Section 5 ILCS 220/16 - Investment policy(a) Investments made by an intergovernmental risk management entity may be governed by a written investment policy adopted by the corporate authorities of the entity. An intergovernmental risk management entity may have an investment policy for any public funds in excess of the amount needed to meet current expenses as provided in subsection (b). The policy shall address safety of principal, liquidity of funds, and return on investment.
(b) The investment policy shall apply to funds under the control of the intergovernmental risk management entity in excess of those required to meet short-term expenses.(c) The intergovernmental risk management entity shall develop performance measures appropriate for the nature and size of the funds within its custody.(d) The intergovernmental risk management entity shall adopt the prudent person rule, which provides that: "investments should be made with the judgment and care, under circumstances then prevailing, that persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation but for investment, considering the probable safety of their capital as well as the probable income to be derived from the investment."(e) The investment policy shall list authorized investments as provided by law.(f) The investment policy shall require that the investment portfolio be structured in such manner as to provide sufficient liquidity to pay obligations as they come due.(g) The investment policy shall establish guidelines for investments. The guidelines shall be appropriate with the nature and size of the public funds within the custody of the intergovernmental risk management entity.(h) The investment policy shall provide for guidelines for appropriate diversification of the investment portfolio. Diversification strategies within the established guidelines shall be reviewed and revised periodically, as deemed necessary by the intergovernmental risk management entity.(i) The investment policy shall provide guidelines for the selection of investment advisors, money managers, and banks.(j) The investment policy shall provide appropriate arrangements for the holding of assets of the intergovernmental risk management entity. No withdrawal of securities, in whole or in part, shall be made, except by an authorized staff member of the intergovernmental risk management entity.(k) The investment policy shall provide for a system of internal controls and operational procedures. The intergovernmental risk management entity's chief executive officer shall, by January 1, 1997, establish a system of internal controls that shall be in writing and made a part of the intergovernmental risk management entity's operational procedures. The investment policy shall provide for review of the controls by independent auditors as part of any financial audit periodically required of the intergovernmental risk management entity. The internal controls shall be designed to prevent losses of funds that might arise from fraud, employee error, misrepresentation by third parties, or imprudent actions by employees of the intergovernmental risk management entity.(l) The investment policy shall provide for appropriate quarterly or more frequent reporting of investment activities. To that end, the intergovernmental risk management entities' chief financial officer shall prepare periodic reports for submission to the governing body and chief executive officer of the intergovernmental risk management entity, which shall include securities in the portfolio by class or type, book value, income earned, and market value as of the report date.P.A. 89-592, eff. 8/1/1996.