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HB 5033

STATE PERMITTED INVESTMENTS

104th Regular Session Introduced by Dan Didech and 2 co-sponsors

HB5033 broadens Illinois state fund investments, adding stock exposure limits, intergovernmental funding mechanisms for vouchers, and stronger disclosure and safeguards.

Rule 19(a) / Re-referred to Rules Committee
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Bill Summary · HB 5033

Summary of HB5033 (104th Illinois General Assembly)

Purpose and Intent

HB5033 amends the Deposit of State Moneys Act to expand and specify the range of permitted investments for Illinois state funds managed by the State Treasurer. The bill aims to provide the Treasury with broader, yet regulated, investment options while imposing criteria to safeguard the state’s assets. The act would take effect immediately upon becoming law.

Key Provisions and Changes

  • Existing framework preserved and expanded: The State Treasurer can continue investing state money not needed for current expenditures in a wide array of permitted instruments, including U.S. government obligations, agencies, and related programs (e.g., National Mortgage Associations, FHA-related mortgage instruments), mortgage participation certificates in first-lien Illinois residential mortgages, and bonds or notes under Illinois housing and development programs.

  • Expanded list of permissible investments (cash-equivalent and yield options):

    • State bonds with proceeds designated for debt service.
    • Bonds issued by Illinois counties or municipal entities.
    • Specific statutory limits on investments in select pools and funds (e.g., College Savings Pool Administrative Trust Fund, IPTIP Administrative Fund, and the State Treasurer’s Administrative Fund): up to 5% in common or preferred stocks of publicly traded U.S. corporations or LLCs with assets over $500 million, subject to multiple safeguards.

  • Equity investment limits and safeguards:

    • If investing in stocks, several controls apply:
    • Individual purchase not to exceed 1% of the issuer’s outstanding stock.
    • No more than 10% of the total funds invested in any single issuer.
    • The issuer must not be on the Illinois Investment Policy Board restricted list.

  • Intergovernmental investment framework for voucher payments:

    • When voucher presentations exceed General Revenue Fund availability by $500 million or more, the Treasurer may invest non-General Revenue funds to cover outstanding vouchers or anticipated payments, up to a current cap of $2 billion.
    • Investments under this provision must be repaid with an interest rate tied to SOFR or the Federal Funds Rate, or an equivalent market-based rate, with a floor on the rate no higher than the lesser of the State Prompt Payment Act penalty rate or the timely pay rate under the Illinois Insurance Code.
    • Requires intergovernmental agreement between the State Treasurer and the Comptroller outlining terms, periods, payment intervals, investment funds, and other conditions. Investment terms and agreements must be public; terms posted on the Treasurer’s website.

  • Broad compliance and risk management framework:

    • Adds explicit authorization to lend securities under Federal Financial Institution Examination Council guidelines with collateral requirements.
    • Permitted investments include a variety of fixed-income and bank/credit union products, money market funds, and government-backed instruments, including:
    • U.S. government and agency securities, supranational issuers, and foreign government obligations under specific credit and default-history criteria.
    • Short-term and mid-range debt instruments with ratings and diversification safeguards.
    • Community development financial institutions and minority depository institutions operating in Illinois.
    • Other investments authorized by law.

  • Additional enumerated instruments and caveats:

    • Includes repurchase agreements governed by the Government Securities Act.
    • Technology Development Act and Student Investment Account Act investments are explicitly permitted.
    • Private placement fixed income securities are allowed if issuer has significant in-state presence, with strict concentration and restricted-list restrictions.

Who/What Would Be Affected

  • State Treasurer and Comptroller: The two offices would coordinate investments under new intergovernmental arrangements for managing voucher payments and ensure funds are available to meet obligations.
  • Illinois state funds and pools: The College Savings Pool Administrative Trust Fund, IPTIP, and the State Treasurer’s Administrative Fund would have a new 5% exposure cap to certain stock investments under defined conditions.
  • State agencies and local issuers: Illinois counties, municipalities, and approved community development and minority depository institutions could be involved as issuers in broader investment activities.
  • Public records and transparency: Investment agreements and terms would be public records and posted online.

Procedural and Timeline Aspects

  • Effective date: Immediate upon becoming law.
  • Legislative process steps (as of the provided history):
    • Referred to Revenue & Finance Committee (Feb 24, 2026).
    • Reported Do Pass by the committee (Mar 26, 2026).
    • Moved to Calendar and scheduled for second reading (Mar 26–Apr 10, 2026).
    • Bill introduced Feb 10, 2026; chief sponsors added in April 2026.
    • Currently in Rules Committee as of the latest action (April 17, 2026).

Potential Impact

  • Potentially broader investment flexibility for state funds, enabling higher-yield options within a structured risk framework.
  • Increased reliance on intergovernmental arrangements to manage cash flow needs, with explicit reporting and rate safeguards.
  • Enhanced transparency through public disclosure of investment agreements and terms.
  • The introduction of stock investments, even if capped, represents a notable shift toward greater diversification of state assets.

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

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