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SB 3086

STATE PERMITTED INVESTMENTS

104th Regular Session Introduced by Diane Blair-Sherlock and 5 co-sponsors

SB3086 broadens Illinois’ investment options for idle funds, including limited stock exposure with safeguards and a liquidity bridge during voucher shortfalls.

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Bill Summary · SB 3086

Summary of SB3086 (104th General Assembly, Illinois)

Title

STATE PERMITTED INVESTMENTS

Purpose and intent

SB3086 amends the Deposit of State Moneys Act to authorize broader categories of investments for the State Treasurer. The bill expands the range of permissible investments for State moneys not needed for current expenditures, and introduces specific thresholds and governance requirements for certain investments. The overall aim is to provide the State Treasurer with greater flexibility to manage idle funds while maintaining defined risk controls.

Key provisions and changes

  • Existing core permissions retained:

    • The State Treasurer may invest non-current funds in:
    • U.S. government obligations or its agencies
    • National Mortgage Associations (NMAs) under the National Housing Act
    • Mortgage participation certificates tied to specified first-lien Illinois residential mortgages underwritten or insured by the Federal Home Loan Mortgage Corporation (Freddie Mac)
    • Affordable Housing Program Trust Fund Bonds or Notes (per the Illinois Housing Development Act)

  • Cash treatment and transferability:

    • All such obligations may be treated as cash and may be delivered as cash to a successor Treasurer.

  • Bond and state finance investments:

    • The Treasurer may purchase state bonds with money set aside for debt service.
    • Such bonds may be treated as cash and delivered to a successor.

  • Expanded pool investments:

    • The Treasurer may invest/reinvest money not needed for current expenditures or money held for debt service in bonds issued by Illinois counties or municipal corporations.

  • Stock investments (limited and tightly constrained):

    • Up to 5% of certain trust funds (College Savings Pool Administrative Trust Fund, IPTIP Administrative Fund, and the Treasurer’s Administrative Fund) may be invested in common or preferred stock of publicly traded U.S. corporations, partnerships, or LLCs with assets > $500 million.
    • Conditions to mitigate risk:
    • Individual purchases capped at 1% of a corporation/LLC’s outstanding stock.
    • No more than 10% of the total funds invested in any single issuer (corporation/LLC).
    • No investment in issuers on the Illinois Investment Policy Board’s restricted list (Section 1-110.16, Illinois Pension Code).

  • Temporary authorization when vouchers outpace General Revenue:

    • If voucher requests exceed General Revenue Fund by $500 million or more, the Treasurer may invest non-GR funds (excluding specified restricted funds) to cover outstanding vouchers up to a $2 billion cap.
    • Such investments would be repaid with interest tied to SOFR, Federal Funds Rate, or an equivalent market rate, with a cap no greater than the lesser of:
    • Penalty rate under the State Prompt Payment Act, or
    • Timely pay interest rate under Illinois Insurance Code Sec. 368a.
    • An intergovernmental agreement between the State Treasurer and Comptroller governs these investments, including public disclosure of terms on the Treasurer’s website.

  • Broad allowed categories (non-exhaustive list, subject to standards):

    • U.S. government obligations and agencies
    • Supranational entities
    • Foreign government obligations (with specific safeguards)
    • Bank and credit union direct obligations
    • Money market funds
    • Private placements of fixed income with certain limits (exempt from SEC registration)
    • Repurchase agreements
    • Technology Development Act investments
    • Student Investment Account Act investments
    • Investments in community development financial institutions and minority depository institutions operating in Illinois
    • Other investments authorized by law
    • Federal Farm Credit entities and other Agency securities

  • Lending of securities:

    • Securities acquired may be lent, subject to Federal FEIC guidelines and adequate collateral.

Affected entities and funds

  • State Treasurer (primary administrator of investments)
  • Comptroller (co-governing through intergovernmental agreements)
  • Illinois state funds: College Savings Pool Admin Fund, IPTIP Admin Fund, Treasurer’s Administrative Fund, General Revenue Fund, Health Insurance Reserve Fund, Attorney General funds, among others designated in the bill
  • Public agencies and issuers (in the context of allowable investments)

Procedural and timeline notes

  • Effective date: Immediate upon enactment.
  • Ongoing governance and transparency requirements:
    • Intergovernmental agreements between Treasurer and Comptroller
    • Written investment agreements for each investment
    • Public posting of investment terms on the Treasurer’s website
  • Legislative action history indicates recent committee amendments and advancement through the Senate, with typical timing for 2025-2026 session processes.

Overall impact

SB3086 broadens the Illinois State Treasury’s investment toolkit, permits limited equity exposure under strict diversification safeguards, relaxes certain liquidity and debt-management flexibilities during voucher shortfalls, and strengthens governance and transparency around these investments. The bill emphasizes risk controls (stock concentration limits, restricted-list exclusion, and rating/maturity criteria) while enabling more flexible cash management for state funds.

Compiled from official sources — confirm details with the bill’s official record.

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