Illinois 2025-2026 Regular Session

Illinois House Bill HB2741 Compare Versions

Only one version of the bill is available at this time.

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1	1	104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 HB2741 Introduced , by Rep. Travis Weaver SYNOPSIS AS INTRODUCED: 30 ILCS 235/2 from Ch. 85, par. 902 Amends the Public Funds Investment Act. Permits public agencies to invest public funds in any security that matures or that may be tendered for purchase at the option of the holder within not more than 7 years of the date on which it is acquired and that has the highest rating category (AAA) or the second highest rating category (AA) assigned by Standard & Poor's Corporation, Moody's Investors' Services, or other similar nationally recognized statistical rating organization. Effective immediately. LRB104 08315 HLH 18366 b A BILL FOR 104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 HB2741 Introduced , by Rep. Travis Weaver SYNOPSIS AS INTRODUCED: 30 ILCS 235/2 from Ch. 85, par. 902 30 ILCS 235/2 from Ch. 85, par. 902 Amends the Public Funds Investment Act. Permits public agencies to invest public funds in any security that matures or that may be tendered for purchase at the option of the holder within not more than 7 years of the date on which it is acquired and that has the highest rating category (AAA) or the second highest rating category (AA) assigned by Standard & Poor's Corporation, Moody's Investors' Services, or other similar nationally recognized statistical rating organization. Effective immediately. LRB104 08315 HLH 18366 b LRB104 08315 HLH 18366 b A BILL FOR
2	2	104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 HB2741 Introduced , by Rep. Travis Weaver SYNOPSIS AS INTRODUCED:
3	3	30 ILCS 235/2 from Ch. 85, par. 902 30 ILCS 235/2 from Ch. 85, par. 902
4	4	30 ILCS 235/2 from Ch. 85, par. 902
5	5	Amends the Public Funds Investment Act. Permits public agencies to invest public funds in any security that matures or that may be tendered for purchase at the option of the holder within not more than 7 years of the date on which it is acquired and that has the highest rating category (AAA) or the second highest rating category (AA) assigned by Standard & Poor's Corporation, Moody's Investors' Services, or other similar nationally recognized statistical rating organization. Effective immediately.
6	6	LRB104 08315 HLH 18366 b LRB104 08315 HLH 18366 b
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8	8	A BILL FOR
9	9	HB2741LRB104 08315 HLH 18366 b HB2741 LRB104 08315 HLH 18366 b
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11	11	1 AN ACT concerning finance.
12	12	2 Be it enacted by the People of the State of Illinois,
13	13	3 represented in the General Assembly:
14	14	4 Section 5. The Public Funds Investment Act is amended by
15	15	5 changing Section 2 as follows:
16	16	6 (30 ILCS 235/2) (from Ch. 85, par. 902)
17	17	7 Sec. 2. Authorized investments.
18	18	8 (a) Any public agency may invest any public funds as
19	19	9 follows:
20	20	10 (1) in bonds, notes, certificates of indebtedness,
21	21	11 treasury bills or other securities now or hereafter
22	22	12 issued, which are guaranteed by the full faith and credit
23	23	13 of the United States of America as to principal and
24	24	14 interest;
25	25	15 (2) in bonds, notes, debentures, or other similar
26	26	16 obligations of the United States of America, its agencies,
27	27	17 and its instrumentalities;
28	28	18 (3) in interest-bearing savings accounts,
29	29	19 interest-bearing certificates of deposit or
30	30	20 interest-bearing time deposits or any other investments
31	31	21 constituting direct obligations of any bank as defined by
32	32	22 the Illinois Banking Act;
33	33	23 (4) in short-term obligations of corporations
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37	37	104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 HB2741 Introduced , by Rep. Travis Weaver SYNOPSIS AS INTRODUCED:
38	38	30 ILCS 235/2 from Ch. 85, par. 902 30 ILCS 235/2 from Ch. 85, par. 902
39	39	30 ILCS 235/2 from Ch. 85, par. 902
40	40	Amends the Public Funds Investment Act. Permits public agencies to invest public funds in any security that matures or that may be tendered for purchase at the option of the holder within not more than 7 years of the date on which it is acquired and that has the highest rating category (AAA) or the second highest rating category (AA) assigned by Standard & Poor's Corporation, Moody's Investors' Services, or other similar nationally recognized statistical rating organization. Effective immediately.
41	41	LRB104 08315 HLH 18366 b LRB104 08315 HLH 18366 b
42	42	LRB104 08315 HLH 18366 b
43	43	A BILL FOR
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68	68	1 organized in the United States with assets exceeding
69	69	2 $500,000,000 if (i) such obligations are rated at the time
70	70	3 of purchase at one of the 3 highest classifications
71	71	4 established by at least 2 standard rating services and
72	72	5 which mature not later than 270 days from the date of
73	73	6 purchase, (ii) such purchases do not exceed 10% of the
74	74	7 corporation's outstanding obligations, and (iii) no more
75	75	8 than one-third of the public agency's funds may be
76	76	9 invested in short-term obligations of corporations under
77	77	10 this paragraph (4);
78	78	11 (4.5) in obligations of corporations organized in the
79	79	12 United States with assets exceeding $500,000,000 if (i)
80	80	13 such obligations are rated at the time of purchase at one
81	81	14 of the 3 highest classifications established by at least 2
82	82	15 standard rating services and which mature more than 270
83	83	16 days but less than 10 years from the date of purchase, (ii)
84	84	17 such purchases do not exceed 10% of the corporation's
85	85	18 outstanding obligations, and (iii) no more than one-third
86	86	19 of the public agency's funds may be invested in
87	87	20 obligations of corporations under this paragraph (4.5); or
88	88	21 (5) in money market mutual funds registered under the
89	89	22 Investment Company Act of 1940, provided that the
90	90	23 portfolio of any such money market mutual fund is limited
91	91	24 to obligations described in paragraph (1) or (2) of this
92	92	25 subsection and to agreements to repurchase such
93	93	26 obligations.
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104	104	1 (6) in any security that matures or that may be
105	105	2 tendered for purchase at the option of the holder within
106	106	3 not more than 7 years of the date on which it is acquired
107	107	4 and that has the highest rating category (AAA) or the
108	108	5 second highest rating category (AA) assigned by Standard &
109	109	6 Poor's Corporation, Moody's Investors' Services, or other
110	110	7 similar nationally recognized statistical rating
111	111	8 organization.
112	112	9 (a-1) In addition to any other investments authorized
113	113	10 under this Act, a municipality, park district, forest preserve
114	114	11 district, conservation district, county, or other governmental
115	115	12 unit may invest its public funds in interest bearing bonds of
116	116	13 any county, township, city, village, incorporated town,
117	117	14 municipal corporation, or school district, of the State of
118	118	15 Illinois, of any other state, or of any political subdivision
119	119	16 or agency of the State of Illinois or of any other state,
120	120	17 whether the interest earned thereon is taxable or tax-exempt
121	121	18 under federal law. The bonds shall be registered in the name of
122	122	19 the municipality, park district, forest preserve district,
123	123	20 conservation district, county, or other governmental unit, or
124	124	21 held under a custodial agreement at a bank. The bonds shall be
125	125	22 rated at the time of purchase within the 4 highest general
126	126	23 classifications established by a rating service of nationally
127	127	24 recognized expertise in rating bonds of states and their
128	128	25 political subdivisions.
129	129	26 (b) Investments may be made only in banks which are
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140	140	1 insured by the Federal Deposit Insurance Corporation. Any
141	141	2 public agency may invest any public funds in short term
142	142	3 discount obligations of the Federal National Mortgage
143	143	4 Association or in shares or other forms of securities legally
144	144	5 issuable by savings banks or savings and loan associations
145	145	6 incorporated under the laws of this State or any other state or
146	146	7 under the laws of the United States. Investments may be made
147	147	8 only in those savings banks or savings and loan associations
148	148	9 the shares, or investment certificates of which are insured by
149	149	10 the Federal Deposit Insurance Corporation. Any such securities
150	150	11 may be purchased at the offering or market price thereof at the
151	151	12 time of such purchase. All such securities so purchased shall
152	152	13 mature or be redeemable on a date or dates prior to the time
153	153	14 when, in the judgment of such governing authority, the public
154	154	15 funds so invested will be required for expenditure by such
155	155	16 public agency or its governing authority. The expressed
156	156	17 judgment of any such governing authority as to the time when
157	157	18 any public funds will be required for expenditure or be
158	158	19 redeemable is final and conclusive. Any public agency may
159	159	20 invest any public funds in dividend-bearing share accounts,
160	160	21 share certificate accounts or class of share accounts of a
161	161	22 credit union chartered under the laws of this State or the laws
162	162	23 of the United States; provided, however, the principal office
163	163	24 of any such credit union must be located within the State of
164	164	25 Illinois. Investments may be made only in those credit unions
165	165	26 the accounts of which are insured by applicable law.
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176	176	1 (c) For purposes of this Section, the term "agencies of
177	177	2 the United States of America" includes: (i) the federal land
178	178	3 banks, federal intermediate credit banks, banks for
179	179	4 cooperative, federal farm credit banks, or any other entity
180	180	5 authorized to issue debt obligations under the Farm Credit Act
181	181	6 of 1971 (12 U.S.C. 2001 et seq.) and Acts amendatory thereto;
182	182	7 (ii) the federal home loan banks and the federal home loan
183	183	8 mortgage corporation; and (iii) any other agency created by
184	184	9 Act of Congress.
185	185	10 (d) Except for pecuniary interests permitted under
186	186	11 subsection (f) of Section 3-14-4 of the Illinois Municipal
187	187	12 Code or under Section 3.2 of the Public Officer Prohibited
188	188	13 Practices Act, no person acting as treasurer or financial
189	189	14 officer or who is employed in any similar capacity by or for a
190	190	15 public agency may do any of the following:
191	191	16 (1) have any interest, directly or indirectly, in any
192	192	17 investments in which the agency is authorized to invest.
193	193	18 (2) have any interest, directly or indirectly, in the
194	194	19 sellers, sponsors, or managers of those investments.
195	195	20 (3) receive, in any manner, compensation of any kind
196	196	21 from any investments in which the agency is authorized to
197	197	22 invest.
198	198	23 (e) Any public agency may also invest any public funds in a
199	199	24 Public Treasurers' Investment Pool created under Section 17 of
200	200	25 the State Treasurer Act. Any public agency may also invest any
201	201	26 public funds in a fund managed, operated, and administered by
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212	212	1 a bank, subsidiary of a bank, or subsidiary of a bank holding
213	213	2 company or use the services of such an entity to hold and
214	214	3 invest or advise regarding the investment of any public funds.
215	215	4 (f) To the extent a public agency has custody of funds not
216	216	5 owned by it or another public agency and does not otherwise
217	217	6 have authority to invest such funds, the public agency may
218	218	7 invest such funds as if they were its own. Such funds must be
219	219	8 released to the appropriate person at the earliest reasonable
220	220	9 time, but in no case exceeding 31 days, after the private
221	221	10 person becomes entitled to the receipt of them. All earnings
222	222	11 accruing on any investments or deposits made pursuant to the
223	223	12 provisions of this Act shall be credited to the public agency
224	224	13 by or for which such investments or deposits were made, except
225	225	14 as provided otherwise in Section 4.1 of the State Finance Act
226	226	15 or the Local Governmental Tax Collection Act, and except where
227	227	16 by specific statutory provisions such earnings are directed to
228	228	17 be credited to and paid to a particular fund.
229	229	18 (g) A public agency may purchase or invest in repurchase
230	230	19 agreements of government securities having the meaning set out
231	231	20 in the Government Securities Act of 1986, as now or hereafter
232	232	21 amended or succeeded, subject to the provisions of said Act
233	233	22 and the regulations issued thereunder. The government
234	234	23 securities, unless registered or inscribed in the name of the
235	235	24 public agency, shall be purchased through banks or trust
236	236	25 companies authorized to do business in the State of Illinois.
237	237	26 (h) Except for repurchase agreements of government
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248	248	1 securities which are subject to the Government Securities Act
249	249	2 of 1986, as now or hereafter amended or succeeded, no public
250	250	3 agency may purchase or invest in instruments which constitute
251	251	4 repurchase agreements, and no financial institution may enter
252	252	5 into such an agreement with or on behalf of any public agency
253	253	6 unless the instrument and the transaction meet the following
254	254	7 requirements:
255	255	8 (1) The securities, unless registered or inscribed in
256	256	9 the name of the public agency, are purchased through banks
257	257	10 or trust companies authorized to do business in the State
258	258	11 of Illinois.
259	259	12 (2) An authorized public officer after ascertaining
260	260	13 which firm will give the most favorable rate of interest,
261	261	14 directs the custodial bank to "purchase" specified
262	262	15 securities from a designated institution. The "custodial
263	263	16 bank" is the bank or trust company, or agency of
264	264	17 government, which acts for the public agency in connection
265	265	18 with repurchase agreements involving the investment of
266	266	19 funds by the public agency. The State Treasurer may act as
267	267	20 custodial bank for public agencies executing repurchase
268	268	21 agreements. To the extent the Treasurer acts in this
269	269	22 capacity, he is hereby authorized to pass through to such
270	270	23 public agencies any charges assessed by the Federal
271	271	24 Reserve Bank.
272	272	25 (3) A custodial bank must be a member bank of the
273	273	26 Federal Reserve System or maintain accounts with member
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284	284	1 banks. All transfers of book-entry securities must be
285	285	2 accomplished on a Reserve Bank's computer records through
286	286	3 a member bank of the Federal Reserve System. These
287	287	4 securities must be credited to the public agency on the
288	288	5 records of the custodial bank and the transaction must be
289	289	6 confirmed in writing to the public agency by the custodial
290	290	7 bank.
291	291	8 (4) Trading partners shall be limited to banks or
292	292	9 trust companies authorized to do business in the State of
293	293	10 Illinois or to registered primary reporting dealers.
294	294	11 (5) The security interest must be perfected.
295	295	12 (6) The public agency enters into a written master
296	296	13 repurchase agreement which outlines the basic
297	297	14 responsibilities and liabilities of both buyer and seller.
298	298	15 (7) Agreements shall be for periods of 330 days or
299	299	16 less.
300	300	17 (8) The authorized public officer of the public agency
301	301	18 informs the custodial bank in writing of the maturity
302	302	19 details of the repurchase agreement.
303	303	20 (9) The custodial bank must take delivery of and
304	304	21 maintain the securities in its custody for the account of
305	305	22 the public agency and confirm the transaction in writing
306	306	23 to the public agency. The Custodial Undertaking shall
307	307	24 provide that the custodian takes possession of the
308	308	25 securities exclusively for the public agency; that the
309	309	26 securities are free of any claims against the trading
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320	320	1 partner; and any claims by the custodian are subordinate
321	321	2 to the public agency's claims to rights to those
322	322	3 securities.
323	323	4 (10) The obligations purchased by a public agency may
324	324	5 only be sold or presented for redemption or payment by the
325	325	6 fiscal agent bank or trust company holding the obligations
326	326	7 upon the written instruction of the public agency or
327	327	8 officer authorized to make such investments.
328	328	9 (11) The custodial bank shall be liable to the public
329	329	10 agency for any monetary loss suffered by the public agency
330	330	11 due to the failure of the custodial bank to take and
331	331	12 maintain possession of such securities.
332	332	13 (i) Notwithstanding the foregoing restrictions on
333	333	14 investment in instruments constituting repurchase agreements
334	334	15 the Illinois Housing Development Authority may invest in, and
335	335	16 any financial institution with capital of at least
336	336	17 $250,000,000 may act as custodian for, instruments that
337	337	18 constitute repurchase agreements, provided that the Illinois
338	338	19 Housing Development Authority, in making each such investment,
339	339	20 complies with the safety and soundness guidelines for engaging
340	340	21 in repurchase transactions applicable to federally insured
341	341	22 banks, savings banks, savings and loan associations or other
342	342	23 depository institutions as set forth in the Federal Financial
343	343	24 Institutions Examination Council Policy Statement Regarding
344	344	25 Repurchase Agreements and any regulations issued, or which may
345	345	26 be issued by the supervisory federal authority pertaining
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356	356	1 thereto and any amendments thereto; provided further that the
357	357	2 securities shall be either (i) direct general obligations of,
358	358	3 or obligations the payment of the principal of and/or interest
359	359	4 on which are unconditionally guaranteed by, the United States
360	360	5 of America or (ii) any obligations of any agency, corporation
361	361	6 or subsidiary thereof controlled or supervised by and acting
362	362	7 as an instrumentality of the United States Government pursuant
363	363	8 to authority granted by the Congress of the United States and
364	364	9 provided further that the security interest must be perfected
365	365	10 by either the Illinois Housing Development Authority, its
366	366	11 custodian or its agent receiving possession of the securities
367	367	12 either physically or transferred through a nationally
368	368	13 recognized book entry system.
369	369	14 (j) In addition to all other investments authorized under
370	370	15 this Section, a community college district may invest public
371	371	16 funds in any mutual funds that invest primarily in corporate
372	372	17 investment grade or global government short term bonds.
373	373	18 Purchases of mutual funds that invest primarily in global
374	374	19 government short term bonds shall be limited to funds with
375	375	20 assets of at least $100 million and that are rated at the time
376	376	21 of purchase as one of the 10 highest classifications
377	377	22 established by a recognized rating service. The investments
378	378	23 shall be subject to approval by the local community college
379	379	24 board of trustees. Each community college board of trustees
380	380	25 shall develop a policy regarding the percentage of the
381	381	26 college's investment portfolio that can be invested in such
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392	392	1 funds.
393	393	2 (k) In addition to all other investments authorized under
394	394	3 this Section, a public agency may adopt an ordinance or
395	395	4 resolution to allow for investment of public funds in other
396	396	5 instruments not specifically listed in this Section provided
397	397	6 that those investments comply with (i) any other law that
398	398	7 authorizes public agencies to invest funds and (ii) the
399	399	8 investment policy adopted by the public agency under Section
400	400	9 2.5 of this Act.
401	401	10 Nothing in this Section shall be construed to authorize an
402	402	11 intergovernmental risk management entity to accept the deposit
403	403	12 of public funds except for risk management purposes.
404	404	13 (Source: P.A. 102-285, eff. 8-6-21; 103-880, eff. 1-1-25.)
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