SB1301 amends the Deposit of State Moneys Act and the Public Funds Investment Act to require the State Treasurer and other public agencies to consider a financial institution’s record of community reinvestment when deciding where to place public money. The bill expands the factors that may be reviewed to include both federal Community Reinvestment Act (CRA) ratings and, for institutions subject to Illinois law, Illinois Community Reinvestment Act ratings, along with changes in ownership, management, policies, and the financial impacts of moving deposits.
The bill also adds more specific deposit restrictions. Beginning January 1, 2022 for federal CRA-covered institutions, no State or public funds may be deposited unless the institution has a current satisfactory or outstanding CRA rating. Beginning January 1, 2026, the same restriction is extended to institutions subject to the Illinois Community Reinvestment Act, with a limited exception for institutions that have not yet completed their initial Illinois examination. It also bars withdrawing already-deposited funds before maturity solely because of a less-than-satisfactory Illinois CRA rating, and allows preference for institutions with outstanding ratings under both federal and Illinois CRA standards.
Impact
This legislation changes Illinois statutes governing the placement of State and local public deposits by tying eligibility and preference for public funds to community reinvestment performance. It amends 15 ILCS 520/16.1 and 16.3 and 30 ILCS 235/8, effectively adding Illinois CRA ratings to the existing federal CRA framework and limiting the Treasurer’s and public agencies’ discretion when selecting depositories. Financial institutions that do not meet the required ratings may be excluded from receiving new deposits, while existing deposits are protected from early withdrawal solely on the basis of an Illinois CRA downgrade.
Sentiment
The bill appears to have broad legislative support, with unanimous recorded votes in both chambers shown in the available history: 55-0 in the Senate and 108-0 in the House. The absence of committee transcript material suggests no recorded public debate in the provided context, and the vote totals indicate a generally favorable view of the measure. Overall, the bill’s policy direction—using public deposits to encourage community lending and reinvestment—appears to have been noncontroversial at the voting stage.
Contention
The main policy tension in SB1301 is between using public deposits as leverage to promote community reinvestment and avoiding undue disruption to financial institutions and public cash management. The bill addresses this by requiring consideration of community commitment and CRA ratings, but also by preserving discretion to weigh financial impacts on both the institution and the public agency. Another point of potential concern is the Illinois CRA expansion itself, since institutions newly subject to the state standard may face deposit restrictions beginning in 2026, though the bill includes a transition period and an exception for institutions awaiting their initial examination.