97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB2007

 

Introduced 2/10/2011, by Sen. Kirk W. Dillard

 

SYNOPSIS AS INTRODUCED:
 
15 ILCS 505/16.5
15 ILCS 505/17  from Ch. 130, par. 17

    Amends the State Treasurer Act. In provisions concerning the investment policy for the College Savings Pool, adds that the Treasurer may publish the policy and changes to that policy in the online version of at least one newspaper of general circulation in both Springfield and Chicago. In provisions concerning the investment policy for the Public Treasurer's Investment Pool, adds that the Treasurer may publish the policy and changes to that policy in the online version of at least one newspaper of general circulation in both Springfield and Chicago. Effective immediately.


LRB097 09581 RLJ 49718 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2007LRB097 09581 RLJ 49718 b

1    AN ACT concerning State government.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The State Treasurer Act is amended by changing
5Sections 16.5 and 17 as follows:
 
6    (15 ILCS 505/16.5)
7    Sec. 16.5. College Savings Pool. The State Treasurer may
8establish and administer a College Savings Pool to supplement
9and enhance the investment opportunities otherwise available
10to persons seeking to finance the costs of higher education.
11The State Treasurer, in administering the College Savings Pool,
12may receive moneys paid into the pool by a participant and may
13serve as the fiscal agent of that participant for the purpose
14of holding and investing those moneys.
15    "Participant", as used in this Section, means any person
16who has authority to withdraw funds, change the designated
17beneficiary, or otherwise exercise control over an account.
18"Donor", as used in this Section, means any person who makes
19investments in the pool. "Designated beneficiary", as used in
20this Section, means any person on whose behalf an account is
21established in the College Savings Pool by a participant. Both
22in-state and out-of-state persons may be participants, donors,
23and designated beneficiaries in the College Savings Pool.

 

 

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1    New accounts in the College Savings Pool may be processed
2through participating financial institutions. "Participating
3financial institution", as used in this Section, means any
4financial institution insured by the Federal Deposit Insurance
5Corporation and lawfully doing business in the State of
6Illinois and any credit union approved by the State Treasurer
7and lawfully doing business in the State of Illinois that
8agrees to process new accounts in the College Savings Pool.
9Participating financial institutions may charge a processing
10fee to participants to open an account in the pool that shall
11not exceed $30 until the year 2001. Beginning in 2001 and every
12year thereafter, the maximum fee limit shall be adjusted by the
13Treasurer based on the Consumer Price Index for the North
14Central Region as published by the United States Department of
15Labor, Bureau of Labor Statistics for the immediately preceding
16calendar year. Every contribution received by a financial
17institution for investment in the College Savings Pool shall be
18transferred from the financial institution to a location
19selected by the State Treasurer within one business day
20following the day that the funds must be made available in
21accordance with federal law. All communications from the State
22Treasurer to participants and donors shall reference the
23participating financial institution at which the account was
24processed.
25    The Treasurer may invest the moneys in the College Savings
26Pool in the same manner and in the same types of investments

 

 

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1provided for the investment of moneys by the Illinois State
2Board of Investment. To enhance the safety and liquidity of the
3College Savings Pool, to ensure the diversification of the
4investment portfolio of the pool, and in an effort to keep
5investment dollars in the State of Illinois, the State
6Treasurer may make a percentage of each account available for
7investment in participating financial institutions doing
8business in the State. The State Treasurer may deposit with the
9participating financial institution at which the account was
10processed the following percentage of each account at a
11prevailing rate offered by the institution, provided that the
12deposit is federally insured or fully collateralized and the
13institution accepts the deposit: 10% of the total amount of
14each account for which the current age of the beneficiary is
15less than 7 years of age, 20% of the total amount of each
16account for which the beneficiary is at least 7 years of age
17and less than 12 years of age, and 50% of the total amount of
18each account for which the current age of the beneficiary is at
19least 12 years of age. The Treasurer shall develop, publish,
20and implement an investment policy covering the investment of
21the moneys in the College Savings Pool. The policy shall be
22published (i) at least once each year in at least one newspaper
23of general circulation or in the online version of at least one
24newspaper of general circulation, in both Springfield and
25Chicago and (ii) each year as part of the audit of the College
26Savings Pool by the Auditor General, which shall be distributed

 

 

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1to all participants. The Treasurer shall notify all
2participants in writing, and the Treasurer shall publish in a
3newspaper of general circulation or in the online version of at
4least one newspaper of general circulation, in both Chicago and
5Springfield, any changes to the previously published
6investment policy at least 30 calendar days before implementing
7the policy. Any investment policy adopted by the Treasurer
8shall be reviewed and updated if necessary within 90 days
9following the date that the State Treasurer takes office.
10    Participants shall be required to use moneys distributed
11from the College Savings Pool for qualified expenses at
12eligible educational institutions. "Qualified expenses", as
13used in this Section, means the following: (i) tuition, fees,
14and the costs of books, supplies, and equipment required for
15enrollment or attendance at an eligible educational
16institution and (ii) certain room and board expenses incurred
17while attending an eligible educational institution at least
18half-time. "Eligible educational institutions", as used in
19this Section, means public and private colleges, junior
20colleges, graduate schools, and certain vocational
21institutions that are described in Section 481 of the Higher
22Education Act of 1965 (20 U.S.C. 1088) and that are eligible to
23participate in Department of Education student aid programs. A
24student shall be considered to be enrolled at least half-time
25if the student is enrolled for at least half the full-time
26academic work load for the course of study the student is

 

 

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1pursuing as determined under the standards of the institution
2at which the student is enrolled. Distributions made from the
3pool for qualified expenses shall be made directly to the
4eligible educational institution, directly to a vendor, or in
5the form of a check payable to both the beneficiary and the
6institution or vendor. Any moneys that are distributed in any
7other manner or that are used for expenses other than qualified
8expenses at an eligible educational institution shall be
9subject to a penalty of 10% of the earnings unless the
10beneficiary dies, becomes disabled, or receives a scholarship
11that equals or exceeds the distribution. Penalties shall be
12withheld at the time the distribution is made.
13    The Treasurer shall limit the contributions that may be
14made on behalf of a designated beneficiary based on the
15limitations established by the Internal Revenue Service. The
16contributions made on behalf of a beneficiary who is also a
17beneficiary under the Illinois Prepaid Tuition Program shall be
18further restricted to ensure that the contributions in both
19programs combined do not exceed the limit established for the
20College Savings Pool. The Treasurer shall provide the Illinois
21Student Assistance Commission each year at a time designated by
22the Commission, an electronic report of all participant
23accounts in the Treasurer's College Savings Pool, listing total
24contributions and disbursements from each individual account
25during the previous calendar year. As soon thereafter as is
26possible following receipt of the Treasurer's report, the

 

 

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1Illinois Student Assistance Commission shall, in turn, provide
2the Treasurer with an electronic report listing those College
3Savings Pool participants who also participate in the State's
4prepaid tuition program, administered by the Commission. The
5Commission shall be responsible for filing any combined tax
6reports regarding State qualified savings programs required by
7the United States Internal Revenue Service. The Treasurer shall
8work with the Illinois Student Assistance Commission to
9coordinate the marketing of the College Savings Pool and the
10Illinois Prepaid Tuition Program when considered beneficial by
11the Treasurer and the Director of the Illinois Student
12Assistance Commission. The Treasurer's office shall not
13publicize or otherwise market the College Savings Pool or
14accept any moneys into the College Savings Pool prior to March
151, 2000. The Treasurer shall provide a separate accounting for
16each designated beneficiary to each participant, the Illinois
17Student Assistance Commission, and the participating financial
18institution at which the account was processed. No interest in
19the program may be pledged as security for a loan. Moneys held
20in an account invested in the Illinois College Savings Pool
21shall be exempt from all claims of the creditors of the
22participant, donor, or designated beneficiary of that account,
23except for the non-exempt College Savings Pool transfers to or
24from the account as defined under subsection (j) of Section
2512-1001 of the Code of Civil Procedure (735 ILCS 5/12-1001(j)).
26    The assets of the College Savings Pool and its income and

 

 

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1operation shall be exempt from all taxation by the State of
2Illinois and any of its subdivisions. The accrued earnings on
3investments in the Pool once disbursed on behalf of a
4designated beneficiary shall be similarly exempt from all
5taxation by the State of Illinois and its subdivisions, so long
6as they are used for qualified expenses. Contributions to a
7College Savings Pool account during the taxable year may be
8deducted from adjusted gross income as provided in Section 203
9of the Illinois Income Tax Act. The provisions of this
10paragraph are exempt from Section 250 of the Illinois Income
11Tax Act.
12    The Treasurer shall adopt rules he or she considers
13necessary for the efficient administration of the College
14Savings Pool. The rules shall provide whatever additional
15parameters and restrictions are necessary to ensure that the
16College Savings Pool meets all of the requirements for a
17qualified state tuition program under Section 529 of the
18Internal Revenue Code (26 U.S.C. 529). The rules shall provide
19for the administration expenses of the pool to be paid from its
20earnings and for the investment earnings in excess of the
21expenses and all moneys collected as penalties to be credited
22or paid monthly to the several participants in the pool in a
23manner which equitably reflects the differing amounts of their
24respective investments in the pool and the differing periods of
25time for which those amounts were in the custody of the pool.
26Also, the rules shall require the maintenance of records that

 

 

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1enable the Treasurer's office to produce a report for each
2account in the pool at least annually that documents the
3account balance and investment earnings. Notice of any proposed
4amendments to the rules and regulations shall be provided to
5all participants prior to adoption. Amendments to rules and
6regulations shall apply only to contributions made after the
7adoption of the amendment.
8    Upon creating the College Savings Pool, the State Treasurer
9shall give bond with 2 or more sufficient sureties, payable to
10and for the benefit of the participants in the College Savings
11Pool, in the penal sum of $1,000,000, conditioned upon the
12faithful discharge of his or her duties in relation to the
13College Savings Pool.
14(Source: P.A. 95-23, eff. 8-3-07; 95-306, eff. 1-1-08; 95-521,
15eff. 8-28-07; 95-876, eff. 8-21-08.)
 
16    (15 ILCS 505/17)  (from Ch. 130, par. 17)
17    Sec. 17. Public Treasurers' Investment Pool. The State
18Treasurer may establish and administer a Public Treasurers'
19Investment Pool to supplement and enhance the investment
20opportunities otherwise available to other custodians of
21public funds for public agencies in this State.
22    The Treasurer, in administering the Public Treasurers'
23Investment Pool, may receive public funds paid into the pool by
24any other custodian of such funds and may serve as the fiscal
25agent of that custodian of public funds for the purpose of

 

 

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1holding and investing those funds.
2    The Treasurer may invest the public funds constituting the
3Public Treasurers' Investment Pool in the same manner, in the
4same types of investments and subject to the same limitations
5provided for the investment of funds in the State Treasury. The
6Treasurer shall develop, publish, and implement an investment
7policy covering the management of funds in the Public
8Treasurers' Investment Pool. The policy shall be published at
9least once each year in at least one newspaper of general
10circulation or in the online version of at least one newspaper
11of general circulation, in both Springfield and Chicago, and
12each year as part of the audit of the Public Treasurers'
13Investment Pool by the Auditor General, which shall be
14distributed to all participants. The Treasurer shall notify all
15Public Treasurers' Investment Pool participants in writing,
16and the Treasurer shall publish in at least one newspaper of
17general circulation or in the online version of at least one
18newspaper of general circulation, in both Springfield and
19Chicago, any changes to a previously published investment
20policy at least 30 calendar days before implementing the
21policy. Any such investment policy adopted by the Treasurer
22shall be reviewed, and updated if necessary, within 90 days
23following the installation of a new Treasurer.
24    The Treasurer shall promulgate such rules and regulations
25as he deems necessary for the efficient administration of the
26Public Treasurers' Investment Pool, including specification of

 

 

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1minimum amounts which may be deposited in the Pool and minimum
2periods of time for which deposits shall be retained in the
3Pool. The rules shall provide for the administration expenses
4of the Pool to be paid from its earnings and for the interest
5earnings in excess of such expenses to be credited or paid
6monthly to the several custodians of public funds participating
7in the Pool in a manner which equitably reflects the differing
8amounts of their respective investments in the Pool and the
9differing periods of time for which such amounts were in the
10custody of the Pool.
11    Upon creating a Public Treasurers' Investment Pool the
12State Treasurer shall give bond with 2 or more sufficient
13sureties, payable to custodians of public funds who participate
14in the Pool for the benefit of the public agencies whose funds
15are paid into the Pool for investment, in the penal sum of
16$150,000, conditioned for the faithful discharge of his duties
17in relation to the Public Treasurers' Investment Pool.
18    "Public funds" and "public agency", as used in this Section
19have the meanings ascribed to them in Section 1 of "An Act
20relating to certain investments of public funds by public
21agencies", approved July 23, 1943, as amended.
22    This amendatory Act of 1975 is not a limit on any home rule
23unit.
24(Source: P.A. 89-350, eff. 8-17-95.)
 
25    Section 99. Effective date. This Act takes effect upon
26becoming law.