97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB3130

 

Introduced 2/1/2012, by Sen. Christine Radogno

 

SYNOPSIS AS INTRODUCED:
 
15 ILCS 505/16.5

    Amends the State Treasurer Act. Makes a technical change in a Section concerning a college savings pool.


LRB097 15463 PJG 60563 b

 

 

A BILL FOR

 

SB3130LRB097 15463 PJG 60563 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
5Section 16.5 as follows:
 
6    (15 ILCS 505/16.5)
7    Sec. 16.5. College Savings Pool. The The State Treasurer
8may establish and administer a College Savings Pool to
9supplement and enhance the investment opportunities otherwise
10available to persons seeking to finance the costs of higher
11education. The State Treasurer, in administering the College
12Savings Pool, may receive moneys paid into the pool by a
13participant and may serve as the fiscal agent of that
14participant for the purpose of holding and investing those
15moneys.
16    "Participant", as used in this Section, means any person
17who has authority to withdraw funds, change the designated
18beneficiary, or otherwise exercise control over an account.
19"Donor", as used in this Section, means any person who makes
20investments in the pool. "Designated beneficiary", as used in
21this Section, means any person on whose behalf an account is
22established in the College Savings Pool by a participant. Both
23in-state and out-of-state persons may be participants, donors,

 

 

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1and designated beneficiaries in the College Savings Pool. The
2College Savings Pool must be available to any individual with a
3valid social security number or taxpayer identification number
4for the benefit of any individual with a valid social security
5number or taxpayer identification number, unless a contract in
6effect on August 1, 2011 (the effective date of Public Act
797-233) this amendatory Act of the 97th General Assembly does
8not allow for taxpayer identification numbers, in which case
9taxpayer identification numbers must be allowed upon the
10expiration of the contract.
11    New accounts in the College Savings Pool may be processed
12through participating financial institutions. "Participating
13financial institution", as used in this Section, means any
14financial institution insured by the Federal Deposit Insurance
15Corporation and lawfully doing business in the State of
16Illinois and any credit union approved by the State Treasurer
17and lawfully doing business in the State of Illinois that
18agrees to process new accounts in the College Savings Pool.
19Participating financial institutions may charge a processing
20fee to participants to open an account in the pool that shall
21not exceed $30 until the year 2001. Beginning in 2001 and every
22year thereafter, the maximum fee limit shall be adjusted by the
23Treasurer based on the Consumer Price Index for the North
24Central Region as published by the United States Department of
25Labor, Bureau of Labor Statistics for the immediately preceding
26calendar year. Every contribution received by a financial

 

 

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1institution for investment in the College Savings Pool shall be
2transferred from the financial institution to a location
3selected by the State Treasurer within one business day
4following the day that the funds must be made available in
5accordance with federal law. All communications from the State
6Treasurer to participants and donors shall reference the
7participating financial institution at which the account was
8processed.
9    The Treasurer may invest the moneys in the College Savings
10Pool in the same manner and in the same types of investments
11provided for the investment of moneys by the Illinois State
12Board of Investment. To enhance the safety and liquidity of the
13College Savings Pool, to ensure the diversification of the
14investment portfolio of the pool, and in an effort to keep
15investment dollars in the State of Illinois, the State
16Treasurer may make a percentage of each account available for
17investment in participating financial institutions doing
18business in the State. The State Treasurer may deposit with the
19participating financial institution at which the account was
20processed the following percentage of each account at a
21prevailing rate offered by the institution, provided that the
22deposit is federally insured or fully collateralized and the
23institution accepts the deposit: 10% of the total amount of
24each account for which the current age of the beneficiary is
25less than 7 years of age, 20% of the total amount of each
26account for which the beneficiary is at least 7 years of age

 

 

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1and less than 12 years of age, and 50% of the total amount of
2each account for which the current age of the beneficiary is at
3least 12 years of age. The Treasurer shall develop, publish,
4and implement an investment policy covering the investment of
5the moneys in the College Savings Pool. The policy shall be
6published each year as part of the audit of the College Savings
7Pool by the Auditor General, which shall be distributed to all
8participants. The Treasurer shall notify all participants in
9writing, and the Treasurer shall publish in a newspaper of
10general circulation in both Chicago and Springfield, any
11changes to the previously published investment policy at least
1230 calendar days before implementing the policy. Any investment
13policy adopted by the Treasurer shall be reviewed and updated
14if necessary within 90 days following the date that the State
15Treasurer takes office.
16    Participants shall be required to use moneys distributed
17from the College Savings Pool for qualified expenses at
18eligible educational institutions. "Qualified expenses", as
19used in this Section, means the following: (i) tuition, fees,
20and the costs of books, supplies, and equipment required for
21enrollment or attendance at an eligible educational
22institution and (ii) certain room and board expenses incurred
23while attending an eligible educational institution at least
24half-time. "Eligible educational institutions", as used in
25this Section, means public and private colleges, junior
26colleges, graduate schools, and certain vocational

 

 

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1institutions that are described in Section 481 of the Higher
2Education Act of 1965 (20 U.S.C. 1088) and that are eligible to
3participate in Department of Education student aid programs. A
4student shall be considered to be enrolled at least half-time
5if the student is enrolled for at least half the full-time
6academic work load for the course of study the student is
7pursuing as determined under the standards of the institution
8at which the student is enrolled. Distributions made from the
9pool for qualified expenses shall be made directly to the
10eligible educational institution, directly to a vendor, or in
11the form of a check payable to both the beneficiary and the
12institution or vendor. Any moneys that are distributed in any
13other manner or that are used for expenses other than qualified
14expenses at an eligible educational institution shall be
15subject to a penalty of 10% of the earnings unless the
16beneficiary dies, becomes disabled, or receives a scholarship
17that equals or exceeds the distribution. Penalties shall be
18withheld at the time the distribution is made.
19    The Treasurer shall limit the contributions that may be
20made on behalf of a designated beneficiary based on the
21limitations established by the Internal Revenue Service. The
22contributions made on behalf of a beneficiary who is also a
23beneficiary under the Illinois Prepaid Tuition Program shall be
24further restricted to ensure that the contributions in both
25programs combined do not exceed the limit established for the
26College Savings Pool. The Treasurer shall provide the Illinois

 

 

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1Student Assistance Commission each year at a time designated by
2the Commission, an electronic report of all participant
3accounts in the Treasurer's College Savings Pool, listing total
4contributions and disbursements from each individual account
5during the previous calendar year. As soon thereafter as is
6possible following receipt of the Treasurer's report, the
7Illinois Student Assistance Commission shall, in turn, provide
8the Treasurer with an electronic report listing those College
9Savings Pool participants who also participate in the State's
10prepaid tuition program, administered by the Commission. The
11Commission shall be responsible for filing any combined tax
12reports regarding State qualified savings programs required by
13the United States Internal Revenue Service. The Treasurer shall
14work with the Illinois Student Assistance Commission to
15coordinate the marketing of the College Savings Pool and the
16Illinois Prepaid Tuition Program when considered beneficial by
17the Treasurer and the Director of the Illinois Student
18Assistance Commission. The Treasurer's office shall not
19publicize or otherwise market the College Savings Pool or
20accept any moneys into the College Savings Pool prior to March
211, 2000. The Treasurer shall provide a separate accounting for
22each designated beneficiary to each participant, the Illinois
23Student Assistance Commission, and the participating financial
24institution at which the account was processed. No interest in
25the program may be pledged as security for a loan. Moneys held
26in an account invested in the Illinois College Savings Pool

 

 

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1shall be exempt from all claims of the creditors of the
2participant, donor, or designated beneficiary of that account,
3except for the non-exempt College Savings Pool transfers to or
4from the account as defined under subsection (j) of Section
512-1001 of the Code of Civil Procedure (735 ILCS 5/12-1001(j)).
6    The assets of the College Savings Pool and its income and
7operation shall be exempt from all taxation by the State of
8Illinois and any of its subdivisions. The accrued earnings on
9investments in the Pool once disbursed on behalf of a
10designated beneficiary shall be similarly exempt from all
11taxation by the State of Illinois and its subdivisions, so long
12as they are used for qualified expenses. Contributions to a
13College Savings Pool account during the taxable year may be
14deducted from adjusted gross income as provided in Section 203
15of the Illinois Income Tax Act. The provisions of this
16paragraph are exempt from Section 250 of the Illinois Income
17Tax Act.
18    The Treasurer shall adopt rules he or she considers
19necessary for the efficient administration of the College
20Savings Pool. The rules shall provide whatever additional
21parameters and restrictions are necessary to ensure that the
22College Savings Pool meets all of the requirements for a
23qualified state tuition program under Section 529 of the
24Internal Revenue Code (26 U.S.C. 529). The rules shall provide
25for the administration expenses of the pool to be paid from its
26earnings and for the investment earnings in excess of the

 

 

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1expenses and all moneys collected as penalties to be credited
2or paid monthly to the several participants in the pool in a
3manner which equitably reflects the differing amounts of their
4respective investments in the pool and the differing periods of
5time for which those amounts were in the custody of the pool.
6Also, the rules shall require the maintenance of records that
7enable the Treasurer's office to produce a report for each
8account in the pool at least annually that documents the
9account balance and investment earnings. Notice of any proposed
10amendments to the rules and regulations shall be provided to
11all participants prior to adoption. Amendments to rules and
12regulations shall apply only to contributions made after the
13adoption of the amendment.
14    Upon creating the College Savings Pool, the State Treasurer
15shall give bond with 2 or more sufficient sureties, payable to
16and for the benefit of the participants in the College Savings
17Pool, in the penal sum of $1,000,000, conditioned upon the
18faithful discharge of his or her duties in relation to the
19College Savings Pool.
20(Source: P.A. 97-233, eff. 8-1-11; 97-537, eff. 8-23-11;
21revised 9-7-11.)