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
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
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.
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A BILL FOR
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1 AN ACT concerning finance.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Public Funds Investment Act is amended by
5 changing 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
9 follows:
10 (1) in bonds, notes, certificates of indebtedness,
11 treasury bills or other securities now or hereafter
12 issued, which are guaranteed by the full faith and credit
13 of the United States of America as to principal and
14 interest;
15 (2) in bonds, notes, debentures, or other similar
16 obligations of the United States of America, its agencies,
17 and its instrumentalities;
18 (3) in interest-bearing savings accounts,
19 interest-bearing certificates of deposit or
20 interest-bearing time deposits or any other investments
21 constituting direct obligations of any bank as defined by
22 the Illinois Banking Act;
23 (4) in short-term obligations of corporations
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
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.
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LRB104 08315 HLH 18366 b
A BILL FOR
30 ILCS 235/2 from Ch. 85, par. 902
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1 organized in the United States with assets exceeding
2 $500,000,000 if (i) such obligations are rated at the time
3 of purchase at one of the 3 highest classifications
4 established by at least 2 standard rating services and
5 which mature not later than 270 days from the date of
6 purchase, (ii) such purchases do not exceed 10% of the
7 corporation's outstanding obligations, and (iii) no more
8 than one-third of the public agency's funds may be
9 invested in short-term obligations of corporations under
10 this paragraph (4);
11 (4.5) in obligations of corporations organized in the
12 United States with assets exceeding $500,000,000 if (i)
13 such obligations are rated at the time of purchase at one
14 of the 3 highest classifications established by at least 2
15 standard rating services and which mature more than 270
16 days but less than 10 years from the date of purchase, (ii)
17 such purchases do not exceed 10% of the corporation's
18 outstanding obligations, and (iii) no more than one-third
19 of the public agency's funds may be invested in
20 obligations of corporations under this paragraph (4.5); or
21 (5) in money market mutual funds registered under the
22 Investment Company Act of 1940, provided that the
23 portfolio of any such money market mutual fund is limited
24 to obligations described in paragraph (1) or (2) of this
25 subsection and to agreements to repurchase such
26 obligations.
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1 (6) in any security that matures or that may be
2 tendered for purchase at the option of the holder within
3 not more than 7 years of the date on which it is acquired
4 and that has the highest rating category (AAA) or the
5 second highest rating category (AA) assigned by Standard &
6 Poor's Corporation, Moody's Investors' Services, or other
7 similar nationally recognized statistical rating
8 organization.
9 (a-1) In addition to any other investments authorized
10 under this Act, a municipality, park district, forest preserve
11 district, conservation district, county, or other governmental
12 unit may invest its public funds in interest bearing bonds of
13 any county, township, city, village, incorporated town,
14 municipal corporation, or school district, of the State of
15 Illinois, of any other state, or of any political subdivision
16 or agency of the State of Illinois or of any other state,
17 whether the interest earned thereon is taxable or tax-exempt
18 under federal law. The bonds shall be registered in the name of
19 the municipality, park district, forest preserve district,
20 conservation district, county, or other governmental unit, or
21 held under a custodial agreement at a bank. The bonds shall be
22 rated at the time of purchase within the 4 highest general
23 classifications established by a rating service of nationally
24 recognized expertise in rating bonds of states and their
25 political subdivisions.
26 (b) Investments may be made only in banks which are
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1 insured by the Federal Deposit Insurance Corporation. Any
2 public agency may invest any public funds in short term
3 discount obligations of the Federal National Mortgage
4 Association or in shares or other forms of securities legally
5 issuable by savings banks or savings and loan associations
6 incorporated under the laws of this State or any other state or
7 under the laws of the United States. Investments may be made
8 only in those savings banks or savings and loan associations
9 the shares, or investment certificates of which are insured by
10 the Federal Deposit Insurance Corporation. Any such securities
11 may be purchased at the offering or market price thereof at the
12 time of such purchase. All such securities so purchased shall
13 mature or be redeemable on a date or dates prior to the time
14 when, in the judgment of such governing authority, the public
15 funds so invested will be required for expenditure by such
16 public agency or its governing authority. The expressed
17 judgment of any such governing authority as to the time when
18 any public funds will be required for expenditure or be
19 redeemable is final and conclusive. Any public agency may
20 invest any public funds in dividend-bearing share accounts,
21 share certificate accounts or class of share accounts of a
22 credit union chartered under the laws of this State or the laws
23 of the United States; provided, however, the principal office
24 of any such credit union must be located within the State of
25 Illinois. Investments may be made only in those credit unions
26 the accounts of which are insured by applicable law.
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1 (c) For purposes of this Section, the term "agencies of
2 the United States of America" includes: (i) the federal land
3 banks, federal intermediate credit banks, banks for
4 cooperative, federal farm credit banks, or any other entity
5 authorized to issue debt obligations under the Farm Credit Act
6 of 1971 (12 U.S.C. 2001 et seq.) and Acts amendatory thereto;
7 (ii) the federal home loan banks and the federal home loan
8 mortgage corporation; and (iii) any other agency created by
9 Act of Congress.
10 (d) Except for pecuniary interests permitted under
11 subsection (f) of Section 3-14-4 of the Illinois Municipal
12 Code or under Section 3.2 of the Public Officer Prohibited
13 Practices Act, no person acting as treasurer or financial
14 officer or who is employed in any similar capacity by or for a
15 public agency may do any of the following:
16 (1) have any interest, directly or indirectly, in any
17 investments in which the agency is authorized to invest.
18 (2) have any interest, directly or indirectly, in the
19 sellers, sponsors, or managers of those investments.
20 (3) receive, in any manner, compensation of any kind
21 from any investments in which the agency is authorized to
22 invest.
23 (e) Any public agency may also invest any public funds in a
24 Public Treasurers' Investment Pool created under Section 17 of
25 the State Treasurer Act. Any public agency may also invest any
26 public funds in a fund managed, operated, and administered by
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1 a bank, subsidiary of a bank, or subsidiary of a bank holding
2 company or use the services of such an entity to hold and
3 invest or advise regarding the investment of any public funds.
4 (f) To the extent a public agency has custody of funds not
5 owned by it or another public agency and does not otherwise
6 have authority to invest such funds, the public agency may
7 invest such funds as if they were its own. Such funds must be
8 released to the appropriate person at the earliest reasonable
9 time, but in no case exceeding 31 days, after the private
10 person becomes entitled to the receipt of them. All earnings
11 accruing on any investments or deposits made pursuant to the
12 provisions of this Act shall be credited to the public agency
13 by or for which such investments or deposits were made, except
14 as provided otherwise in Section 4.1 of the State Finance Act
15 or the Local Governmental Tax Collection Act, and except where
16 by specific statutory provisions such earnings are directed to
17 be credited to and paid to a particular fund.
18 (g) A public agency may purchase or invest in repurchase
19 agreements of government securities having the meaning set out
20 in the Government Securities Act of 1986, as now or hereafter
21 amended or succeeded, subject to the provisions of said Act
22 and the regulations issued thereunder. The government
23 securities, unless registered or inscribed in the name of the
24 public agency, shall be purchased through banks or trust
25 companies authorized to do business in the State of Illinois.
26 (h) Except for repurchase agreements of government
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1 securities which are subject to the Government Securities Act
2 of 1986, as now or hereafter amended or succeeded, no public
3 agency may purchase or invest in instruments which constitute
4 repurchase agreements, and no financial institution may enter
5 into such an agreement with or on behalf of any public agency
6 unless the instrument and the transaction meet the following
7 requirements:
8 (1) The securities, unless registered or inscribed in
9 the name of the public agency, are purchased through banks
10 or trust companies authorized to do business in the State
11 of Illinois.
12 (2) An authorized public officer after ascertaining
13 which firm will give the most favorable rate of interest,
14 directs the custodial bank to "purchase" specified
15 securities from a designated institution. The "custodial
16 bank" is the bank or trust company, or agency of
17 government, which acts for the public agency in connection
18 with repurchase agreements involving the investment of
19 funds by the public agency. The State Treasurer may act as
20 custodial bank for public agencies executing repurchase
21 agreements. To the extent the Treasurer acts in this
22 capacity, he is hereby authorized to pass through to such
23 public agencies any charges assessed by the Federal
24 Reserve Bank.
25 (3) A custodial bank must be a member bank of the
26 Federal Reserve System or maintain accounts with member
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1 banks. All transfers of book-entry securities must be
2 accomplished on a Reserve Bank's computer records through
3 a member bank of the Federal Reserve System. These
4 securities must be credited to the public agency on the
5 records of the custodial bank and the transaction must be
6 confirmed in writing to the public agency by the custodial
7 bank.
8 (4) Trading partners shall be limited to banks or
9 trust companies authorized to do business in the State of
10 Illinois or to registered primary reporting dealers.
11 (5) The security interest must be perfected.
12 (6) The public agency enters into a written master
13 repurchase agreement which outlines the basic
14 responsibilities and liabilities of both buyer and seller.
15 (7) Agreements shall be for periods of 330 days or
16 less.
17 (8) The authorized public officer of the public agency
18 informs the custodial bank in writing of the maturity
19 details of the repurchase agreement.
20 (9) The custodial bank must take delivery of and
21 maintain the securities in its custody for the account of
22 the public agency and confirm the transaction in writing
23 to the public agency. The Custodial Undertaking shall
24 provide that the custodian takes possession of the
25 securities exclusively for the public agency; that the
26 securities are free of any claims against the trading
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1 partner; and any claims by the custodian are subordinate
2 to the public agency's claims to rights to those
3 securities.
4 (10) The obligations purchased by a public agency may
5 only be sold or presented for redemption or payment by the
6 fiscal agent bank or trust company holding the obligations
7 upon the written instruction of the public agency or
8 officer authorized to make such investments.
9 (11) The custodial bank shall be liable to the public
10 agency for any monetary loss suffered by the public agency
11 due to the failure of the custodial bank to take and
12 maintain possession of such securities.
13 (i) Notwithstanding the foregoing restrictions on
14 investment in instruments constituting repurchase agreements
15 the Illinois Housing Development Authority may invest in, and
16 any financial institution with capital of at least
17 $250,000,000 may act as custodian for, instruments that
18 constitute repurchase agreements, provided that the Illinois
19 Housing Development Authority, in making each such investment,
20 complies with the safety and soundness guidelines for engaging
21 in repurchase transactions applicable to federally insured
22 banks, savings banks, savings and loan associations or other
23 depository institutions as set forth in the Federal Financial
24 Institutions Examination Council Policy Statement Regarding
25 Repurchase Agreements and any regulations issued, or which may
26 be issued by the supervisory federal authority pertaining
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1 thereto and any amendments thereto; provided further that the
2 securities shall be either (i) direct general obligations of,
3 or obligations the payment of the principal of and/or interest
4 on which are unconditionally guaranteed by, the United States
5 of America or (ii) any obligations of any agency, corporation
6 or subsidiary thereof controlled or supervised by and acting
7 as an instrumentality of the United States Government pursuant
8 to authority granted by the Congress of the United States and
9 provided further that the security interest must be perfected
10 by either the Illinois Housing Development Authority, its
11 custodian or its agent receiving possession of the securities
12 either physically or transferred through a nationally
13 recognized book entry system.
14 (j) In addition to all other investments authorized under
15 this Section, a community college district may invest public
16 funds in any mutual funds that invest primarily in corporate
17 investment grade or global government short term bonds.
18 Purchases of mutual funds that invest primarily in global
19 government short term bonds shall be limited to funds with
20 assets of at least $100 million and that are rated at the time
21 of purchase as one of the 10 highest classifications
22 established by a recognized rating service. The investments
23 shall be subject to approval by the local community college
24 board of trustees. Each community college board of trustees
25 shall develop a policy regarding the percentage of the
26 college's investment portfolio that can be invested in such
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1 funds.
2 (k) In addition to all other investments authorized under
3 this Section, a public agency may adopt an ordinance or
4 resolution to allow for investment of public funds in other
5 instruments not specifically listed in this Section provided
6 that those investments comply with (i) any other law that
7 authorizes public agencies to invest funds and (ii) the
8 investment policy adopted by the public agency under Section
9 2.5 of this Act.
10 Nothing in this Section shall be construed to authorize an
11 intergovernmental risk management entity to accept the deposit
12 of public funds except for risk management purposes.
13 (Source: P.A. 102-285, eff. 8-6-21; 103-880, eff. 1-1-25.)
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