State of Illinois
91st General Assembly
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Public Act 91-0829

SB1862 Enrolled                                LRB9110258JMdv

    AN ACT to amend  the  State  Treasurer  Act  by  changing
Section 16.5.

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

    Section  5.   The  State  Treasurer  Act  is  amended  by
changing Section 16.5 as follows:

    (15 ILCS 505/16.5)
    Sec. 16.5.  College Savings Pool. The State Treasurer may
establish and administer a College Savings Pool to supplement
and enhance the investment opportunities otherwise  available
to  persons seeking to finance the costs of higher education.
The State Treasurer, in  administering  the  College  Savings
Pool,  may receive moneys paid into the pool by a participant
and may serve as the fiscal agent of that participant for the
purpose of holding and investing those moneys.
    "Participant", as used in this Section, means any  person
that makes investments in the pool. "Designated beneficiary",
as  used in this Section, means any person on whose behalf an
account is established in  the  College  Savings  Pool  by  a
participant.  Both  in-state  and out-of-state persons may be
participants and  designated  beneficiaries  in  the  College
Savings Pool.
    New  accounts  in  the  College  Savings  Pool  shall  be
processed   through   participating  financial  institutions.
"Participating  financial  institution",  as  used  in   this
Section,  means  any  financial  institution  insured  by the
Federal Deposit  Insurance  Corporation  and  lawfully  doing
business  in  the  State  of  Illinois  and  any credit union
approved by the State Treasurer and lawfully  doing  business
in  the State of Illinois that agrees to process new accounts
in  the  College  Savings  Pool.    Participating   financial
institutions  may  charge a processing fee to participants to
open an account in the pool that shall not exceed  $30  until
the  year 2001.  Beginning in 2001 and every year thereafter,
the maximum fee limit shall  be  adjusted  by  the  Treasurer
based  on  the  Consumer  Price  Index  for the North Central
Region as published by the United States Department of Labor,
Bureau of Labor  Statistics  for  the  immediately  preceding
calendar  year.   Every  contribution received by a financial
institution for investment in the College Savings Pool  shall
be  transferred  from the financial institution to a location
selected by the  State  Treasurer  within  one  business  day
following  the  day  that the funds must be made available in
accordance with federal law.   All  communications  from  the
State   Treasurer   to   participants   shall  reference  the
participating financial institution at which the account  was
processed.
    The  Treasurer  may  invest  the  moneys  in  the College
Savings Pool in  the  same  manner,  in  the  same  types  of
investments, and subject to the same limitations provided for
the  investment  of  moneys  by  the  Illinois State Board of
Investment. To  enhance  the  safety  and  liquidity  of  the
College  Savings  Pool,  to ensure the diversification of the
investment portfolio of the pool, and in an  effort  to  keep
investment  dollars  in  the  State  of  Illinois,  the State
Treasurer shall make a percentage of each  account  available
for  investment in participating financial institutions doing
business in the State.  The  State  Treasurer  shall  deposit
with  the  participating  financial  institution at which the
account  was  processed  the  following  percentage  of  each
account at a prevailing  rate  offered  by  the  institution,
provided  that  the  deposit  is  federally  insured or fully
collateralized and the institution accepts the  deposit:  10%
of the total amount of each account for which the current age
of  the  beneficiary  is less than 7 years of age, 20% of the
total amount of each account for which the beneficiary is  at
least  7  years of age and less than 12 years of age, and 50%
of the total amount of each account for which the current age
of the beneficiary is at least 12 years of  age.   The  State
Treasurer  shall  adjust  each  account  at least annually to
ensure compliance with this Section.    The  Treasurer  shall
develop, publish, and implement an investment policy covering
the investment of the moneys in the College Savings Pool. The
policy  shall  be published (i) at least once each year in at
least  one  newspaper  of   general   circulation   in   both
Springfield  and  Chicago  and  (ii) each year as part of the
audit of the College Savings Pool  by  the  Auditor  General,
which shall be distributed to all participants. The Treasurer
shall  notify  all participants in writing, and the Treasurer
shall publish in a newspaper of general circulation  in  both
Chicago  and  Springfield,  any  changes  to  the  previously
published  investment policy at least 30 calendar days before
implementing the policy. Any investment policy adopted by the
Treasurer shall be reviewed and updated if  necessary  within
90  days  following  the  date that the State Treasurer takes
office.
    Participants shall be required to use moneys  distributed
from  the  College  Savings  Pool  for  qualified expenses at
eligible educational institutions. "Qualified  expenses",  as
used in this Section, means the following: (i) tuition, fees,
and  the costs of books, supplies, and equipment required for
enrollment  or  attendance   at   an   eligible   educational
institution and (ii) certain room and board expenses incurred
while  attending an eligible educational institution at least
half-time. "Eligible educational institutions",  as  used  in
this  Section,  means  public  and  private  colleges, junior
colleges,   graduate   schools,   and   certain    vocational
institutions  that are described in Section 481 of the Higher
Education Act of 1965 (20 U.S.C. 1088) and that are  eligible
to   participate  in  Department  of  Education  student  aid
programs. A student shall be considered  to  be  enrolled  at
least  half-time if the student is enrolled for at least half
the full-time academic work load for the course of study  the
student  is pursuing as determined under the standards of the
institution at which the student is  enrolled.  Distributions
made  from  the  pool  for  qualified  expenses shall be made
directly to the eligible educational institution, directly to
a vendor, or in the form of  a  check  payable  to  both  the
beneficiary  and  the  institution or vendor. Any moneys that
are distributed in any other manner  or  that  are  used  for
expenses   other  than  qualified  expenses  at  an  eligible
educational institution shall be subject to a penalty of  10%
of   the   earnings  unless  the  beneficiary  dies,  becomes
disabled, or receives a scholarship that  equals  or  exceeds
the distribution. Penalties shall be withheld at the time the
distribution is made.
    The  Treasurer  shall limit the contributions that may be
made on behalf  of  a  designated  beneficiary  based  on  an
actuarial  estimate of what is required to pay tuition, fees,
and room and board for 5 undergraduate years at  the  highest
cost eligible educational institution. The contributions made
on  behalf  of  a beneficiary who is also a beneficiary under
the  Illinois  Prepaid  Tuition  Program  shall  be   further
restricted  to ensure that the contributions in both programs
combined do not exceed the limit established for the  College
Savings  Pool.  The  Treasurer  shall  provide  the  Illinois
Student  Assistance Commission each year at a time designated
by the Commission, an electronic report  of  all  participant
accounts  in  the  Treasurer's  College Savings Pool, listing
total contributions and disbursements  from  each  individual
account   during   the   previous  calendar  year.   As  soon
thereafter  as  is  possible   following   receipt   of   the
Treasurer's   report,   the   Illinois   Student   Assistance
Commission  shall,  in  turn,  provide  the Treasurer with an
electronic  report  listing  those   College   Savings   Pool
participants  who  also  participate  in  the State's prepaid
tuition  program,  administered  by  the   Commission.    The
Commission  shall  be responsible for filing any combined tax
reports regarding State qualified savings  programs  required
by the United States Internal Revenue Service.  The Treasurer
shall work with the Illinois Student Assistance Commission to
coordinate  the marketing of the College Savings Pool and the
Illinois Prepaid Tuition Program when  considered  beneficial
by  the  Treasurer  and  the Director of the Illinois Student
Assistance  Commission.  The  Treasurer's  office  shall  not
publicize or otherwise market the  College  Savings  Pool  or
accept  any  moneys  into  the  College Savings Pool prior to
March  1,  2000.  The  Treasurer  shall  provide  a  separate
accounting  for   each   designated   beneficiary   to   each
participant,  the Illinois Student Assistance Commission, and
the participating financial institution at which the  account
was  processed.  No interest in the program may be pledged as
security for a loan.
    The assets of the College Savings Pool and its income and
operation shall be exempt from all taxation by the  State  of
Illinois  and  any of its subdivisions.  The accrued earnings
on investments in the Pool once  disbursed  on  behalf  of  a
designated  beneficiary  shall  be  similarly exempt from all
taxation by the State of Illinois and  its  subdivisions,  so
long as they are used for qualified expenses.  The provisions
of this paragraph are exempt from Section 250 of the Illinois
Income Tax Act.
    The  Treasurer  shall  adopt  rules  he  or she considers
necessary for the efficient  administration  of  the  College
Savings  Pool.  The  rules  shall provide whatever additional
parameters and restrictions are necessary to ensure that  the
College  Savings  Pool  meets  all  of the requirements for a
qualified state tuition program  under  Section  529  of  the
Internal Revenue Code (26 U.S.C. 52). The rules shall provide
for  the  administration expenses of the pool to be paid from
its earnings and for the investment earnings in excess of the
expenses and all moneys collected as penalties to be credited
or paid monthly to the several participants in the pool in  a
manner  which  equitably  reflects  the  differing amounts of
their respective investments in the pool  and  the  differing
periods  of  time for which those amounts were in the custody
of the pool. Also, the rules shall require the maintenance of
records that enable  the  Treasurer's  office  to  produce  a
report  for  each  account in the pool at least annually that
documents the account balance and investment earnings. Notice
of any proposed amendments to the rules and regulations shall
be provided to all participants prior to adoption. Amendments
to rules and regulations shall apply  only  to  contributions
made after the adoption of the amendment.
    Upon   creating  the  College  Savings  Pool,  the  State
Treasurer shall give bond with 2 or more sufficient sureties,
payable to and for the benefit of  the  participants  in  the
College  Savings  Pool,  in  the  penal  sum  of  $1,000,000,
conditioned  upon the faithful discharge of his or her duties
in relation to the College Savings Pool.
(Source: P.A. 91-607, eff. 1-1-00.)

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