State of Illinois
91st General Assembly
Legislation

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91_HB1754

 
                                               LRB9104094NTsb

 1        AN ACT concerning prepaid tuition.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section 5.  The Public Funds Investment Act is amended by
 5    changing Section 1 as follows:

 6        (30 ILCS 235/1) (from Ch. 85, par. 901)
 7        Sec.  1.  The  words "public funds", as used in this Act,
 8    mean current operating funds,  special  funds,  interest  and
 9    sinking  funds,  and funds of any kind or character belonging
10    to or in the custody of any public agency.
11        The words "public agency", as used in this Act, mean  the
12    State  of  Illinois, the various counties, townships, cities,
13    towns,  villages,  school  districts,   educational   service
14    regions,   special   road   districts,  public  water  supply
15    districts, fire  protection  districts,  drainage  districts,
16    levee  districts,  sewer  districts, housing authorities, the
17    Illinois Bank Examiners' Education  Foundation,  the  Chicago
18    Park  District,  and  all  other  political  corporations  or
19    subdivisions  of  the  State  of  Illinois,  now or hereafter
20    created, whether herein specifically mentioned or  not.  This
21    Act  does  not  apply  to  the Illinois Prepaid Tuition Trust
22    Fund, pension funds or retirement systems  established  under
23    the  Illinois  Pension  Code, except as otherwise provided in
24    that Code.
25    (Source: P.A. 90-507, eff. 8-22-97.)

26        Section 10.  The Illinois Prepaid Tuition Act is  amended
27    by changing Sections 10, 20, and 30 as follows:

28        (110 ILCS 979/10)
29        Sec. 10.  Definitions.  In this Act:
 
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 1        "Illinois  public  university"  means  the  University of
 2    Illinois,   Illinois   State   University,   Chicago    State
 3    University,  Governors  State  University,  Southern Illinois
 4    University, Northern Illinois  University,  Eastern  Illinois
 5    University,  Western  Illinois  University,  or  Northeastern
 6    Illinois University.
 7        "Illinois  community  college"  means  a public community
 8    college as defined in Section 1-2  of  the  Public  Community
 9    College Act.
10        "MAP-eligible  institution" means a public institution of
11    higher  education  or  a  nonpublic  institution  of   higher
12    education  whose  students are eligible to receive need-based
13    student financial assistance  through  State  Monetary  Award
14    Program  (MAP)  grants  administered  by the Illinois Student
15    Assistance Commission  under  the  Higher  Education  Student
16    Assistance  Act  and  whose  students  also  are  eligible to
17    receive benefits under Section 529(a) of the Internal Revenue
18    Code of 1986, as specified by the federal Small Business  Act
19    of 1996 and subsequent amendments to this federal law.
20        "Illinois prepaid tuition contract" or "contract" means a
21    contract entered into between the State and a Purchaser under
22    Section 45 to provide for the higher education of a qualified
23    beneficiary.
24        "Illinois prepaid tuition program" or "program" means the
25    program created in Section 15.
26        "Purchaser" means a person who makes or has contracted to
27    make payments under an Illinois prepaid tuition contract.
28        "Public   institution   of  higher  education"  means  an
29    Illinois public university or Illinois community college.
30        "Nonpublic institution of  higher  education"  means  any
31    MAP-eligible  educational  organization,  other than a public
32    institution of higher education, that provides a  minimum  of
33    an  organized  2-year  program at the postsecondary level and
34    that operates  in  conformity  with  standards  substantially
 
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 1    equivalent   to   those  of  public  institutions  of  higher
 2    education.  "Nonpublic institution of higher education"  does
 3    not include any educational organization used principally for
 4    sectarian  instruction,  as  a place of religious teaching or
 5    worship, or for any religious denomination for  the  training
 6    of  ministers,  rabbis,  or other professional persons in the
 7    field of religion.
 8        "Qualified beneficiary" means (i) anyone who has  been  a
 9    resident  of  this  State for at least 12 months prior to the
10    date of the contract, or (ii) a nonresident, so long  as  the
11    purchaser  has  been  a resident of the State for at least 12
12    months prior to the date of the contract, or (iii) any person
13    less than one year of age whose parent or legal guardian  has
14    been  a  who  is  a  relative of an Illinois resident of this
15    State for at least  12  months  prior  to  the  date  of  the
16    contract.
17        "Tuition"  means  the quarter or semester charges imposed
18    on  a  qualified  beneficiary  to   attend   a   MAP-eligible
19    institution.
20        "Mandatory  Fees"  means  those  quarter or semester fees
21    imposed  upon  all  students  enrolled  at   a   MAP-eligible
22    institution.
23        "Registration   Fees"   means   the  charges  derived  by
24    combining tuition and mandatory fees.
25        "Contract Unit" means 15 credit hours of instruction at a
26    MAP-eligible institution.
27        "Panel" means the investment advisory panel created under
28    Section 20.
29        "Commission"  means  the  Illinois   Student   Assistance
30    Commission.
31    (Source: P.A. 90-546, eff. 12-1-97.)

32        (110 ILCS 979/20)
33        Sec.   20.   Investment  Advisory  Panel.   The  Illinois
 
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 1    prepaid tuition program shall be administered by the Illinois
 2    Student Assistance Commission, with advice and  counsel  from
 3    an  investment  advisory  panel  appointed by the Commission.
 4    The   Illinois   prepaid    tuition    program    shall    be
 5    administratively   housed  within  the  Commission,  and  the
 6    investment advisory panel  shall  have  such  duties  as  are
 7    specified in this Act.
 8        The  investment advisory panel shall consist of 7 members
 9    who  are  appointed  by   the   Commission,   including   one
10    recommended  by  the  State Treasurer, one recommended by the
11    State Comptroller, one recommended by  the  Director  of  the
12    Bureau  of  the  Budget, and one recommended by the Executive
13    Director of the Board of Higher Education.  Each panel member
14    shall possess knowledge, skill, and experience  in  at  least
15    one   of   the  following  areas  of  expertise:  accounting,
16    actuarial   practice,   risk   management,   or    investment
17    management.  Members shall serve 3-year terms except that, in
18    making the initial appointments, the Commission shall appoint
19    2  members  to  serve  for  2 years, 2 members to serve for 3
20    years, and 3 members  to  serve  for  4  years.   Any  person
21    appointed  to  fill a vacancy on the panel shall be appointed
22    in a like manner and shall serve for only the unexpired term.
23    Investment advisory  panel  members  shall  be  eligible  for
24    reappointment  and shall serve until a successor is appointed
25    and   confirmed.    Panel   members   shall   serve   without
26    compensation but shall be  reimbursed  for  expenses.  Before
27    being installed as a member of the investment advisory panel,
28    each  nominee  shall  file  verified  written  statements  of
29    economic  interest with the Secretary of State as required by
30    the Illinois Governmental Ethics Act and with  the  Board  of
31    Ethics as required by Executive Order of the Governor.
32        The  investment  advisory panel shall meet at least twice
33    annually.  At least once each year  the  Commission  Chairman
34    shall  designate  a  time  and  place at which the investment
 
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 1    advisory panel shall meet publicly with the Illinois  Student
 2    Assistance Commission to discuss issues and concerns relating
 3    to the Illinois prepaid tuition program.
 4    (Source: P.A. 90-546, eff. 12-1-97.)

 5        (110 ILCS 979/30)
 6        Sec.   30.    Investment   Advisory   Panel   duties  and
 7    responsibilities.
 8        (a)  Advice and review.  The panel shall offer advice and
 9    counseling regarding the investments of the Illinois  prepaid
10    tuition  program  with  the  objective  of obtaining the best
11    possible return  on  investments  consistent  with  actuarial
12    soundness  of the program.  The panel is required to annually
13    review  and  advise  the  Commission  on  provisions  of  the
14    strategic investment plan for the  prepaid  tuition  program.
15    The  panel  is  also  charged with reviewing and advising the
16    Commission with regard to the annual  report  that  describes
17    the current financial condition of the program.  The panel at
18    its  own  discretion  also may advise the Commission on other
19    aspects of the program.
20        (b)  Investment  plan.   The  Commission  annually  shall
21    adopt a comprehensive investment plan for  purposes  of  this
22    Section.  The comprehensive investment plan shall specify the
23    investment  policies  to be utilized by the Commission in its
24    administration of the Illinois  Prepaid  Tuition  Trust  Fund
25    created by Section 35.  The Commission may direct that assets
26    of  those  Funds be placed in savings accounts or may use the
27    same to purchase fixed or variable life insurance or  annuity
28    contracts,  securities,  evidence  of  indebtedness, or other
29    investment products pursuant to the comprehensive  investment
30    plan and in such proportions as may be designated or approved
31    under  that  plan.   Those  insurance,  annuity, savings, and
32    investment products shall  be  underwritten  and  offered  in
33    compliance with applicable federal and State laws, rules, and
 
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 1    regulations  by  persons  who  are  authorized  thereunder to
 2    provide  those  services.   The  Commission  shall   delegate
 3    responsibility  for  preparing  the  comprehensive investment
 4    plan to the Executive Director of the Commission.  Nothing in
 5    this Section shall preclude the Commission  from  contracting
 6    with  a  private  corporation  or institution to provide such
 7    services as may be a part  of  the  comprehensive  investment
 8    plan  or as may be deemed necessary for implementation of the
 9    comprehensive investment plan, including, but not limited to,
10    providing consolidated  billing,  individual  and  collective
11    record  keeping  and accounting, and asset purchase, control,
12    and safekeeping.
13        (c)  Program management.  The Commission may not delegate
14    its management functions, but may arrange to  compensate  for
15    personalized   investment  advisory  services  rendered  with
16    respect to any or all of the investments under its control an
17    investment advisor registered under Section 8 of the Illinois
18    Securities Law of 1953 or any bank or other entity authorized
19    by law to provide those services.  Nothing  contained  herein
20    shall  preclude  the  Commission  from subscribing to general
21    investment research services available for purchase or use by
22    others.   The  Commission  also  shall  have   authority   to
23    compensate  for  accounting,  computing,  and other necessary
24    services.
25        (d)  Annual  report.   The  Commission   shall   annually
26    prepare  or  cause  to  be prepared a report setting forth in
27    appropriate detail an  accounting  of  all  Illinois  prepaid
28    tuition  program  funds  and  a  description of the financial
29    condition of the program at the close of  each  fiscal  year.
30    Included  in  this  report shall be an evaluation by at least
31    one nationally recognized actuary of the financial  viability
32    of  the  program.   This  report  shall  be  submitted to the
33    Governor, the President of the Senate,  the  Speaker  of  the
34    House  of Representatives, the Auditor General, and the Board
 
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 1    of Higher Education on or before March 1  of  the  subsequent
 2    fiscal  year.   This  report  also shall be made available to
 3    purchasers of Illinois prepaid tuition  contracts  and  shall
 4    contain  complete  Illinois  prepaid  tuition  contract sales
 5    information,  including,  but  not  limited   to,   projected
 6    postsecondary enrollment data for qualified beneficiaries.
 7        (e)  Marketing  plan.  Selection of a marketing agent for
 8    the Illinois prepaid tuition program must be approved by  the
 9    Commission.   At  least  once  every  3 years, the Commission
10    shall solicit proposals for marketing of the Illinois prepaid
11    tuition program in accordance with  the  Illinois  Securities
12    Law  of  1953  and  any applicable provisions of federal law.
13    The entity designated pursuant to this paragraph shall  serve
14    as  a  centralized  marketing agent for the program and shall
15    have exclusive responsibility for marketing the program.   No
16    contract  for  marketing the Illinois prepaid tuition program
17    shall extend for longer than 3 years.  Any materials produced
18    for the purpose of marketing the program shall  be  submitted
19    to  the  Executive  Director  of  the Commission for approval
20    before they  are  made  public.   Any  Illinois  MAP-eligible
21    institution  may  distribute marketing materials produced for
22    the program,  so  long  as  the  Executive  Director  of  the
23    Commission approves the distribution in advance.  Neither the
24    State    nor    the    Commission   shall   be   liable   for
25    misrepresentation of the program by a marketing agent.
26        (f)  Accounting and audit.  The Commission shall annually
27    cause to be prepared an accounting of  the  trust  and  shall
28    transmit  a  copy  of  the  accounting  to  the Governor, the
29    President of the Senate, the Speaker of the  House,  and  the
30    minority  leaders of the Senate and House of Representatives.
31    The Commission shall also make available this  accounting  of
32    the  trust  to  any  purchaser of an Illinois prepaid tuition
33    contract, upon request.  The accounts of the Illinois prepaid
34    tuition program shall be subject  to  annual  audits  by  the
 
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 1    Auditor General or a certified public accountant appointed by
 2    the Auditor General.
 3    (Source: P.A. 90-546, eff. 12-1-97.)

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