Illinois General Assembly

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Full Text of SB2007  97th General Assembly




SB2007 EnrolledLRB097 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
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 in both Springfield and Chicago and (ii)
24each year as part of the audit of the College Savings Pool by
25the Auditor General, which shall be distributed to all
26participants. The Treasurer shall notify all participants in



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



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



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1Savings Pool participants who also participate in the State's
2prepaid tuition program, administered by the Commission. The
3Commission shall be responsible for filing any combined tax
4reports regarding State qualified savings programs required by
5the United States Internal Revenue Service. The Treasurer shall
6work with the Illinois Student Assistance Commission to
7coordinate the marketing of the College Savings Pool and the
8Illinois Prepaid Tuition Program when considered beneficial by
9the Treasurer and the Director of the Illinois Student
10Assistance Commission. The Treasurer's office shall not
11publicize or otherwise market the College Savings Pool or
12accept any moneys into the College Savings Pool prior to March
131, 2000. The Treasurer shall provide a separate accounting for
14each designated beneficiary to each participant, the Illinois
15Student Assistance Commission, and the participating financial
16institution at which the account was processed. No interest in
17the program may be pledged as security for a loan. Moneys held
18in an account invested in the Illinois College Savings Pool
19shall be exempt from all claims of the creditors of the
20participant, donor, or designated beneficiary of that account,
21except for the non-exempt College Savings Pool transfers to or
22from the account as defined under subsection (j) of Section
2312-1001 of the Code of Civil Procedure (735 ILCS 5/12-1001(j)).
24    The assets of the College Savings Pool and its income and
25operation shall be exempt from all taxation by the State of
26Illinois and any of its subdivisions. The accrued earnings on



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



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



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



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