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| [ Engrossed ] | [ Enrolled ] | [ Senate Amendment 001 ] |
91_SB1862
LRB9110258JMdv
1 AN ACT to amend the State Treasurer Act by changing
2 Section 16.5.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The State Treasurer Act is amended by
6 changing Section 16.5 as follows:
7 (15 ILCS 505/16.5)
8 Sec. 16.5. College Savings Pool. The State Treasurer may
9 establish and administer a College Savings Pool to supplement
10 and enhance the investment opportunities otherwise available
11 to persons seeking to finance the costs of higher education.
12 The State Treasurer, in administering the College Savings
13 Pool, may receive moneys paid into the pool by a participant
14 and may serve as the fiscal agent of that participant for the
15 purpose of holding and investing those moneys.
16 "Participant", as used in this Section, means any person
17 that makes investments in the pool. "Designated beneficiary",
18 as used in this Section, means any person on whose behalf an
19 account is established in the College Savings Pool by a
20 participant. Both in-state and out-of-state persons may be
21 participants and designated beneficiaries in the College
22 Savings Pool.
23 New accounts in the College Savings Pool shall be
24 processed through participating financial institutions.
25 "Participating financial institution", as used in this
26 Section, means any financial institution insured by the
27 Federal Deposit Insurance Corporation and lawfully doing
28 business in the State of Illinois and any credit union
29 approved by the State Treasurer and lawfully doing business
30 in the State of Illinois that agrees to process new accounts
31 in the College Savings Pool. Participating financial
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1 institutions may charge a processing fee to participants to
2 open an account in the pool that shall not exceed $30 until
3 the year 2001. Beginning in 2001 and every year thereafter,
4 the maximum fee limit shall be adjusted by the Treasurer
5 based on the Consumer Price Index for the North Central
6 Region as published by the United States Department of Labor,
7 Bureau of Labor Statistics for the immediately preceding
8 calendar year. Every contribution received by a financial
9 institution for investment in the College Savings Pool shall
10 be transferred from the financial institution to a location
11 selected by the State Treasurer within one business day
12 following the day that the funds must be made available in
13 accordance with federal law. All communications from the
14 State Treasurer to participants shall reference the
15 participating financial institution at which the account was
16 processed.
17 The Treasurer may invest the moneys in the College
18 Savings Pool in the same manner, in the same types of
19 investments, and subject to the same limitations provided for
20 the investment of moneys by the Illinois State Board of
21 Investment. To enhance the safety and liquidity of the
22 College Savings Pool, to ensure the diversification of the
23 investment portfolio of the pool, and in an effort to keep
24 investment dollars in the State of Illinois, the State
25 Treasurer shall make a percentage of each account available
26 for investment in participating financial institutions doing
27 business in the State. The State Treasurer shall deposit
28 with the participating financial institution at which the
29 account was processed the following percentage of each
30 account at a prevailing rate offered by the institution,
31 provided that the deposit is federally insured or fully
32 collateralized and the institution accepts the deposit: 10%
33 of the total amount of each account for which the current age
34 of the beneficiary is less than 7 years of age, 20% of the
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1 total amount of each account for which the beneficiary is at
2 least 7 years of age and less than 12 years of age, and 50%
3 of the total amount of each account for which the current age
4 of the beneficiary is at least 12 years of age. The State
5 Treasurer shall adjust each account at least annually to
6 ensure compliance with this Section. The Treasurer shall
7 develop, publish, and implement an investment policy covering
8 the investment of the moneys in the College Savings Pool. The
9 policy shall be published (i) at least once each year in at
10 least one newspaper of general circulation in both
11 Springfield and Chicago and (ii) each year as part of the
12 audit of the College Savings Pool by the Auditor General,
13 which shall be distributed to all participants. The Treasurer
14 shall notify all participants in writing, and the Treasurer
15 shall publish in a newspaper of general circulation in both
16 Chicago and Springfield, any changes to the previously
17 published investment policy at least 30 calendar days before
18 implementing the policy. Any investment policy adopted by the
19 Treasurer shall be reviewed and updated if necessary within
20 90 days following the date that the State Treasurer takes
21 office.
22 Participants shall be required to use moneys distributed
23 from the College Savings Pool for qualified expenses at
24 eligible educational institutions. "Qualified expenses", as
25 used in this Section, means the following: (i) tuition, fees,
26 and the costs of books, supplies, and equipment required for
27 enrollment or attendance at an eligible educational
28 institution and (ii) certain room and board expenses incurred
29 while attending an eligible educational institution at least
30 half-time. "Eligible educational institutions", as used in
31 this Section, means public and private colleges, junior
32 colleges, graduate schools, and certain vocational
33 institutions that are described in Section 481 of the Higher
34 Education Act of 1965 (20 U.S.C. 1088) and that are eligible
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1 to participate in Department of Education student aid
2 programs. A student shall be considered to be enrolled at
3 least half-time if the student is enrolled for at least half
4 the full-time academic work load for the course of study the
5 student is pursuing as determined under the standards of the
6 institution at which the student is enrolled. Distributions
7 made from the pool for qualified expenses shall be made
8 directly to the eligible educational institution, directly to
9 a vendor, or in the form of a check payable to both the
10 beneficiary and the institution or vendor. Any moneys that
11 are distributed in any other manner or that are used for
12 expenses other than qualified expenses at an eligible
13 educational institution shall be subject to a penalty of 10%
14 of the earnings unless the beneficiary dies, becomes
15 disabled, or receives a scholarship that equals or exceeds
16 the distribution. Penalties shall be withheld at the time the
17 distribution is made.
18 The Treasurer shall limit the contributions that may be
19 made on behalf of a designated beneficiary based on an
20 actuarial estimate of what is required to pay tuition, fees,
21 and room and board for 5 undergraduate years at the highest
22 cost eligible educational institution. The contributions made
23 on behalf of a beneficiary who is also a beneficiary under
24 the Illinois Prepaid Tuition Program shall be further
25 restricted to ensure that the contributions in both programs
26 combined do not exceed the limit established for the College
27 Savings Pool. The Treasurer shall provide the Illinois
28 Student Assistance Commission each year at a time designated
29 by the Commission, an electronic report of all participant
30 accounts in the Treasurer's College Savings Pool, listing
31 total contributions and disbursements from each individual
32 account during the previous calendar year. As soon
33 thereafter as is possible following receipt of the
34 Treasurer's report, the Illinois Student Assistance
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1 Commission shall, in turn, provide the Treasurer with an
2 electronic report listing those College Savings Pool
3 participants who also participate in the State's prepaid
4 tuition program, administered by the Commission. The
5 Commission shall be responsible for filing any combined tax
6 reports regarding State qualified savings programs required
7 by the United States Internal Revenue Service. The Treasurer
8 shall work with the Illinois Student Assistance Commission to
9 coordinate the marketing of the College Savings Pool and the
10 Illinois Prepaid Tuition Program when considered beneficial
11 by the Treasurer and the Director of the Illinois Student
12 Assistance Commission. The Treasurer's office shall not
13 publicize or otherwise market the College Savings Pool or
14 accept any moneys into the College Savings Pool prior to
15 March 1, 2000. The Treasurer shall provide a separate
16 accounting for each designated beneficiary to each
17 participant, the Illinois Student Assistance Commission, and
18 the participating financial institution at which the account
19 was processed. No interest in the program may be pledged as
20 security for a loan.
21 The Treasurer shall adopt rules he or she considers
22 necessary for the efficient administration of the College
23 Savings Pool. The rules shall provide whatever additional
24 parameters and restrictions are necessary to ensure that the
25 College Savings Pool meets all of the requirements for a
26 qualified state tuition program under Section 529 of the
27 Internal Revenue Code (26 U.S.C. 52). The rules shall provide
28 for the administration expenses of the pool to be paid from
29 its earnings and for the investment earnings in excess of the
30 expenses and all moneys collected as penalties to be credited
31 or paid monthly to the several participants in the pool in a
32 manner which equitably reflects the differing amounts of
33 their respective investments in the pool and the differing
34 periods of time for which those amounts were in the custody
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1 of the pool. Also, the rules shall require the maintenance of
2 records that enable the Treasurer's office to produce a
3 report for each account in the pool at least annually that
4 documents the account balance and investment earnings. Notice
5 of any proposed amendments to the rules and regulations shall
6 be provided to all participants prior to adoption. Amendments
7 to rules and regulations shall apply only to contributions
8 made after the adoption of the amendment.
9 Upon creating the College Savings Pool, the State
10 Treasurer shall give bond with 2 or more sufficient sureties,
11 payable to and for the benefit of the participants in the
12 College Savings Pool, in the penal sum of $1,000,000,
13 conditioned upon the faithful discharge of his or her duties
14 in relation to the College Savings Pool.
15 (Source: P.A. 91-607, eff. 1-1-00.)