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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 adding
5Section 16.8 as follows:
6    (15 ILCS 505/16.8 new)
7    Sec. 16.8. Illinois Higher Education Savings Program.
8    (a) As used in this Section:
9        "Custodial account" means a 529 plan account under
10    Section 529 of the Internal Revenue Code where the State
11    Treasurer serves as the custodian of the account with the
12    child as the beneficiary. The custodial account is not a
13    standard account.
14        "Fund" means the Illinois Higher Education Savings
15    Program Fund.
16        "Standard account" means a 529 plan account under
17    Section 529 of the Internal Revenue Code, created pursuant
18    to Section 16.5 of this Act.
19        "Internal Revenue Code" means Internal Revenue Code of
20    1986, or any successor law, in effect for the calendar
21    year.
22        "Low-income households" means households with income
23    less than 250% of the federal poverty line.



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1        "Program" means the Illinois Higher Education Savings
2    Program.
3        "Post-secondary education" means a college,
4    university, vocational school, and any two or four-year
5    degree program from an accredited educational institution.
6        "Seed" means the initial contribution into an Account.
7        "State Treasurer" means the Illinois State Treasurer.
8    (b) The State Treasurer shall establish the Illinois Higher
9Education Savings Program as part of the College Savings Pool
10described in Section 16.5 of this Act. The State Treasurer
11shall administer the Program for the purposes of expanding
12access to higher education through savings. The Program shall
13include the following features:
14        (1) All children born or adopted in Illinois and who
15    reside in Illinois at the time of birth or adoption are
16    eligible for the Program.
17        (2) Beginning after the effective date of this
18    amendatory Act of the 100th General Assembly, the Illinois
19    Department of Public Health shall provide the State
20    Treasurer with data from Illinois birth records for each
21    baby born in Illinois. All such information shall be
22    provided on a quarterly basis within 30 days of the end of
23    each quarter. The information provided shall be strictly
24    confidential and shall not be subject to release under the
25    Freedom of Information Act.
26        (3) After receiving birth record data for a child born



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1    in the State of Illinois from the Department of Public
2    Health, the State Treasurer shall open a custodial account
3    through the Program. A parent or legal guardian may choose
4    to opt out of the Program at the time of the birth
5    certificate application process.
6    (c) The State Treasurer shall establish custodial accounts
7in accordance with the following provisions:
8        (1) Upon establishment of a custodial account, the
9    State Treasurer shall make a seed deposit on behalf of the
10    beneficiary into the custodial account, as provided in
11    paragraphs (8) and (9) of this subsection (c).
12        (2) The State Treasurer will provide an annual match as
13    provided in paragraphs (8) and (9) of this subsection (c)
14    into the custodial account on a one-to-one dollar basis for
15    beneficiaries in low-income households, that are 18 years
16    of age or younger, and that are listed as a beneficiary of
17    a standard account under Section 16.5 of this Act. The
18    legal guardian and owner of the standard account will be
19    able to view the aggregate amount of the standard and
20    custodial accounts.
21        (3) Subject to funding, the State Treasurer may provide
22    additional savings incentives, including conditional cash
23    transfers that provide a savings incentive based on
24    specific actions taken, for beneficiaries in low-income
25    households.
26        (4) If sufficient funds are not available, the State



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1    Treasurer may reduce the seed amount deposited in a
2    custodial account and any match temporarily. In the case of
3    limited funding, the seed amount will take priority over
4    the match incentives.
5        (5) Deposits into the custodial account shall be made
6    by the State Treasurer from funds appropriated by the
7    General Assembly or received as gifts, grants, or
8    contributions into the Higher Education Savings Program
9    Fund.
10        (6) Distributions from the custodial account shall be
11    permitted for qualifying post-secondary education expenses
12    in compliance with Section 529 of the Internal Revenue Code
13    only. Distributions from the custodial account must be made
14    prior to the beneficiary attaining the age of 29.
15        (7) For beneficiaries who serve in a national service
16    program, including, but not limited to, the United States
17    Military or the Peace Corp, each year of service shall
18    increase the maturity date by one year. For beneficiaries
19    that are serving a sentence as a result of a criminal
20    conviction or juvenile adjudication between the ages of 18
21    and 29, each year of confinement shall increase the
22    maturity date by one year.
23        (8) Between establishment of the Program and January 1,
24    2021, the seed and match amounts set forth in paragraphs
25    (1) and (2) of this subsection (c) shall be as follows: (i)
26    $50 initial seed and (ii) a total match of $150 annually



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1    for low-income households.
2        (9) The State Treasurer shall adjust the seed deposit
3    amount and the annual match beginning July 1, 2021, and at
4    minimum every 5 years thereafter, based on an analysis of
5    the consumer price index. Adjustments to the seed and match
6    amounts shall be calculated by multiplying the current seed
7    amount by the percentage increase, if any, in the Consumer
8    Price Index for all Urban Consumers since the establishment
9    of the Program or, after July 1, 2021, since the date of
10    the last adjustment, and rounding that result to the
11    nearest 5 dollars.
12        (10) If a beneficiary does not use all funds in the
13    custodial account for a qualified expense and within the
14    timeline described in paragraphs (6) and (7) of this
15    subsection (c), any seed or match funds contributed by the
16    State Treasurer and any earnings from those funds shall be
17    forfeited and remain in the Higher Education Program Fund.
18        (11) If a beneficiary dies prior to the age of 29, any
19    seed or match funds contributed by the State of Illinois,
20    and any earnings from those funds shall be forfeited and
21    remain in the Higher Education Program Fund.
22    (d) If a beneficiary is not a resident of Illinois, (i) the
23beneficiary shall not be eligible for the match incentives
24described in paragraph (2) of subsection (c) of this Section
25during any period of time when he or she is not residing in the
26state of Illinois; and (ii) the custodial account shall



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1otherwise be maintained by the State Treasurer as set forth is
2paragraph (1) and paragraphs (4) through (10) of subsection
4    (e) A legal guardian, residing in Illinois, of a child who
5is born in Illinois before the implementation date or a child
6born outside of Illinois and who is 15 years of age or younger,
7may apply with the Office of the Illinois State Treasurer to
8enroll his or her child in the Program as a beneficiary. This
9new enrollee would be eligible for the match incentive
10described in paragraphs (8) and (9) of subsection (c) of this
11Section, but is not eligible for the seed amount.
12    (f) The Illinois Higher Education Savings Program Fund is
13hereby established. The Fund shall be the official repository
14of all contributions, appropriations, interest and dividend
15payments, gifts, or other financial assets received by State
16Treasurer in connection with the operation of the Program. All
17such moneys shall be deposited in the Fund and held by the
18State Treasurer as custodian thereof, outside of the State
19Treasury, separate and apart from all public moneys or funds of
20this State.
21    All interest or other earnings accruing or received on
22amounts in the Illinois Higher Education Savings Program Fund
23shall be credited to and retained by the Fund. Moneys,
24interest, or other earnings paid into the Fund shall not be
25transferred or allocated by the State Treasurer or the State
26Comptroller to any other fund, nor shall the Governor authorize



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1any such transfer or allocation, while any contracts are
2outstanding. In addition, no moneys, interest, or other
3earnings paid into the Fund shall be used, temporarily or
4otherwise, for inter-fund borrowing or be otherwise used or
5appropriated, except as expressly authorized in this Act.
6    (g) The State Treasurer may develop financial capability
7programs and education that support the financial literacy of
8beneficiaries and their legal guardians impacted by the Program
9in collaboration with State agencies, including the State Board
10of Education and the Department of Human Services, and existing
11nonprofit agencies working with low-income families that
12specialize in financial education delivery.
13    (h) The Illinois Higher Education Savings Program shall be
14included as part of the audit of the College Savings Pool
15described in Section 16.5 of this Act.
16    (i) The State Treasurer shall begin implementation of the
17Illinois Higher Education Savings Program in 2018. The State
18Treasurer may establish a phased implementation and
19beneficiary enrollment timeline based on funding availability.
20Upon implementation of the Program, the State Treasurer shall
21include information on savings rates and match savings rates in
22the State Treasurer's annual financial report to the Governor
23and General Assembly.
24    (j) The Higher Education Savings Program Act is subject to
25appropriation by the General Assembly. If the State Treasurer
26does not secure adequate funds to implement the Program within



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1the time frame set forth under this Section, Program
2implementation may be delayed while the State Treasurer makes
3good faith efforts to secure necessary funding. The State
4Treasurer may accept gifts, grants, awards, matching
5contributions, interest income and appropriations from
6individuals, businesses, governments, and other third-party
7sources to implement the Program on terms that the Treasurer
8deems advisable. Moneys received under this Section may be
9expended for purposes consistent with the conditions under
10which those moneys are received, subject to appropriations made
11by the General Assembly for those purposes.
12    (k) Birth certificate data from the State Registrar of
13Vital Records shall only be used for the Illinois Higher
14Education Savings Program and shall not be used for any other
15purpose. The State Treasurer and any contractors working on the
16Program shall maintain strict confidentiality of data from
17Illinois birth records, and shall promptly provide written or
18electronic notice of any security breach to the Department of
19Public Health. The Department of Public Health shall remain the
20sole and exclusive owner of data from Illinois birth records
21provided under this Section.
22    (l) The State Treasurer may adopt, in accordance with the
23Illinois Administrative Procedure Act, any rules that may be
24necessary to implement the Program as described in this



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1    Section 10. The State Finance Act is amended by adding
2Section 5.878 as follows:
3    (30 ILCS 105/5.878 new)
4    Sec. 5.878. The Illinois Higher Education Savings Program