SPRINGFIELD -- Governor George H. Ryan today signed House Bill 4159, amending the Deposit of State Moneys Act and allowing the state treasurer--with the approval of the governor--to invest non-obligated state treasury funds in foreign government bonds and notes.
HB4159 also provides that the principal and interest must be guaranteed by the full faith and credit of the government and can only occur with foreign states that have not defaulted on any similar financial obligations and that have previously met their payment obligations in a timely manner on all similar obligations for a period of at least 25 years. HB4159 is an initiative of State Treasurer Judy Baar Topinka.
Under current law, the treasurer--with the approval of the governor-- can invest in various bonds, notes, debentures or other obligations or the U.S. government, U.S. banks, U.S. savings and loans, Illinois credit unions, U.S. corporations, Illinois local governments and any agencies created by Congress. The treasurer, however, may not currently invest state moneys in overseas accounts or in foreign governments.
"Expanding our investment opportunities to foreign countries not only will allow the state to diversify its portfolio, but also will open our doors to other countries as we try to expand trade and increase our presence in the global marketplace, " Governor Ryan said. "
HB4159 gives the state treasurer increased flexibility in the investment of money in the state treasury that is not needed for current expenditures. HB4159 provides more stringent
requirements for foreign investments than domestic government investments, providing additional guides to the state treasurer while increasing the opportunity for the development of international economic partnerships.
While the language of HB4159 allows investments in all foreign governments who meet the specified criteria, HB4159 was designed to provide the constitutional authority for the treasurer to invest in Israeli bonds. Currently, 15 states invest in Israeli bonds: California, Connecticut, Georgia, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Texas and Wisconsin.
According to the Development Corporation for Israel, proceeds from Israel bond sales go directly to the Treasurer of Israel for general use, but are often earmarked for infrastructure projects such as highways, bridges, water projects communication links and port and airport expansion.
HB4159 was sponsored by Representatives Jeffery Schoenberg (D-Evanston), Susan Garrett (D-Lake Forest), Karen May (D-Highland Park), Sidney Mathias (R-Buffalo Grove) and Sara Feigenholtz (D-Chicago) and Senators Dave Sullivan (R-Mt. Prospect), Kathleen Parker (R-Northbrook), Ira Silverstein (D-Chicago) and Terry Link (D-Vernon Hills)