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Public Act 91-0607
SB1014 Enrolled LRB9105628DHmg
AN ACT concerning the State Treasurer.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The State Treasurer Act is amended by adding
Section 16.5 as follows:
(15 ILCS 505/16.5 new)
Sec. 16.5. College Savings Pool. The State Treasurer may
establish and administer a College Savings Pool to supplement
and enhance the investment opportunities otherwise available
to persons seeking to finance the costs of higher education.
The Treasurer, in administering the College Savings Pool, may
receive moneys paid into the pool by a participant and may
serve as the fiscal agent of that participant for the purpose
of holding and investing those moneys.
"Participant", as used in this Section, means any person
that makes investments in the pool. "Designated beneficiary",
as used in this Section, means any person on whose behalf an
account is established in the College Savings Pool by a
participant. Both in-state and out-of-state persons may be
participants and designated beneficiaries in the College
Savings Pool.
New accounts in the College Savings Pool shall be
processed through participating financial institutions.
"Participating financial institution", as used in this
Section, means any financial institution insured by the
Federal Deposit Insurance Corporation and lawfully doing
business in the State of Illinois and any credit union
approved by the State Treasurer and lawfully doing business
in the State of Illinois that agrees to process new accounts
in the College Savings Pool. Participating financial
institutions may charge a processing fee to participants to
open an account in the pool that shall not exceed $30 until
the year 2001. Beginning in 2001 and every year thereafter,
the maximum fee limit shall be adjusted by the Treasurer
based on the Consumer Price Index for the North Central
Region as published by the United States Department of Labor,
Bureau of Labor Statistics for the immediately preceding
calendar year. Every contribution received by a financial
institution for investment in the College Savings Pool shall
be transferred from the financial institution to a location
selected by the State Treasurer within one business day
following the day that the funds must be made available in
accordance with federal law. All communications from the
State Treasurer to participants shall reference the
participating financial institution at which the account was
processed.
The Treasurer may invest the moneys in the College
Savings Pool in the same manner, in the same types of
investments, and subject to the same limitations provided for
the investment of moneys by the Illinois State Board of
Investment. To enhance the safety and liquidity of the
College Savings Pool, to ensure the diversification of the
investment portfolio of the pool, and in an effort to keep
investment dollars in the State of Illinois, the State
Treasurer shall make a percentage of each account available
for investment in participating financial institutions doing
business in the State. The State Treasurer shall deposit
with the participating financial institution at which the
account was processed the following percentage of each
account at a prevailing rate offered by the institution,
provided that the deposit is federally insured or fully
collateralized and the institution accepts the deposit: 10%
of the total amount of each account for which the current age
of the beneficiary is less than 7 years of age, 20% of the
total amount of each account for which the beneficiary is at
least 7 years of age and less than 12 years of age, and 50%
of the total amount of each account for which the current age
of the beneficiary is at least 12 years of age. The State
Treasurer shall adjust each account at least annually to
ensure compliance with this Section. The Treasurer shall
develop, publish, and implement an investment policy covering
the investment of the moneys in the College Savings Pool. The
policy shall be published (i) at least once each year in at
least one newspaper of general circulation in both
Springfield and Chicago and (ii) each year as part of the
audit of the College Savings Pool by the Auditor General,
which shall be distributed to all participants. The Treasurer
shall notify all participants in writing, and the Treasurer
shall publish in a newspaper of general circulation in both
Chicago and Springfield, any changes to the previously
published investment policy at least 30 calendar days before
implementing the policy. Any investment policy adopted by the
Treasurer shall be reviewed and updated if necessary within
90 days following the date that the State Treasurer takes
office.
Participants shall be required to use moneys distributed
from the College Savings Pool for qualified expenses at
eligible educational institutions. "Qualified expenses", as
used in this Section, means the following: (i) tuition, fees,
and the costs of books, supplies, and equipment required for
enrollment or attendance at an eligible educational
institution and (ii) certain room and board expenses incurred
while attending an eligible educational institution at least
half-time. "Eligible educational institutions", as used in
this Section, means public and private colleges, junior
colleges, graduate schools, and certain vocational
institutions that are described in Section 481 of the Higher
Education Act of 1965 (20 U.S.C. 1088) and that are eligible
to participate in Department of Education student aid
programs. A student shall be considered to be enrolled at
least half-time if the student is enrolled for at least half
the full-time academic work load for the course of study the
student is pursuing as determined under the standards of the
institution at which the student is enrolled. Distributions
made from the pool for qualified expenses shall be made
directly to the eligible educational institution, directly to
a vendor, or in the form of a check payable to both the
beneficiary and the institution or vendor. Any moneys that
are distributed in any other manner or that are used for
expenses other than qualified expenses at an eligible
educational institution shall be subject to a penalty of 10%
of the earnings unless the beneficiary dies, becomes
disabled, or receives a scholarship that equals or exceeds
the distribution. Penalties shall be withheld at the time the
distribution is made.
The Treasurer shall limit the contributions that may be
made on behalf of a designated beneficiary based on an
actuarial estimate of what is required to pay tuition, fees,
and room and board for 5 undergraduate years at the highest
cost eligible educational institution. The contributions made
on behalf of a beneficiary who is also a beneficiary under
the Illinois Prepaid Tuition Program shall be further
restricted to ensure that the contributions in both programs
combined do not exceed the limit established for the College
Savings Pool. The Treasurer shall provide the Illinois
Student Assistance Commission each year at a time designated
by the Commission, an electronic report of all participant
accounts in the Treasurer's College Savings Pool, listing
total contributions and disbursements from each individual
account during the previous calendar year. As soon
thereafter as is possible following receipt of the
Treasurer's report, the Illinois Student Assistance
Commission shall, in turn, provide the Treasurer with an
electronic report listing those College Savings Pool
participants who also participate in the State's prepaid
tuition program, administered by the Commission. The
Commission shall be responsible for filing any combined tax
reports regarding State qualified savings programs required
by the United States Internal Revenue Service. The Treasurer
shall work with the Illinois Student Assistance Commission to
coordinate the marketing of the College Savings Pool and the
Illinois Prepaid Tuition Program when considered beneficial
by the Treasurer and the Director of the Illinois Student
Assistance Commission. The Treasurer's office shall not
publicize or otherwise market the College Savings Pool or
accept any moneys into the College Savings Pool prior to
March 1, 2000. The Treasurer shall provide a separate
accounting for each designated beneficiary to each
participant, the Illinois Student Assistance Commission, and
the participating financial institution at which the account
was processed. No interest in the program may be pledged as
security for a loan.
The Treasurer shall adopt rules he or she considers
necessary for the efficient administration of the College
Savings Pool. The rules shall provide whatever additional
parameters and restrictions are necessary to ensure that the
College Savings Pool meets all of the requirements for a
qualified state tuition program under Section 529 of the
Internal Revenue Code (26 U.S.C. 52). The rules shall provide
for the administration expenses of the pool to be paid from
its earnings and for the investment earnings in excess of the
expenses and all moneys collected as penalties to be credited
or paid monthly to the several participants in the pool in a
manner which equitably reflects the differing amounts of
their respective investments in the pool and the differing
periods of time for which those amounts were in the custody
of the pool. Also, the rules shall require the maintenance of
records that enable the Treasurer's office to produce a
report for each account in the pool at least annually that
documents the account balance and investment earnings. Notice
of any proposed amendments to the rules and regulations shall
be provided to all participants prior to adoption. Amendments
to rules and regulations shall apply only to contributions
made after the adoption of the amendment.
Upon creating the College Savings Pool, the State
Treasurer shall give bond with 2 or more sufficient sureties,
payable to and for the benefit of the participants in the
College Savings Pool, in the penal sum of $1,000,000,
conditioned upon the faithful discharge of his or her duties
in relation to the College Savings Pool.
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