093_HB0972eng

 
HB0972 Engrossed                     LRB093 05784 RCE 05877 b

 1        AN ACT concerning finance.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section  5.   The  State  Treasurer  Act  is  amended  by
 5    changing Section 16.5 as follows:

 6        (15 ILCS 505/16.5)
 7        Sec. 16.5. College Savings Pool.  The State Treasurer may
 8    establish and administer a College Savings Pool to supplement
 9    and  enhance the investment opportunities otherwise available
10    to persons seeking to finance the costs of higher  education.
11    The  State  Treasurer,  in  administering the College Savings
12    Pool, may receive moneys paid into the pool by a  participant
13    and may serve as the fiscal agent of that participant for the
14    purpose of holding  and investing those moneys.
15        "Participant",  as  used  in  this  Section,  means a any
16    person  who  makes  investments  in  the  pool.   "Designated
17    beneficiary", as used in this Section, means  any  person  on
18    whose behalf an account is established in the College Savings
19    Pool  by  a  participant.   Both  in-state  and  out-of-state
20    persons  may  be participants and designated beneficiaries in
21    the College Savings Pool.
22        New  accounts  in  the  College  Savings  Pool  shall  be
23    processed  through  participating   financial   institutions.
24    "Participating   financial  institution",  as  used  in  this
25    Section, means  any  financial  institution  insured  by  the
26    Federal  Deposit  Insurance  Corporation  and  lawfully doing
27    business in the  State  of  Illinois  and  any  credit  union
28    approved  by  the State Treasurer and lawfully doing business
29    in the State of Illinois that agrees to process new  accounts
30    in   the   College  Savings  Pool.   Participating  financial
31    institutions may charge a processing fee to  participants  to
 
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 1    open  an  account in the pool that shall not exceed $30 until
 2    the year 2001.  Beginning in 2001 and every year  thereafter,
 3    the  maximum  fee  limit  shall  be adjusted by the Treasurer
 4    based on the Consumer  Price  Index  for  the  North  Central
 5    Region as published by the United States Department of Labor,
 6    Bureau  of  Labor  Statistics  for  the immediately preceding
 7    calendar year.  Every contribution received  by  a  financial
 8    institution  for investment in the College Savings Pool shall
 9    be transferred from the financial institution to  a  location
10    selected  by  the  State  Treasurer  within  one business day
11    following the day that the funds must be  made  available  in
12    accordance  with  federal  law.   All communications from the
13    State  Treasurer  to   participants   shall   reference   the
14    participating  financial institution at which the account was
15    processed.
16        The Treasurer  may  invest  the  moneys  in  the  College
17    Savings  Pool  in  the  same  manner,  in  the  same types of
18    investments, and subject to the same limitations provided for
19    the investment of moneys  by  the  Illinois  State  Board  of
20    Investment.   To  enhance  the  safety  and  liquidity of the
21    College Savings Pool, to ensure the  diversification  of  the
22    investment  portfolio  of  the pool, and in an effort to keep
23    investment dollars  in  the  State  of  Illinois,  the  State
24    Treasurer  shall  make a percentage of each account available
25    for investment in participating financial institutions  doing
26    business  in  the  State.   The State Treasurer shall deposit
27    with the participating financial  institution  at  which  the
28    account  was  processed  the  following  percentage  of  each
29    account  at  a  prevailing  rate  offered by the institution,
30    provided that the  deposit  is  federally  insured  or  fully
31    collateralized  and  the institution accepts the deposit: 10%
32    of the total amount of each account for which the current age
33    of the beneficiary is less than 7 years of age,  20%  of  the
34    total  amount of each account for which the beneficiary is at
 
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 1    least 7 years of age and less than 12 years of age,  and  50%
 2    of the total amount of each account for which the current age
 3    of  the  beneficiary  is at least 12 years of age.  The State
 4    Treasurer shall adjust each  account  at  least  annually  to
 5    ensure  compliance  with  this  Section.  The Treasurer shall
 6    develop, publish, and implement an investment policy covering
 7    the investment of the moneys in  the  College  Savings  Pool.
 8    The  policy shall be published (i) at least once each year in
 9    at  least  one  newspaper  of  general  circulation  in  both
10    Springfield and Chicago and (ii) each year  as  part  of  the
11    audit  of  the  College  Savings Pool by the Auditor General,
12    which  shall  be  distributed  to  all   participants.    The
13    Treasurer  shall  notify all participants in writing, and the
14    Treasurer shall publish in a newspaper of general circulation
15    in  both  Chicago  and  Springfield,  any  changes   to   the
16    previously  published  investment policy at least 30 calendar
17    days before implementing the policy.  Any  investment  policy
18    adopted  by  the  Treasurer  shall be reviewed and updated if
19    necessary within 90 days following the date  that  the  State
20    Treasurer takes office.
21        Participants  shall be required to use moneys distributed
22    from the College  Savings  Pool  for  qualified  expenses  at
23    eligible  educational  institutions. "Qualified expenses", as
24    used in this Section, means the following: (i) tuition, fees,
25    and the costs of books, supplies, and equipment required  for
26    enrollment   or   attendance   at   an  eligible  educational
27    institution and (ii) certain room and board expenses incurred
28    while attending an eligible educational institution at  least
29    half-time.  "Eligible  educational  institutions", as used in
30    this Section,  means  public  and  private  colleges,  junior
31    colleges,    graduate   schools,   and   certain   vocational
32    institutions that are described in Section 481 of the  Higher
33    Education  Act of 1965 (20 U.S.C. 1088) and that are eligible
34    to  participate  in  Department  of  Education  student   aid
 
HB0972 Engrossed            -4-      LRB093 05784 RCE 05877 b
 1    programs.  A  student  shall  be considered to be enrolled at
 2    least half-time if the student is enrolled for at least  half
 3    the  full-time academic work load for the course of study the
 4    student is pursuing as determined under the standards of  the
 5    institution  at which the student is enrolled.  Distributions
 6    made from the pool  for  qualified  expenses  shall  be  made
 7    directly to the eligible educational institution, directly to
 8    a  vendor,  or  in  the  form  of a check payable to both the
 9    beneficiary and the institution or vendor.  Any  moneys  that
10    are  distributed  in  any  other  manner or that are used for
11    expenses  other  than  qualified  expenses  at  an   eligible
12    educational  institution shall be subject to a penalty of 10%
13    of  the  earnings  unless  the  beneficiary   dies,   becomes
14    disabled,  or  receives  a scholarship that equals or exceeds
15    the distribution.  Penalties shall be withheld  at  the  time
16    the distribution is made.
17        The  Treasurer  shall limit the contributions that may be
18    made on behalf  of  a  designated  beneficiary  based  on  an
19    actuarial  estimate of what is required to pay tuition, fees,
20    and room and board for 5 undergraduate years at  the  highest
21    cost eligible educational institution. The contributions made
22    on  behalf  of  a beneficiary who is also a beneficiary under
23    the  Illinois  Prepaid  Tuition  Program  shall  be   further
24    restricted  to ensure that the contributions in both programs
25    combined do not exceed the limit established for the  College
26    Savings  Pool.   The  Treasurer  shall  provide  the Illinois
27    Student Assistance Commission each year at a time  designated
28    by  the  Commission,  an electronic report of all participant
29    accounts in the Treasurer's  College  Savings  Pool,  listing
30    total  contributions  and  disbursements from each individual
31    account  during  the  previous  calendar   year.    As   soon
32    thereafter   as   is   possible   following  receipt  of  the
33    Treasurer's   report,   the   Illinois   Student   Assistance
34    Commission shall, in turn,  provide  the  Treasurer  with  an
 
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 1    electronic   report   listing   those  College  Savings  Pool
 2    participants who also  participate  in  the  State's  prepaid
 3    tuition   program,   administered  by  the  Commission.   The
 4    Commission shall be responsible for filing any  combined  tax
 5    reports  regarding  State qualified savings programs required
 6    by the United States Internal Revenue Service.  The Treasurer
 7    shall work with the Illinois Student Assistance Commission to
 8    coordinate the marketing of the College Savings Pool and  the
 9    Illinois  Prepaid  Tuition Program when considered beneficial
10    by the Treasurer and the Director  of  the  Illinois  Student
11    Assistance  Commission.   The  Treasurer's  office  shall not
12    publicize or otherwise market the  College  Savings  Pool  or
13    accept  any  moneys  into  the  College Savings Pool prior to
14    March 1,  2000.   The  Treasurer  shall  provide  a  separate
15    accounting   for   each   designated   beneficiary   to  each
16    participant, the Illinois Student Assistance Commission,  and
17    the  participating financial institution at which the account
18    was processed.  No interest in the program may be pledged  as
19    security for a loan.
20        The assets of the College Savings Pool and its income and
21    operation  shall  be exempt from all taxation by the State of
22    Illinois and any of its subdivisions.  The  accrued  earnings
23    on  investments  in  the  Pool  once disbursed on behalf of a
24    designated beneficiary shall be  similarly  exempt  from  all
25    taxation  by  the  State of Illinois and its subdivisions, so
26    long as they are used for qualified expenses.   Contributions
27    to a College Savings Pool account during the taxable year may
28    be deducted from adjusted gross income as provided in Section
29    203  of  the Illinois Income Tax Act.  The provisions of this
30    paragraph are exempt from Section 250 of the Illinois  Income
31    Tax Act.
32        The  Treasurer  shall  adopt  rules  he  or she considers
33    necessary for the efficient  administration  of  the  College
34    Savings  Pool.   The  rules shall provide whatever additional
 
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 1    parameters and restrictions are necessary to ensure that  the
 2    College  Savings  Pool  meets  all  of the requirements for a
 3    qualified state tuition program  under  Section  529  of  the
 4    Internal  Revenue  Code  (26  U.S.C.  529).   The rules shall
 5    provide for the administration expenses of  the  pool  to  be
 6    paid  from  its  earnings  and for the investment earnings in
 7    excess of the expenses and all moneys collected as  penalties
 8    to be credited or paid monthly to the several participants in
 9    the  pool  in a manner which equitably reflects the differing
10    amounts of their respective investments in the pool  and  the
11    differing periods of time for which those amounts were in the
12    custody  of  the  pool.   Also,  the  rules shall require the
13    maintenance of records that enable the Treasurer's office  to
14    produce  a  report  for  each  account  in  the pool at least
15    annually that documents the account  balance  and  investment
16    earnings.  Notice of any proposed amendments to the rules and
17    regulations  shall  be  provided to all participants prior to
18    adoption.  Amendments to rules and  regulations  shall  apply
19    only   to  contributions  made  after  the  adoption  of  the
20    amendment.
21        Upon  creating  the  College  Savings  Pool,  the   State
22    Treasurer shall give bond with 2 or more sufficient sureties,
23    payable  to  and  for  the benefit of the participants in the
24    College  Savings  Pool,  in  the  penal  sum  of  $1,000,000,
25    conditioned upon the faithful discharge of his or her  duties
26    in relation to the College Savings Pool.
27        No  contributions  to the College Savings Pool authorized
28    by  this  Section  shall  be  considered  in  evaluating  the
29    financial situation  of  the  designated  beneficiary  or  be
30    deemed  a financial resource of or a form of financial aid or
31    assistance to the designated  beneficiary,  for  purposes  of
32    determining   eligibility  for  any  scholarship,  grant,  or
33    monetary  assistance  awarded   by   the   Illinois   Student
34    Assistance  Commission, the State, or any agency thereof; nor
 
HB0972 Engrossed            -7-      LRB093 05784 RCE 05877 b
 1    shall contributions to the College Savings  Pool  reduce  the
 2    amount of any scholarship, grant, or monetary assistance that
 3    the  designated  beneficiary is eligible to be awarded by the
 4    Illinois Student Assistance Commission,  the  State,  or  any
 5    agency thereof in accordance with the provisions of any State
 6    law.
 7    (Source:  P.A.  91-607,  eff.  1-1-00;  91-829,  eff. 1-1-01;
 8    92-16, eff.  6-28-01;  92-439,  eff.  8-17-01;  92-626,  eff.
 9    7-11-02.)