97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB5600

 

Introduced 2/15/2012, by Rep. Jim Durkin - Darlene J. Senger - Kent Gaffney - Jim Sacia

 

SYNOPSIS AS INTRODUCED:
 
110 ILCS 979/15
110 ILCS 979/30
110 ILCS 979/35

    Amends the Illinois Prepaid Tuition Act. Authorizes the Illinois Student Assistance Commission to enter into contracts only as specifically authorized by the Act for expenses associated with the administration of the Illinois prepaid tuition program (now, the Commission may enter into any contracts that are necessary to provide for the administration of the program). Deletes a provision that provides that charges and expenses shall be paid exclusively from the Illinois Prepaid Tuition Trust Fund. Deletes a provision that provides that nothing with respect to the prohibition on delegating management functions shall preclude the Commission from subscribing to general investment research services available for purchase or use by others and providing compensation for accounting, computing, and other necessary services. Prohibits certain administrative and promotional expenses from being paid from moneys in the Illinois Prepaid Tuition Trust Fund. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning education.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Prepaid Tuition Act is amended by
5changing Sections 15, 30, and 35 as follows:
 
6    (110 ILCS 979/15)
7    Sec. 15. Creation of Illinois prepaid tuition program.
8There is created the Illinois prepaid tuition program to be
9administered by the Illinois Student Assistance Commission.
10This program is to be administered so that the full cost of
11tuition and mandatory fees at Illinois public universities and
12Illinois community colleges may be paid in advance of
13enrollment through the prior purchase of an Illinois prepaid
14tuition contract. The Commission may enter into contracts as
15specifically authorized by the provisions of this Act for
16expenses associated with as may be necessary to provide for
17administration of the program and shall develop and implement
18rules and regulations necessary for the efficient
19administration of the program.
20    All reasonable charges incidental to the administration of
21the program by the Commission shall be paid in the initial
22start-up period for the program's operation from the General
23Revenue Fund, pursuant to appropriations made for that purpose

 

 

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1by the General Assembly. Those charges and expenses in
2subsequent years shall be paid exclusively from the Illinois
3Prepaid Tuition Trust Fund established by Section 35 of this
4Act.
5(Source: P.A. 90-546, eff. 12-1-97.)
 
6    (110 ILCS 979/30)
7    Sec. 30. Investment Advisory Panel duties and
8responsibilities.
9    (a) Advice and review. The panel shall offer advice and
10counseling regarding the investments of the Illinois prepaid
11tuition program with the objective of obtaining the best
12possible return on investments consistent with actuarial
13soundness of the program. The panel is required to annually
14review and advise the Commission on provisions of the strategic
15investment plan for the prepaid tuition program. The panel is
16also charged with reviewing and advising the Commission with
17regard to the annual report that describes the current
18financial condition of the program. The panel at its own
19discretion also may advise the Commission on other aspects of
20the program.
21    (b) Investment plan. The Commission annually shall adopt a
22comprehensive investment plan for purposes of this Section. The
23comprehensive investment plan shall specify the investment
24policies to be utilized by the Commission in its administration
25of the Illinois Prepaid Tuition Trust Fund created by Section

 

 

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135. The Commission may direct that assets of those Funds be
2placed in savings accounts or may use the same to purchase
3fixed or variable life insurance or annuity contracts,
4securities, evidence of indebtedness, or other investment
5products pursuant to the comprehensive investment plan and in
6such proportions as may be designated or approved under that
7plan. The Commission shall invest such assets with the care,
8skill, prudence, and diligence under the circumstances then
9prevailing that a prudent man acting in a like capacity and
10familiar with such matters would use in the conduct of an
11enterprise of a like character with like aims, and the
12Commission shall diversify the investments of such assets so as
13to minimize the risk of large losses, unless under the
14circumstances it is clearly prudent not to do so. Those
15insurance, annuity, savings, and investment products shall be
16underwritten and offered in compliance with applicable federal
17and State laws, rules, and regulations by persons who are
18authorized thereunder to provide those services. The
19Commission shall delegate responsibility for preparing the
20comprehensive investment plan to the Executive Director of the
21Commission. Nothing in this Section shall preclude the
22Commission from contracting with a private corporation or
23institution to provide such services as may be a part of the
24comprehensive investment plan or as may be deemed necessary for
25implementation of the comprehensive investment plan,
26including, but not limited to, providing consolidated billing,

 

 

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1individual and collective record keeping and accounting, and
2asset purchase, control, and safekeeping.
3    (c) Program management. The Commission may not delegate its
4management functions, but may arrange to compensate for
5personalized investment advisory services rendered with
6respect to any or all of the investments under its control an
7investment advisor registered under Section 8 of the Illinois
8Securities Law of 1953 or any bank or other entity authorized
9by law to provide those services. Nothing contained herein
10shall preclude the Commission from subscribing to general
11investment research services available for purchase or use by
12others. The Commission also shall have authority to compensate
13for accounting, computing, and other necessary services.
14    (d) Annual report. The Commission shall annually prepare or
15cause to be prepared a report setting forth in appropriate
16detail an accounting of all Illinois prepaid tuition program
17funds and a description of the financial condition of the
18program at the close of each fiscal year. Included in this
19report shall be an evaluation by at least one nationally
20recognized actuary of the financial viability of the program.
21This report shall be submitted to the Governor, the President
22of the Senate, the Speaker of the House of Representatives, the
23Auditor General, and the Board of Higher Education on or before
24March 1 of the subsequent fiscal year. This report also shall
25be made available to purchasers of Illinois prepaid tuition
26contracts and shall contain complete Illinois prepaid tuition

 

 

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1contract sales information, including, but not limited to,
2projected postsecondary enrollment data for qualified
3beneficiaries.
4    (e) Marketing plan. Selection of a marketing agent for the
5Illinois prepaid tuition program must be approved by the
6Commission. At least once every 3 years, the Commission shall
7solicit proposals for marketing of the Illinois prepaid tuition
8program in accordance with the Illinois Securities Law of 1953
9and any applicable provisions of federal law. The entity
10designated pursuant to this paragraph shall serve as a
11centralized marketing agent for the program and shall have
12exclusive responsibility for marketing the program. No
13contract for marketing the Illinois prepaid tuition program
14shall extend for longer than 3 years. Any materials produced
15for the purpose of marketing the program shall be submitted to
16the Executive Director of the Commission for approval before
17they are made public. Any eligible institution may distribute
18marketing materials produced for the program, so long as the
19Executive Director of the Commission approves the distribution
20in advance. Neither the State nor the Commission shall be
21liable for misrepresentation of the program by a marketing
22agent. In no event shall any expenses associated with
23marketing, advertising, or promotion of the Illinois prepaid
24tuition program be paid from the Illinois Prepaid Tuition Trust
25Fund.
26    (f) Accounting and audit. The Commission shall annually

 

 

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1cause to be prepared an accounting of the trust and shall
2transmit a copy of the accounting to the Governor, the
3President of the Senate, the Speaker of the House, and the
4minority leaders of the Senate and House of Representatives.
5The Commission shall also make available this accounting of the
6trust to any purchaser of an Illinois prepaid tuition contract,
7upon request. The accounts of the Illinois prepaid tuition
8program shall be subject to annual audits by the Auditor
9General or a certified public accountant appointed by the
10Auditor General.
11(Source: P.A. 96-1282, eff. 7-26-10.)
 
12    (110 ILCS 979/35)
13    Sec. 35. Illinois Prepaid Tuition Trust Fund.
14    (a) The Illinois Prepaid Tuition Trust Fund is created as
15the repository of all moneys received by the Commission in
16conjunction with the Illinois prepaid tuition program. The
17Illinois Prepaid Tuition Trust Fund also shall be the official
18repository of all contributions, appropriations, interest and
19dividend payments, gifts, or other financial assets received by
20the Commission in connection with operation of the Illinois
21prepaid tuition program. All such moneys shall be deposited in
22the Illinois Prepaid Tuition Trust Fund and held by the State
23Treasurer as ex-officio custodian thereof, outside of the State
24Treasury, separate and apart from all public moneys or funds of
25this State.

 

 

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1    All interest or other earnings accruing or received on
2amounts in the Illinois Prepaid Tuition Trust Fund shall be
3credited to and retained by the Fund. Moneys, interest, or
4other earnings paid into the Fund shall not be transferred or
5allocated by the Commission, the State Treasurer, or the State
6Comptroller to any other fund, nor shall the Governor authorize
7any such transfer or allocation, while any contracts are
8outstanding. The State Comptroller shall not offset moneys paid
9to institutions from the Illinois Prepaid Tuition Trust Fund
10(unless the Trust Fund moneys are used for child support). In
11addition, no moneys, interest, or other earnings paid into the
12Fund shall be used, temporarily or otherwise, for interfund
13borrowing or be otherwise used or appropriated except as
14expressly authorized in this Act.
15    The Illinois Prepaid Tuition Trust Fund and each individual
16participant account that may be created in that Fund in
17conjunction with the Illinois prepaid tuition program shall be
18subject to audit in the same manner as funds and accounts
19belonging to the State of Illinois and shall be protected by
20the official bond given by the State Treasurer.
21    (b) The Commission from time to time shall direct the State
22Treasurer to invest moneys in the Illinois Prepaid Tuition
23Trust Fund that are not needed for immediate disbursement, in
24accordance with provisions of the investment plan approved by
25the Commission.
26    (c) The Executive Director of the Commission shall, at such

 

 

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1times and in such amounts as shall be necessary, prepare and
2send to the State Comptroller vouchers requesting payment from
3the Illinois Prepaid Tuition Trust Fund for: (i) registration
4fee payments to eligible institutions on behalf of qualified
5beneficiaries of Illinois prepaid tuition contracts, and (ii)
6any other payments specifically authorized by the provisions of
7this Act associated with administration of the Illinois prepaid
8tuition program.
9    (d) The Governor shall indicate in a separate document
10submitted concurrent with each annual State budget the
11estimated amount of moneys in the Illinois Prepaid Tuition
12Trust Fund which shall be necessary and sufficient, during that
13State fiscal year, to discharge all obligations anticipated
14under Illinois prepaid tuition contracts. The Governor also
15shall indicate in a separate document submitted concurrent with
16each annual State budget the amount of moneys from the Illinois
17Prepaid Tuition Trust Fund necessary to cover anticipated
18expenses associated with administration of the program. The
19Commission shall obtain concurrence from a nationally
20recognized actuary as to all amounts necessary for the program
21to meet its obligations. These amounts shall be certified
22annually to the Governor by the Commission no later than
23January 30.
24    During the first 18 months of operation of the Illinois
25prepaid tuition program, the Governor shall request an
26appropriation to the Commission from general funds sufficient

 

 

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1to pay for start-up costs associated with establishment of the
2program. This appropriation constitutes a loan that shall be
3repaid to the General Revenue Fund within 5 years by the
4Commission from prepaid tuition program contributions.
5Subsequent program administrative costs shall be provided from
6reasonable fees and charges equitably assessed to purchasers of
7prepaid tuition contracts.
8    (e) If the Commission determines that there are
9insufficient moneys in the Illinois Prepaid Tuition Trust Fund
10to pay contractual obligations in the next succeeding fiscal
11year, the Commission shall certify the amount necessary to meet
12these obligations to the Board of Higher Education, the
13Governor, the President of the Senate, and the Speaker of the
14House of Representatives. The Governor shall submit the amount
15so certified to the General Assembly as soon as practicable,
16but no later than the end of the current State fiscal year.
17    (f) In the event the Commission, with the concurrence of
18the Governor, determines the program to be financially
19infeasible, the Commission may discontinue, prospectively, the
20operation of the program. Any qualified beneficiary who has
21been accepted by and is enrolled or will within 5 years enroll
22at an eligible institution shall be entitled to exercise the
23complete benefits specified in the Illinois prepaid tuition
24contract. All other contract holders shall receive an
25appropriate refund of all contributions and accrued interest up
26to the time that the program is discontinued.

 

 

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1(Source: P.A. 96-1282, eff. 7-26-10.)
 
2    Section 99. Effective date. This Act takes effect upon
3becoming law.