Bill
HB 2741
Illinois public funds may now invest in high-rated securities that mature or are tenderable within 7 years (AAA/AA), expanding options for treasurers while preserving credit standards.
Status: Enacted (Governor signed); effective immediately.
Note on source documents
- The materials provided include two distinct bill texts under the same bill number: an unrelated Arizona liquor‑license amendment and an Illinois amendment to the Public Funds Investment Act. This summary focuses on the Illinois change titled “Public Funds — Securities” (30 ILCS 235/2), which is the operative content identified as HB 2741 (Illinois). The Arizona text appears to have been included in error.
Purpose and intent
- To expand the types of securities in which Illinois public agencies may invest by explicitly permitting investments in certain higher‑rated corporate or other securities that mature (or are tenderable) within seven years of acquisition, provided they carry a top (AAA) or second‑tier (AA) rating from S&P, Moody’s, or a similar nationally recognized rating agency. The amendment aims to broaden short‑to‑intermediate investment options available to public treasurers while maintaining a high credit‑quality standard.
Key provisions
- Amends Section 2 of the Public Funds Investment Act (30 ILCS 235/2).
- Adds authorization for 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 a rating of AAA or AA (S&P, Moody’s, or similar).
- Retains existing enumerated investment options (Treasury securities, agency obligations, FDIC‑insured accounts, certificates of deposit, money‑market funds, specified corporate obligations under prior subsections, public treasurer pools, etc.).
- Effective immediately upon enactment.
Who is affected
- Municipalities, counties, townships, cities, villages, school districts, park districts, forest preserve districts, conservation districts and other public agencies and units in Illinois that invest public funds.
- Financial officers/treasurers who manage public investment portfolios.
- Potentially banks, issuers of eligible securities, money‑management firms and custodial banks providing investment services to public entities.
Potential impacts and considerations
- Investment flexibility: Public agencies gain an additional category of high‑rated, short‑to‑intermediate securities (≤7‑year maturities), potentially improving portfolio yield opportunities while aiming to control credit risk through rating thresholds.
- Credit and market risk: Although limited to AAA/AA ratings, these securities still carry market and issuer risk; agencies must assess suitability, liquidity (tender provisions), and alignment with cash flow needs.
- Administrative/oversight: Treasurers may need updated policies, investment guidelines, and possibly enhanced due diligence or custodian arrangements to manage new permitted instruments.
- Fiscal: Could modestly improve returns for some public portfolios; no direct appropriation or state fiscal impact specified.
Legislative/timeline highlights (from provided actions)
- Introduced: February 2025 (filed 2/5–2/12 depending on source record).
- Committee referrals and readings occurred in Feb–Mar 2025; hearings and votes documented in March–April.
- Passed both chambers (dates in late Feb–Apr 2025) and transmitted to the Governor.
- Signed by Governor: April 18, 2025. Effective immediately.
If you want, I can:
- Provide suggested model policy language for a municipal investment policy to incorporate this new authority.
- Compare this change to prior Illinois practice or to other states’ allowable investments.
Compiled from official sources — confirm details with the bill’s official record.
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