balances on deposit with the several
7depositories and the speedy transfer of money from one
8depository to another in case of necessity, the county
9treasurer is hereby authorized to draw checks or drafts against
10any deposit made by him under the terms of this Division. Each
11draft or check so drawn shall be payable to the order of the
12county treasurer, and shall indicate upon its face that it is
13drawn only for deposit in a bank, or savings and loan
14association, savings bank, or credit union authorized under the
15provisions of this Division to receive county moneys.
16(Source: P.A. 86-962.)
 
17    (55 ILCS 5/3-11011)  (from Ch. 34, par. 3-11011)
18    Sec. 3-11011. Designation of active depository. Of the
19banks, or savings and loan associations, savings banks, or
20credit unions which may have been so designated as
21depositories, one shall be designated from time to time by the
22county treasurer as the active bank, depository, or savings and
23loan association, savings bank, or credit union for a period of
24not more than one month at a time. The county board shall have

 

 

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1power, if it sees fit, to require that no bank, or savings and
2loan association, savings bank, or credit union whose aggregate
3capital stock and surplus is less than a certain specified
4amount shall be named as the active bank, or savings and loan
5association, savings bank, or credit union. During such period
6the county treasurer shall draw all of his checks to pay
7warrants and other demands drawn upon him upon such active
8bank, or savings and loan association, savings bank, or credit
9union: Provided, however, that the county treasurer shall have
10power to withdraw county moneys from any depository for the
11purposes stated in Section 3-11010: And, provided, further,
12that during such period drafts and checks against deposit of
13funds designated by Section 3-11003 hereof as "Class A" funds
14and "Class B" funds may be drawn upon other than the active
15bank, or savings and loan association, savings bank, or credit
16union.
17(Source: P.A. 86-962.)
 
18    (55 ILCS 5/3-11013)  (from Ch. 34, par. 3-11013)
19    Sec. 3-11013. Annual report of interest received. The
20county treasurer shall make to the county clerk an annual
21report, under oath, of all interest received by the county
22treasurer or credited to the county treasurer by any bank, or
23savings and loan association, savings bank, or credit union, in
24which is deposited any county moneys, and at the time of making
25such report the county treasurer shall pay into the county

 

 

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1treasury for the benefit of the county the aggregate amount of
2all interest so received by or credited to him, as shown by
3said report. Such report shall show the name of each bank or
4depository where any county moneys are deposited.
5(Source: P.A. 86-962.)
 
6    (55 ILCS 5/3-11018)  (from Ch. 34, par. 3-11018)
7    Sec. 3-11018. Payment of interest or fees on deposits. No
8bank, or savings and loan association, savings bank, or credit
9union holding county moneys deposited therewith by the county
10treasurer in accordance with the provisions in this Division,
11or otherwise, and no officer of any such bank, or savings and
12loan association, savings bank, or credit union, or other
13person, shall pay to, withhold for the benefit of, or contract
14in any manner for the payment to such county treasurer, or to
15any other person for him, of any interest or other fee,
16perquisite or emolument, on account of the deposit of such
17county moneys, except such interest as shall be paid to such
18county treasurer for the benefit of the county.
19(Source: P.A. 86-962.)
 
20    Section 99. Effective date. This Act takes effect upon
21becoming law.