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| [ Introduced ] | [ Engrossed ] | [ Senate Amendment 001 ] |
91_SB1862enr SB1862 Enrolled 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 SB1862 Enrolled -2- LRB9110258JMdv 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 SB1862 Enrolled -3- LRB9110258JMdv 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 SB1862 Enrolled -4- LRB9110258JMdv 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 SB1862 Enrolled -5- LRB9110258JMdv 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 assets of the College Savings Pool and its income and 22 operation shall be exempt from all taxation by the State of 23 Illinois and any of its subdivisions. The accrued earnings 24 on investments in the Pool once disbursed on behalf of a 25 designated beneficiary shall be similarly exempt from all 26 taxation by the State of Illinois and its subdivisions, so 27 long as they are used for qualified expenses. The provisions 28 of this paragraph are exempt from Section 250 of the Illinois 29 Income Tax Act. 30 The Treasurer shall adopt rules he or she considers 31 necessary for the efficient administration of the College 32 Savings Pool. The rules shall provide whatever additional 33 parameters and restrictions are necessary to ensure that the 34 College Savings Pool meets all of the requirements for a SB1862 Enrolled -6- LRB9110258JMdv 1 qualified state tuition program under Section 529 of the 2 Internal Revenue Code (26 U.S.C. 52). The rules shall provide 3 for the administration expenses of the pool to be paid from 4 its earnings and for the investment earnings in excess of the 5 expenses and all moneys collected as penalties to be credited 6 or paid monthly to the several participants in the pool in a 7 manner which equitably reflects the differing amounts of 8 their respective investments in the pool and the differing 9 periods of time for which those amounts were in the custody 10 of the pool. Also, the rules shall require the maintenance of 11 records that enable the Treasurer's office to produce a 12 report for each account in the pool at least annually that 13 documents the account balance and investment earnings. Notice 14 of any proposed amendments to the rules and regulations shall 15 be provided to all participants prior to adoption. Amendments 16 to rules and regulations shall apply only to contributions 17 made after the adoption of the amendment. 18 Upon creating the College Savings Pool, the State 19 Treasurer shall give bond with 2 or more sufficient sureties, 20 payable to and for the benefit of the participants in the 21 College Savings Pool, in the penal sum of $1,000,000, 22 conditioned upon the faithful discharge of his or her duties 23 in relation to the College Savings Pool. 24 (Source: P.A. 91-607, eff. 1-1-00.)