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90_HB0396
New Act
30 ILCS 105/5.449 new
Creates the Education for the Future Today Act. Provides
for a program of contracts administered by the State
Treasurer for the purchase of future college tuition payments
for persons born on or after December 1, 1982. Limits the
State's full faith and credit obligation to $5,000,000.
Amends the State Finance Act to create the necessary special
fund within the State treasury.
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1 AN ACT concerning future education accounts.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the
5 Educate for the Future Today Act.
6 Section 5. Purpose. The General Assembly finds and
7 declares that the provision of a higher education to all
8 qualified residents of this State is an essential function of
9 state government and is critical to the welfare and security
10 of this State and the nation. Rising tuition costs,
11 increasingly restrictive eligibility criteria for existing
12 federal and State student aid programs, and other trends in
13 higher education finance have impeded access to a higher
14 education for many Illinois families, with a consequent
15 irreparable loss to the State and the nation of talents vital
16 to welfare and security. It is the intent of this Act to
17 provide Illinois families with alternatives to enhance their
18 financial access to institutions of higher education,
19 specifically through a future education account program
20 designed to encourage Illinois families to anticipate and
21 prepare for their children's future educational needs and
22 thereby enable them to attend up to 4 years of post-secondary
23 undergraduate education at qualified institutions of higher
24 education of their choice.
25 Section 10. Definitions. In this Act, unless the
26 context indicates otherwise:
27 "Illinois future education account contract" or
28 "Contract" means a contract entered into between the State
29 and a Purchaser under Section 20 to provide for the higher
30 education of a qualified beneficiary.
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1 "Illinois future education account fund" or "Fund" means
2 the fund created in Section 25.
3 "Illinois future education account program" or "Program"
4 means the program created in Section 15.
5 "Public institution of higher education" or "public
6 institution" means the University of Illinois, Southern
7 Illinois University, Chicago State University, Eastern
8 Illinois University, Governors State University, Illinois
9 State University, Northeastern Illinois University, Northern
10 Illinois University, Western Illinois University, the public
11 community colleges of the State, and any other public
12 universities, colleges, and community colleges at any time
13 established or authorized by the General Assembly.
14 "Purchaser" means a person who makes or has contracted to
15 make payments under an Illinois future education account
16 contract.
17 "Nonpublic institution of higher education" or "nonpublic
18 institution" means any accredited educational organization,
19 other than a public institution of higher education situated
20 in this State, that provides a minimum of an organized 2-year
21 program at the private junior college level or higher and
22 that operates not-for-profit and in conformity with standards
23 substantially equivalent to those of public institutions of
24 higher education. "Nonpublic institution of higher
25 education" does not include any educational organization used
26 for sectarian instruction, as a place of religious teaching
27 or worship, or for any religious denomination for the
28 training of ministers, rabbis, or other professional persons
29 in the field of religion.
30 "Qualified beneficiary" means (i) a resident of this
31 State at the time a Purchaser enters into a Contract on
32 behalf of the resident or (ii) a non-resident who is the
33 child of a non-custodial parent or guardian who is a resident
34 of this State at the time that parent or guardian enters into
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1 a Contract on behalf of the child, provided, however, that no
2 person born before December 1, 1982, shall be considered a
3 qualified beneficiary.
4 "Reserve account" means the account created in subsection
5 (b) of Section 25.
6 "Tuition" means the quarter or semester charges imposed
7 to attend a public institution of higher education and all
8 mandatory fees required as a condition of enrollment.
9 Section 15. Illinois future education account program
10 created. There is created the Illinois future education
11 account program to be administered by the Treasurer and to
12 provide a means whereby the full cost of tuition at a public
13 institution of higher education may be paid in advance of
14 enrollment through the prior purchase of an Illinois future
15 education account contract. The Treasurer may enter into
16 contracts as may be necessary to provide for administration
17 of the Program and shall adopt rules and regulations as the
18 Treasurer deems necessary for the efficient administration of
19 the Program. All reasonable charges and expenses incidental
20 to the administration of the program may be paid from the
21 Illinois future education account fund under Section 25, from
22 amounts appropriated for those purposes by the General
23 Assembly, or from a combination of both. The Treasurer shall
24 have all powers necessary to meet the responsibility to carry
25 out the purposes of this Act and to do any and all things
26 necessary or convenient to exercise the powers given to the
27 Treasurer by this Act.
28 Section 20. Future education account contracts. The
29 Treasurer may enter into Illinois future education account
30 contracts with a Purchaser under which the Treasurer
31 contracts on behalf of the State to pay all or a portion of
32 the tuition for a qualified beneficiary to attend any public
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1 institution of higher education to which the qualified
2 beneficiary is admitted. The Contract shall contain such
3 terms, conditions, and provisions as the Treasurer shall deem
4 to be necessary or appropriate to accomplish the goals of the
5 Program, including but not limited to provisions that
6 describe the conditions under which:
7 (a) principal refunds or withdrawals may be made, with
8 or without interest;
9 (b) the transfer of the benefits under a Contract may be
10 made to another qualified beneficiary;
11 (c) rebates of portions of the benefits may be made for
12 beneficiaries who elect to attend institutions with a tuition
13 lower than the tuition at the institution charging the
14 highest tuition at the time of redemption of benefits; and
15 (d) refund proceeds under a Contract may be applied
16 towards the cost of attending a nonpublic institution of
17 higher education provided, however, that: (i) if a
18 beneficiary seeks to apply refund proceeds toward the cost of
19 attending a non-public institution of higher education
20 situated in Illinois, the refund shall be equal to the amount
21 covered by the contract, for qualified beneficiaries
22 attending public institutions of higher education in that
23 year; or, (ii) if a beneficiary seeks to apply refund
24 proceeds toward the cost of attending an institution of
25 higher education situated in a state other than Illinois, the
26 refund shall be the average of the tuition charged in that
27 year by all public institutions of higher education to which
28 the contract benefits under the contract being refunded could
29 have been applied. The Treasurer may enter into Illinois
30 future education account contracts on behalf of the State to
31 pay all or a portion of the tuition for a qualified
32 beneficiary to attend any non-public institution of higher
33 education to which the qualified beneficiary is admitted.
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1 Section 25. Illinois future education account fund.
2 (a) The Illinois future education account fund is
3 created in the State Treasury. All revenues received under
4 Contracts and other moneys from whatever source that by law
5 are required to be deposited into the Fund shall be paid into
6 the Fund upon their collection, payment, or other receipt.
7 All amounts paid into the Fund shall be held, administered,
8 and promptly invested by the Treasurer in accordance with
9 this Act and solely in investments authorized under Section
10 1-113 of the Illinois Pension Code. All interest or other
11 earnings accruing or received on amounts in the Fund shall be
12 credited to and paid into the Fund. Moneys, interest, or
13 earnings paid into the Fund shall not be transferred or
14 allocated by the Treasurer or the Comptroller to any other
15 fund, and the Governor shall not authorize any such transfer
16 or allocation while any Contracts are outstanding. In
17 addition, no moneys, interest, or earnings paid into the Fund
18 shall be used, temporarily or otherwise, for interfund
19 borrowing or be otherwise used or appropriated except as
20 expressly authorized and provided in this Act.
21 (b) The Treasurer shall establish within the Fund a
22 reserve account. At least one percent of all payments on
23 future education account contracts shall be allocated to this
24 reserve account. Funds in the reserve account may be used to
25 ensure the actuarial soundness of the program and to satisfy
26 any obligation of the Program.
27 (c) The Treasurer shall request funds from the General
28 Assembly each year in an amount sufficient to pay and
29 discharge all payments and obligations under future education
30 accounts contracts which are expected to become due during
31 that period. If moneys in the Fund are insufficient to pay
32 and discharge all payments and obligations under this Act, or
33 if for any reason the General Assembly fails to appropriate
34 for or fails to transfer to the Fund amounts sufficient to
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1 pay and discharge all payments and obligations under this Act
2 as they become due, this Act shall constitute an irrevocable
3 and continuing appropriation of all amounts necessary for
4 that purpose and the irrevocable and continuing authority for
5 and direction to the Comptroller and the Treasurer to make
6 the necessary transfers and disbursements from the revenues
7 and funds of the State for that purpose.
8 (d) All Contracts issued in accordance with this Act
9 shall be direct, general obligations of the State of Illinois
10 and shall so state on their face, and the full faith and
11 credit of the State of Illinois, provided, however, that the
12 liability assumed under this subsection (d), which shall be
13 the total obligation necessary to satisfy the college expense
14 requirements obligated under contracts outstanding less the
15 balance of the Fund, shall not exceed $5,000,000, are pledged
16 for the punctual payment of all payments and obligations
17 under the Contracts and this Act as they become due. Except
18 as provided in subsection (d) of Section 30, the State of
19 Illinois pledges to and agrees with the Purchasers and
20 qualified beneficiaries of the Contracts entered into under
21 this Act that the State will not limit or alter the rights
22 and powers created by this Act so as to impair the terms of
23 any Contract with those purchasers and qualified
24 beneficiaries or in any way impair the rights and remedies of
25 those purchasers and qualified beneficiaries until all
26 payments and obligations under the Contracts and all costs
27 and expenses in connection with any action or proceedings by
28 or on behalf of those purchasers and qualified beneficiaries
29 are fully met and discharged. In addition, the State pledges
30 to and agrees with the purchasers and qualified beneficiaries
31 of the Contracts entered into under this Act that the State
32 will not limit or alter the basis on which State funds are to
33 be paid to the Fund and purchasers and qualified
34 beneficiaries as provided in this Act, or the use of those
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1 funds, so as to impair the terms of any Contract. The
2 Treasurer is authorized to include these pledges and
3 agreements of the State in any Contract entered into under
4 this Act.
5 Section 30. Illinois future education account program
6 administration.
7 (a) The Treasurer shall administer the Program in a
8 manner designed to be actuarially sound, so that with
9 reasonable certainty, the assets of the Fund will be
10 sufficient to defray all obligations of the future education
11 account contracts.
12 (b) The price of a future education account contract
13 shall be set each year by taking into consideration the
14 following factors:
15 (1) the anticipated tuition for 4 years at the time
16 the beneficiary is expected to attend college;
17 (2) the anticipated investment income on the assets
18 of the Fund;
19 (3) the administrative costs of the Program;
20 (4) the anticipated contract fulfillment rate;
21 (5) the amount of allocation and sufficiency of the
22 Reserve Account provided for in subsection (b) of Section
23 25; and,
24 (6) any other factors necessary to insure the
25 actuarial soundness of the Fund.
26 (c) The Treasurer shall prepare or cause to be prepared
27 an annual report on the future education account fund that
28 includes:
29 (1) An actuarial statement of opinion as to the
30 present value of future obligations under future
31 education account contracts currently in force;
32 (2) The amount of the contract payments received by
33 the fund;
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1 (3) The number of participants who have contracted
2 with the Program;
3 (4) A statement describing the facts and methods
4 used to evaluate the factors specified in subsection (b);
5 (5) A statement indicating how much of the maximum
6 obligation of the State of Illinois under its full faith
7 and credit guarantee has been obligated to date; and
8 (6) Such other information as shall be necessary to
9 fully and fairly disclose the actuarial soundness of the
10 Program.
11 (d) The Auditor General shall annually prepare an audit
12 of the Program in the manner provided in Section 1-13 of the
13 Illinois State Auditing Act, in accordance with generally
14 accepted governmental auditing standards. As part of this
15 audit, the Auditor General shall evaluate the Program and
16 make a finding of the actuarial soundness of the Program,
17 taking into consideration the Treasurer's annual report and
18 using the factors set out in subsection (b). The finding
19 shall be reported to the Treasurer.
20 (e) In the event that the Fund is not found to be
21 actuarially sound, the Treasurer shall attempt to restore the
22 actuarial soundness of the Program. If the annual audits of
23 the Program contain findings that it is not actuarially sound
24 for 2 consecutive years, the Treasurer shall make a
25 recommendation to the General Assembly and the Governor that
26 the Program be discontinued. The General Assembly and the
27 Governor, based on such a recommendation, may elect to
28 discontinue the Program. In such event, any qualified
29 beneficiary who has been accepted by and is enrolled or is
30 within 4 years of enrollment in a public or non-public
31 institution of higher education shall be entitled to all
32 benefits of all Contracts under which he or she is the
33 qualified beneficiary. Under all other Contracts, the
34 Treasurer shall refund to participants the amount paid under
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1 the terms of a Contract, less administrative expenses and
2 Reserve Account allocation. In addition, the Treasurer shall
3 refund an amount in the nature of interest at a rate that
4 corresponds, at a minimum, to the average interest rates that
5 prevailed each month for the purchase of federal funds during
6 the term of the contract up to the date of refund.
7 Section 35. Advisory Panel.
8 (a) There is created an Illinois Future Education
9 Account Program Advisory Panel. The Advisory Panel shall be
10 appointed by the Treasurer and consist of 13 members with at
11 least one representative from each of the Illinois Student
12 Assistance Commission, Illinois Baccalaureate Trust
13 Authority, and the Illinois Board of Higher Education and
14 with representatives from each of the following categories:
15 non-public institutions of higher education, public community
16 colleges, higher education loan finance field, State and
17 municipal finance, and the general public. Members of the
18 Advisory Panel shall serve for terms of 4 years, with the
19 first terms ending on September 30, 2001. The Treasurer
20 shall designate one member to serve as chair. Members of the
21 Advisory Panel shall receive no compensation but shall be
22 reimbursed from the Fund for expenses necessarily incurred in
23 the performance of their duties under this Section.
24 (b) The Advisory Panel shall aid the Treasurer in
25 establishing the criteria, goals, and objectives for the
26 Program and in assessing its effectiveness. The Advisory
27 Panel shall meet at least twice each year and shall submit to
28 the Treasurer a report of its findings and recommendations on
29 the Program. This report shall be filed at the same time as
30 the audit of the Program submitted each year by the Auditor
31 General in accordance with Section 30.
32 Section 40. Tax exemption. Any benefit received by a
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1 qualified beneficiary upon payment or application of funds by
2 the Program shall also be exempt from all taxation by this
3 State or any of its political subdivisions.
4 Section 45. Securities law exemption. Illinois future
5 education account contracts are not securities and shall be
6 exempt from the Illinois Securities Law of 1953. No Contract
7 may be sold or otherwise transferred by the Purchaser or
8 qualified beneficiary without the prior approval of the
9 Treasurer, and in accordance with the terms set forth in the
10 Contract.
11 Section 50. Construction. Nothing in this Act or in a
12 Contract shall be construed as a promise or guarantee by the
13 Program or the State that a person will be admitted to a
14 public institution of higher education or to a particular
15 public institution of higher education, will be allowed to
16 continue to attend a public institution of higher education
17 after having been admitted, or will be graduated from a
18 public institution of higher education.
19 Section 55. Severability. The provisions of this Act
20 are severable under Section 1.31 of the Statute on Statutes.
21 Section 60. The State Finance Act is amended by adding
22 Section 5.449 as follows:
23 (30 ILCS 105/5.449 new)
24 Sec. 5.449. The Illinois Future Education Account Fund.