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| [ Engrossed ] | [ Enrolled ] | [ House Amendment 001 ] |
90_HB2630
30 ILCS 235/2.5 new
Amends the Public Funds Investment Act. Requires public
agencies to develop and implement an investment policy for
public funds within their custody or control. Includes areas
the policy must cover to address investment safety,
liquidity, and rate of return. Requires that policies be in
effect by January 1, 2000. Effective immediately.
LRB9008551JMmbB
LRB9008551JMmbB
1 AN ACT concerning the safety and soundness of public
2 investments
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Public Funds Investment Act is amended by
6 adding Section 2.5 as follows:
7 (30 ILCS 235/2.5 new)
8 Sec. 2.5. Investment policy.
9 (a) Investment of public funds by a public agency shall
10 be governed by a written investment policy adopted by the
11 public agency. The level of detail and complexity of the
12 investment policy shall be appropriate to the nature of the
13 funds, the purpose for the funds, and the amount of the
14 public funds within the investment portfolio. The policy
15 shall address safety of principal, liquidity of funds, and
16 return on investment and shall require that the investment
17 portfolio be structured in such manner as to provide
18 sufficient liquidity to pay obligations as they come due. In
19 addition, the investment policy shall include or address the
20 following:
21 (1) a listing of authorized investments;
22 (2) a rule, such as the "prudent person rule",
23 establishing the standard of care that must be maintained
24 by the persons investing the public funds;
25 (3) investment guidelines that are appropriate to
26 the nature of the funds, the purpose for the funds, and
27 the amount of the public funds within the investment
28 portfolio;
29 (4) a policy regarding diversification of the
30 investment portfolio that is appropriate to the nature of
31 the funds, the purpose for the funds, and the amount of
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1 the public funds within the investment portfolio;
2 (5) a policy regarding appropriate collateral
3 requirements and appropriate contractual arrangements for
4 the custody and safekeeping of portfolio assets;
5 (6) a policy regarding the establishment of a
6 system of internal controls and written operational
7 procedures designed to prevent losses of funds that might
8 arise from fraud, employee error, misrepresentation by
9 third parties, or imprudent actions by employees of the
10 entity. The written operational procedures shall
11 address, but need not be limited to, relevant matters
12 such as custody and safekeeping of assets, delivery and
13 payment requirements, investment accounting, repurchase
14 agreements, wire transfer agreements, collateral
15 requirements, depository agreements, and banking service
16 contracts;
17 (7) identification of the chief investment officer
18 who is responsible for establishing the internal controls
19 and written procedures for the operation of the
20 investment program;
21 (8) performance measures that are appropriate to
22 the nature of the funds, the purpose for the funds, and
23 the amount of the public funds within the investment
24 portfolio;
25 (9) a policy regarding appropriate periodic review
26 of the investment portfolio, its effectiveness in meeting
27 the public agency's needs for safety, liquidity, rate of
28 return, and diversification, and its general performance;
29 (10) a policy establishing at least quarterly
30 written reports of investment activities by the public
31 agency's chief financial officer for submission to the
32 governing body and chief executive officer of the public
33 agency. The reports shall include information regarding
34 securities in the portfolio by class or type, book value,
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1 income earned, and market value as of the report date;
2 (11) a policy regarding the selection of investment
3 advisors, money managers, and financial institutions; and
4 (12) a policy regarding ethics and conflicts of
5 interest.
6 (b) For purposes of the State or a county, the
7 investment policy shall be adopted by the elected treasurer
8 and presented to the chief executive officer and the
9 governing body. For purposes of any other public agency, the
10 investment policy shall be adopted by the governing body of
11 the public agency.
12 (c) The investment policy shall be made available to the
13 public at the main administrative office of the public
14 agency.
15 (d) The written investment policy required under this
16 Section shall be developed and implemented by January 1,
17 2000.
18 Section 99. Effective date. This Act takes effect upon
19 becoming law.