Rep. Emily McAsey

Filed: 3/9/2011

 

 


 

 


 
09700HB2101ham001LRB097 09042 KMW 52333 a

1
AMENDMENT TO HOUSE BILL 2101

2    AMENDMENT NO. ______. Amend House Bill 2101 by replacing
3everything after the enacting clause with the following:
 
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;

 

 

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1        (3) in interest-bearing savings accounts,
2    interest-bearing certificates of deposit or
3    interest-bearing time deposits or any other investments
4    constituting direct obligations of any bank as defined by
5    the Illinois Banking Act;
6        (4) in short term obligations of corporations
7    organized in the United States with assets exceeding
8    $500,000,000 if (i) such obligations are rated at the time
9    of purchase at one of the 3 highest classifications
10    established by at least 2 standard rating services and
11    which mature not later than 270 days from the date of
12    purchase, (ii) such purchases do not exceed 10% of the
13    corporation's outstanding obligations and (iii) no more
14    than one-third of the public agency's funds may be invested
15    in short term obligations of corporations; or
16        (5) in money market mutual funds registered under the
17    Investment Company Act of 1940, provided that the portfolio
18    of any such money market mutual fund is limited to
19    obligations described in paragraph (1) or (2) of this
20    subsection and to agreements to repurchase such
21    obligations.
22    (a-1) In addition to any other investments authorized under
23this Act, a municipality or a county may invest its public
24funds in interest bearing bonds of any county, township, city,
25village, incorporated town, municipal corporation, or school
26district, of the State of Illinois, of any other state, or of

 

 

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1any political subdivision or agency of the State of Illinois or
2of any other state, whether the interest earned thereon is
3taxable or tax-exempt under federal law. The bonds shall be
4registered in the name of the municipality or county or held
5under a custodial agreement at a bank. The bonds shall be rated
6at the time of purchase within the 4 highest general
7classifications established by a rating service of nationally
8recognized expertise in rating bonds of states and their
9political subdivisions.
10    (b) Investments may be made only in banks which are insured
11by the Federal Deposit Insurance Corporation. Any public agency
12may invest any public funds in short term discount obligations
13of the Federal National Mortgage Association or in shares or
14other forms of securities legally issuable by savings banks or
15savings and loan associations incorporated under the laws of
16this State or any other state or under the laws of the United
17States. Investments may be made only in those savings banks or
18savings and loan associations the shares, or investment
19certificates of which are insured by the Federal Deposit
20Insurance Corporation. Any such securities may be purchased at
21the offering or market price thereof at the time of such
22purchase. All such securities so purchased shall mature or be
23redeemable on a date or dates prior to the time when, in the
24judgment of such governing authority, the public funds so
25invested will be required for expenditure by such public agency
26or its governing authority. The expressed judgment of any such

 

 

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

 

 

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1    investments in which the agency is authorized to invest.
2        (2) have any interest, directly or indirectly, in the
3    sellers, sponsors, or managers of those investments.
4        (3) receive, in any manner, compensation of any kind
5    from any investments in which the agency is authorized to
6    invest.
7    (e) Any public agency may also invest any public funds in a
8Public Treasurers' Investment Pool created under Section 17 of
9the State Treasurer Act. Any public agency may also invest any
10public funds in a fund managed, operated, and administered by a
11bank, subsidiary of a bank, or subsidiary of a bank holding
12company or use the services of such an entity to hold and
13invest or advise regarding the investment of any public funds.
14    (f) To the extent a public agency has custody of funds not
15owned by it or another public agency and does not otherwise
16have authority to invest such funds, the public agency may
17invest such funds as if they were its own. Such funds must be
18released to the appropriate person at the earliest reasonable
19time, but in no case exceeding 31 days, after the private
20person becomes entitled to the receipt of them. All earnings
21accruing on any investments or deposits made pursuant to the
22provisions of this Act shall be credited to the public agency
23by or for which such investments or deposits were made, except
24as provided otherwise in Section 4.1 of the State Finance Act
25or the Local Governmental Tax Collection Act, and except where
26by specific statutory provisions such earnings are directed to

 

 

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1be credited to and paid to a particular fund.
2    (g) A public agency may purchase or invest in repurchase
3agreements of government securities having the meaning set out
4in the Government Securities Act of 1986, as now or hereafter
5amended or succeeded, subject to the provisions of said Act and
6the regulations issued thereunder. The government securities,
7unless registered or inscribed in the name of the public
8agency, shall be purchased through banks or trust companies
9authorized to do business in the State of Illinois.
10    (h) Except for repurchase agreements of government
11securities which are subject to the Government Securities Act
12of 1986, as now or hereafter amended or succeeded, no public
13agency may purchase or invest in instruments which constitute
14repurchase agreements, and no financial institution may enter
15into such an agreement with or on behalf of any public agency
16unless the instrument and the transaction meet the following
17requirements:
18        (1) The securities, unless registered or inscribed in
19    the name of the public agency, are purchased through banks
20    or trust companies authorized to do business in the State
21    of Illinois.
22        (2) An authorized public officer after ascertaining
23    which firm will give the most favorable rate of interest,
24    directs the custodial bank to "purchase" specified
25    securities from a designated institution. The "custodial
26    bank" is the bank or trust company, or agency of

 

 

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1    government, which acts for the public agency in connection
2    with repurchase agreements involving the investment of
3    funds by the public agency. The State Treasurer may act as
4    custodial bank for public agencies executing repurchase
5    agreements. To the extent the Treasurer acts in this
6    capacity, he is hereby authorized to pass through to such
7    public agencies any charges assessed by the Federal Reserve
8    Bank.
9        (3) A custodial bank must be a member bank of the
10    Federal Reserve System or maintain accounts with member
11    banks. All transfers of book-entry securities must be
12    accomplished on a Reserve Bank's computer records through a
13    member bank of the Federal Reserve System. These securities
14    must be credited to the public agency on the records of the
15    custodial bank and the transaction must be confirmed in
16    writing to the public agency by the custodial bank.
17        (4) Trading partners shall be limited to banks or trust
18    companies authorized to do business in the State of
19    Illinois or to registered primary reporting dealers.
20        (5) The security interest must be perfected.
21        (6) The public agency enters into a written master
22    repurchase agreement which outlines the basic
23    responsibilities and liabilities of both buyer and seller.
24        (7) Agreements shall be for periods of 330 days or
25    less.
26        (8) The authorized public officer of the public agency

 

 

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1    informs the custodial bank in writing of the maturity
2    details of the repurchase agreement.
3        (9) The custodial bank must take delivery of and
4    maintain the securities in its custody for the account of
5    the public agency and confirm the transaction in writing to
6    the public agency. The Custodial Undertaking shall provide
7    that the custodian takes possession of the securities
8    exclusively for the public agency; that the securities are
9    free of any claims against the trading partner; and any
10    claims by the custodian are subordinate to the public
11    agency's claims to rights to those securities.
12        (10) The obligations purchased by a public agency may
13    only be sold or presented for redemption or payment by the
14    fiscal agent bank or trust company holding the obligations
15    upon the written instruction of the public agency or
16    officer authorized to make such investments.
17        (11) The custodial bank shall be liable to the public
18    agency for any monetary loss suffered by the public agency
19    due to the failure of the custodial bank to take and
20    maintain possession of such securities.
21    (i) Notwithstanding the foregoing restrictions on
22investment in instruments constituting repurchase agreements
23the Illinois Housing Development Authority may invest in, and
24any financial institution with capital of at least $250,000,000
25may act as custodian for, instruments that constitute
26repurchase agreements, provided that the Illinois Housing

 

 

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1Development Authority, in making each such investment,
2complies with the safety and soundness guidelines for engaging
3in repurchase transactions applicable to federally insured
4banks, savings banks, savings and loan associations or other
5depository institutions as set forth in the Federal Financial
6Institutions Examination Council Policy Statement Regarding
7Repurchase Agreements and any regulations issued, or which may
8be issued by the supervisory federal authority pertaining
9thereto and any amendments thereto; provided further that the
10securities shall be either (i) direct general obligations of,
11or obligations the payment of the principal of and/or interest
12on which are unconditionally guaranteed by, the United States
13of America or (ii) any obligations of any agency, corporation
14or subsidiary thereof controlled or supervised by and acting as
15an instrumentality of the United States Government pursuant to
16authority granted by the Congress of the United States and
17provided further that the security interest must be perfected
18by either the Illinois Housing Development Authority, its
19custodian or its agent receiving possession of the securities
20either physically or transferred through a nationally
21recognized book entry system.
22    (j) In addition to all other investments authorized under
23this Section, a community college district may invest public
24funds in any mutual funds that invest primarily in corporate
25investment grade or global government short term bonds.
26Purchases of mutual funds that invest primarily in global

 

 

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1government short term bonds shall be limited to funds with
2assets of at least $100 million and that are rated at the time
3of purchase as one of the 10 highest classifications
4established by a recognized rating service. The investments
5shall be subject to approval by the local community college
6board of trustees. Each community college board of trustees
7shall develop a policy regarding the percentage of the
8college's investment portfolio that can be invested in such
9funds.
10    Nothing in this Section shall be construed to authorize an
11intergovernmental risk management entity to accept the deposit
12of public funds except for risk management purposes.
13(Source: P.A. 96-741, eff. 8-25-09.)
 
14    Section 10. The Counties Code is amended by changing
15Sections 3-10009, 3-11002, 3-11003, 3-11004, 3-11006, 3-11007,
163-11009, 3-11010, 3-11011, 3-11013, and 3-11018 as follows:
 
17    (55 ILCS 5/3-10009)  (from Ch. 34, par. 3-10009)
18    Sec. 3-10009. Deposit of public funds.
19    (a) In counties having a population of less than 150,000
20the county board, when requested by the county treasurer, shall
21designate one or more banks, or savings and loan associations,
22savings banks, or credit unions in which the funds and other
23public moneys in the custody of the county treasurer may be
24kept and when a bank, or savings and loan association, savings

 

 

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

 

 

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

 

 

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1    (55 ILCS 5/3-11003)  (from Ch. 34, par. 3-11003)
2    Sec. 3-11003. Classification of funds. For the purpose of
3establishing a control over the withdrawal, in accordance with
4the provisions of this Division, of all county moneys deposited
5in any bank, or savings and loan association, savings bank, or
6credit union, as hereinafter required, such moneys are hereby
7classified as follows:
8    Class A. All taxes and special assessments received by the
9county treasurer in his capacity as ex officio county collector
10or ex officio town collector, and held by him pending
11distribution to the several governments or authorities
12entitled to receive the same, shall be known as "Class A"
13funds.
14    Class B. All other moneys belonging to the State of
15Illinois or to any political or corporate subdivision thereof,
16except the county, shall be known as "Class B" funds.
17    Class C. All moneys belonging to the county in its
18corporate capacity shall be known as "Class C" funds.
19    Class D. All other county moneys as defined in Section
203-11001 shall be known as "Class D" funds.
21(Source: P.A. 86-962.)
 
22    (55 ILCS 5/3-11004)  (from Ch. 34, par. 3-11004)
23    Sec. 3-11004. Deposits by county treasurer. It shall be the
24duty of the county treasurer of such county to deposit daily,
25in separate accounts in accordance with the classification set

 

 

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1forth in Section 3-11003, to the credit of the county treasurer
2of such county, in one or more banks, or savings and loan
3associations, savings banks, or credit unions as shall have
4been selected and designated under the terms of this Division
5and as shall have complied with the requirements thereof, all
6county moneys as defined in Section 3-11001, received by him
7during banking hours, and also all such county moneys as he may
8have received on the day previous after banking hours.
9(Source: P.A. 86-962.)
 
10    (55 ILCS 5/3-11006)  (from Ch. 34, par. 3-11006)
11    Sec. 3-11006. Investment of county moneys; release of
12private funds in custody of county treasurer.
13    (a) All county moneys shall be invested in one or more of
14the following: (1) (a) interest-bearing savings accounts,
15interest-bearing certificates of deposit or interest-bearing
16time deposits constituting direct obligations of any bank as
17shall have been selected and designated under the terms of this
18Division and as shall have complied with the requirements
19thereof; (2) (b) shares or other forms of securities legally
20issuable by savings and loan associations incorporated under
21the laws of this State or any other state or under the laws of
22the United States, provided such shares or securities are
23insured by the Federal Savings and Loan Insurance Corporation;
24(3) (c) bonds, notes, certificates of indebtedness, treasury
25bills or other securities now or hereafter issued, which are

 

 

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1guaranteed by the full faith and credit of the United States of
2America as to principal and interest; (4) (d) short term
3discount obligations of the Federal National Mortgage
4Association; and (5) dividend-bearing share accounts, share
5certificate accounts, or class of share accounts of a credit
6union chartered under the laws of this State or the laws of the
7United States, provided the accounts of that credit union are
8insured by applicable law and the credit union's principal
9office is located within the State of Illinois. The expressed
10judgment of the county treasurer as to the time when any county
11moneys will be required for expenditure or be redeemable is
12final and conclusive. Privately owned funds held in the custody
13of a county treasurer must be released to the appropriate party
14at the earliest reasonable time, but in no case exceeding 31
15days, after the private party becomes entitled to the receipt
16of them.
17    (b) In addition to any other investments or deposits
18authorized under this Code, all counties are authorized to
19invest county moneys in accordance with the Public Funds
20Investment Act.
21(Source: P.A. 86-962.)
 
22    (55 ILCS 5/3-11007)  (from Ch. 34, par. 3-11007)
23    Sec. 3-11007. Monthly report of investments and deposits.
24On the twenty-eighth day of each month the county treasurer
25shall publish a report disclosing the investments and deposits

 

 

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1of county moneys as of the first day of that month. The report
2shall list, under the name of each bank, or savings and loan
3association, savings bank, or credit union in which the county
4treasurer maintains an account or investment, each separate
5account or investment maintained in that institution, the
6amount of each such account or investment, the rate of interest
7of each such account or investment, and the term of maturity of
8each such account or investment. The report shall also disclose
9the total cost and average rate of interest of all other
10investments of county moneys. A copy of the report shall be
11transmitted to each member of the county board, and the report
12shall be a public record.
13(Source: P.A. 86-962.)
 
14    (55 ILCS 5/3-11009)  (from Ch. 34, par. 3-11009)
15    Sec. 3-11009. Petty cash fund. For the purpose of enabling
16the county treasurer to pay in cash such warrants and other
17demands as may be presented to him for payment in cash, he is
18hereby authorized to withhold from the daily deposit of funds
19required of him under Section 3-11004, or to withdraw from the
20one or more banks, or savings and loan associations, savings
21banks, or credit unions holding such county moneys on deposit,
22upon check or draft payable to his own order as county
23treasurer, such amounts as will enable him to maintain a petty
24cash fund sufficient to meet the daily demand for the purpose
25herein indicated: Provided, however, that the amount of said

 

 

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1petty cash fund shall at no time exceed the sum of $5,000 in
2counties having fewer than 1,000,000 inhabitants or the sum of
3$200,000 in counties having 1,000,000 or more inhabitants. The
4county treasurer shall keep proper records of such petty cash
5fund, showing the amounts so withheld or withdrawn by him daily
6and the amounts paid out by him in cash from day to day. Such
7records shall be open to the inspection of all persons wishing
8to examine the same.
9(Source: P.A. 86-962.)
 
10    (55 ILCS 5/3-11010)  (from Ch. 34, par. 3-11010)
11    Sec. 3-11010. Equalization and transfer of deposits. For
12the purpose of facilitating the equalization or apportionment
13of the amount of the balances on deposit with the several
14depositories and the speedy transfer of money from one
15depository to another in case of necessity, the county
16treasurer is hereby authorized to draw checks or drafts against
17any deposit made by him under the terms of this Division. Each
18draft or check so drawn shall be payable to the order of the
19county treasurer, and shall indicate upon its face that it is
20drawn only for deposit in a bank, or savings and loan
21association, savings bank, or credit union authorized under the
22provisions of this Division to receive county moneys.
23(Source: P.A. 86-962.)
 
24    (55 ILCS 5/3-11011)  (from Ch. 34, par. 3-11011)

 

 

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1    Sec. 3-11011. Designation of active depository. Of the
2banks, or savings and loan associations, savings banks, or
3credit unions which may have been so designated as
4depositories, one shall be designated from time to time by the
5county treasurer as the active bank, depository, or savings and
6loan association, savings bank, or credit union for a period of
7not more than one month at a time. The county board shall have
8power, if it sees fit, to require that no bank, or savings and
9loan association, savings bank, or credit union whose aggregate
10capital stock and surplus is less than a certain specified
11amount shall be named as the active bank, or savings and loan
12association, savings bank, or credit union. During such period
13the county treasurer shall draw all of his checks to pay
14warrants and other demands drawn upon him upon such active
15bank, or savings and loan association, savings bank, or credit
16union: Provided, however, that the county treasurer shall have
17power to withdraw county moneys from any depository for the
18purposes stated in Section 3-11010: And, provided, further,
19that during such period drafts and checks against deposit of
20funds designated by Section 3-11003 hereof as "Class A" funds
21and "Class B" funds may be drawn upon other than the active
22bank, or savings and loan association, savings bank, or credit
23union.
24(Source: P.A. 86-962.)
 
25    (55 ILCS 5/3-11013)  (from Ch. 34, par. 3-11013)

 

 

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1    Sec. 3-11013. Annual report of interest received. The
2county treasurer shall make to the county clerk an annual
3report, under oath, of all interest received by the county
4treasurer or credited to the county treasurer by any bank, or
5savings and loan association, savings bank, or credit union, in
6which is deposited any county moneys, and at the time of making
7such report the county treasurer shall pay into the county
8treasury for the benefit of the county the aggregate amount of
9all interest so received by or credited to him, as shown by
10said report. Such report shall show the name of each bank or
11depository where any county moneys are deposited.
12(Source: P.A. 86-962.)
 
13    (55 ILCS 5/3-11018)  (from Ch. 34, par. 3-11018)
14    Sec. 3-11018. Payment of interest or fees on deposits. No
15bank, or savings and loan association, savings bank, or credit
16union holding county moneys deposited therewith by the county
17treasurer in accordance with the provisions in this Division,
18or otherwise, and no officer of any such bank, or savings and
19loan association, savings bank, or credit union, or other
20person, shall pay to, withhold for the benefit of, or contract
21in any manner for the payment to such county treasurer, or to
22any other person for him, of any interest or other fee,
23perquisite or emolument, on account of the deposit of such
24county moneys, except such interest as shall be paid to such
25county treasurer for the benefit of the county.

 

 

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1(Source: P.A. 86-962.)
 
2    Section 99. Effective date. This Act takes effect upon
3becoming law.".