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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB5304

Introduced 2/10/2026, by Rep. Justin Slaughter

SYNOPSIS AS INTRODUCED:

30 ILCS 235/2

from Ch. 85, par. 902

Amends the Public Funds Investment Act. Provides that a public agency
may invest any 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) assigned by Standard & Poor's corporation, Moody's
investors service, or other similar nationally recognized statistical
rating organization. Effective immediately.
LRB104 17270 HLH 30692 b

A BILL FOR

HB5304
LRB104 17270 HLH 30692 b
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

HB5304
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LRB104 17270 HLH 30692 b
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
; or

.

HB5304
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LRB104 17270 HLH 30692 b
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) assigned by
5

Standard & Poor's corporation, Moody's investors service,
6

or other similar nationally recognized statistical rating
7

organization.

8

(a-1) In addition to any other investments authorized
9
under this Act, a municipality, park district, forest preserve
10
district, conservation district, county, or other governmental
11
unit may invest its public funds in interest bearing bonds of
12
any county, township, city, village, incorporated town,
13
municipal corporation, or school district, of the State of
14
Illinois, of any other state, or of any political subdivision
15
or agency of the State of Illinois or of any other state,
16
whether the interest earned thereon is taxable or tax-exempt
17
under federal law. The bonds shall be registered in the name of
18
the municipality, park district, forest preserve district,
19
conservation district, county, or other governmental unit, or
20
held under a custodial agreement at a bank. The bonds shall be
21
rated at the time of purchase within the 4 highest general
22
classifications established by a rating service of nationally
23
recognized expertise in rating bonds of states and their
24
political subdivisions.
25

(b) Investments may be made only in banks which are
26
insured by the Federal Deposit Insurance Corporation. Any

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LRB104 17270 HLH 30692 b
1
public agency may invest any public funds in short term
2
discount obligations of the Federal National Mortgage
3
Association or in shares or other forms of securities legally
4
issuable by savings banks or savings and loan associations
5
incorporated under the laws of this State or any other state or
6
under the laws of the United States. Investments may be made
7
only in those savings banks or savings and loan associations
8
the shares, or investment certificates of which are insured by
9
the Federal Deposit Insurance Corporation. Any such securities
10
may be purchased at the offering or market price thereof at the
11
time of such purchase. All such securities so purchased shall
12
mature or be redeemable on a date or dates prior to the time
13
when, in the judgment of such governing authority, the public
14
funds so invested will be required for expenditure by such
15
public agency or its governing authority. The expressed
16
judgment of any such governing authority as to the time when
17
any public funds will be required for expenditure or be
18
redeemable is final and conclusive. Any public agency may
19
invest any public funds in dividend-bearing share accounts,
20
share certificate accounts or class of share accounts of a
21
credit union chartered under the laws of this State or the laws
22
of the United States; provided, however, the principal office
23
of any such credit union must be located within the State of
24
Illinois. Investments may be made only in those credit unions
25
the accounts of which are insured by applicable law.
26

(c) For purposes of this Section, the term "agencies of

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LRB104 17270 HLH 30692 b
1
the United States of America" includes: (i) the federal land
2
banks, federal intermediate credit banks, banks for
3
cooperative, federal farm credit banks, or any other entity
4
authorized to issue debt obligations under the Farm Credit Act
5
of 1971 (12 U.S.C. 2001 et seq.) and Acts amendatory thereto;
6
(ii) the federal home loan banks and the federal home loan
7
mortgage corporation; and (iii) any other agency created by
8
Act of Congress.
9

(d) Except for pecuniary interests permitted under
10
subsection (f) of Section 3-14-4 of the Illinois Municipal
11
Code or under Section 3.2 of the Public Officer Prohibited
12
Practices Act, no person acting as treasurer or financial
13
officer or who is employed in any similar capacity by or for a
14
public agency may do any of the following:
15

(1) have any interest, directly or indirectly, in any
16

investments in which the agency is authorized to invest.
17

(2) have any interest, directly or indirectly, in the
18

sellers, sponsors, or managers of those investments.
19

(3) receive, in any manner, compensation of any kind
20

from any investments in which the agency is authorized to
21

invest.
22

(e) Any public agency may also invest any public funds in a
23
Public Treasurers' Investment Pool created under Section 17 of
24
the State Treasurer Act. Any public agency may also invest any
25
public funds in a fund managed, operated, and administered by
26
a bank, subsidiary of a bank, or subsidiary of a bank holding

HB5304
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LRB104 17270 HLH 30692 b
1
company or use the services of such an entity to hold and
2
invest or advise regarding the investment of any public funds.
3

(f) To the extent a public agency has custody of funds not
4
owned by it or another public agency and does not otherwise
5
have authority to invest such funds, the public agency may
6
invest such funds as if they were its own. Such funds must be
7
released to the appropriate person at the earliest reasonable
8
time, but in no case exceeding 31 days, after the private
9
person becomes entitled to the receipt of them. All earnings
10
accruing on any investments or deposits made pursuant to the
11
provisions of this Act shall be credited to the public agency
12
by or for which such investments or deposits were made, except
13
as provided otherwise in Section 4.1 of the State Finance Act
14
or the Local Governmental Tax Collection Act, and except where
15
by specific statutory provisions such earnings are directed to
16
be credited to and paid to a particular fund.
17

(g) A public agency may purchase or invest in repurchase
18
agreements of government securities having the meaning set out
19
in the Government Securities Act of 1986, as now or hereafter
20
amended or succeeded, subject to the provisions of said Act
21
and the regulations issued thereunder. The government
22
securities, unless registered or inscribed in the name of the
23
public agency, shall be purchased through banks or trust
24
companies authorized to do business in the State of Illinois.
25

(h) Except for repurchase agreements of government
26
securities which are subject to the Government Securities Act

HB5304
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LRB104 17270 HLH 30692 b
1
of 1986, as now or hereafter amended or succeeded, no public
2
agency may purchase or invest in instruments which constitute
3
repurchase agreements, and no financial institution may enter
4
into such an agreement with or on behalf of any public agency
5
unless the instrument and the transaction meet the following
6
requirements:
7

(1) The securities, unless registered or inscribed in
8

the name of the public agency, are purchased through banks
9

or trust companies authorized to do business in the State
10

of Illinois.
11

(2) An authorized public officer after ascertaining
12

which firm will give the most favorable rate of interest,
13

directs the custodial bank to "purchase" specified
14

securities from a designated institution. The "custodial
15

bank" is the bank or trust company, or agency of
16

government, which acts for the public agency in connection
17

with repurchase agreements involving the investment of
18

funds by the public agency. The State Treasurer may act as
19

custodial bank for public agencies executing repurchase
20

agreements. To the extent the Treasurer acts in this
21

capacity, he is hereby authorized to pass through to such
22

public agencies any charges assessed by the Federal
23

Reserve Bank.
24

(3) A custodial bank must be a member bank of the
25

Federal Reserve System or maintain accounts with member
26

banks. All transfers of book-entry securities must be

HB5304
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LRB104 17270 HLH 30692 b
1

accomplished on a Reserve Bank's computer records through
2

a member bank of the Federal Reserve System. These
3

securities must be credited to the public agency on the
4

records of the custodial bank and the transaction must be
5

confirmed in writing to the public agency by the custodial
6

bank.
7

(4) Trading partners shall be limited to banks or
8

trust companies authorized to do business in the State of
9

Illinois or to registered primary reporting dealers.
10

(5) The security interest must be perfected.
11

(6) The public agency enters into a written master
12

repurchase agreement which outlines the basic
13

responsibilities and liabilities of both buyer and seller.
14

(7) Agreements shall be for periods of 330 days or
15

less.
16

(8) The authorized public officer of the public agency
17

informs the custodial bank in writing of the maturity
18

details of the repurchase agreement.
19

(9) The custodial bank must take delivery of and
20

maintain the securities in its custody for the account of
21

the public agency and confirm the transaction in writing
22

to the public agency. The Custodial Undertaking shall
23

provide that the custodian takes possession of the
24

securities exclusively for the public agency; that the
25

securities are free of any claims against the trading
26

partner; and any claims by the custodian are subordinate

HB5304
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LRB104 17270 HLH 30692 b
1

to the public agency's claims to rights to those
2

securities.
3

(10) The obligations purchased by a public agency may
4

only be sold or presented for redemption or payment by the
5

fiscal agent bank or trust company holding the obligations
6

upon the written instruction of the public agency or
7

officer authorized to make such investments.
8

(11) The custodial bank shall be liable to the public
9

agency for any monetary loss suffered by the public agency
10

due to the failure of the custodial bank to take and
11

maintain possession of such securities.
12

(i) Notwithstanding the foregoing restrictions on
13
investment in instruments constituting repurchase agreements
14
the Illinois Housing Development Authority may invest in, and
15
any financial institution with capital of at least
16
$250,000,000 may act as custodian for, instruments that
17
constitute repurchase agreements, provided that the Illinois
18
Housing Development Authority, in making each such investment,
19
complies with the safety and soundness guidelines for engaging
20
in repurchase transactions applicable to federally insured
21
banks, savings banks, savings and loan associations or other
22
depository institutions as set forth in the Federal Financial
23
Institutions Examination Council Policy Statement Regarding
24
Repurchase Agreements and any regulations issued, or which may
25
be issued by the supervisory federal authority pertaining
26
thereto and any amendments thereto; provided further that the

HB5304
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LRB104 17270 HLH 30692 b
1
securities shall be either (i) direct general obligations of,
2
or obligations the payment of the principal of and/or interest
3
on which are unconditionally guaranteed by, the United States
4
of America or (ii) any obligations of any agency, corporation
5
or subsidiary thereof controlled or supervised by and acting
6
as an instrumentality of the United States Government pursuant
7
to authority granted by the Congress of the United States and
8
provided further that the security interest must be perfected
9
by either the Illinois Housing Development Authority, its
10
custodian or its agent receiving possession of the securities
11
either physically or transferred through a nationally
12
recognized book entry system.
13

(j) In addition to all other investments authorized under
14
this Section, a community college district may invest public
15
funds in any mutual funds that invest primarily in corporate
16
investment grade or global government short term bonds.
17
Purchases of mutual funds that invest primarily in global
18
government short term bonds shall be limited to funds with
19
assets of at least $100 million and that are rated at the time
20
of purchase as one of the 10 highest classifications
21
established by a recognized rating service. The investments
22
shall be subject to approval by the local community college
23
board of trustees. Each community college board of trustees
24
shall develop a policy regarding the percentage of the
25
college's investment portfolio that can be invested in such
26
funds.

HB5304
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LRB104 17270 HLH 30692 b
1

(k) In addition to all other investments authorized under
2
this Section, a public agency may adopt an ordinance or
3
resolution to allow for investment of public funds in other
4
instruments not specifically listed in this Section provided
5
that those investments comply with (i) any other law that
6
authorizes public agencies to invest funds and (ii) the
7
investment policy adopted by the public agency under Section
8
2.5 of this Act.
9

Nothing in this Section shall be construed to authorize an
10
intergovernmental risk management entity to accept the deposit
11
of public funds except for risk management purposes.
12
(Source: P.A. 102-285, eff. 8-6-21; 103-880, eff. 1-1-25
.)

13

Section 99.
Effective date.
This Act takes effect upon
14
becoming law.

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