Illinois General Assembly - Full Text of SB3133
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Full Text of SB3133  103rd General Assembly



SB3133 EnrolledLRB103 36417 SPS 66519 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 16.8 as follows:
6    (15 ILCS 505/16.5)
7    Sec. 16.5. College Savings Pool.
8    (a) Definitions. As used in this Section:
9    "Account owner" means any person or entity who has opened
10an account or to whom ownership of an account has been
11transferred, as allowed by the Internal Revenue Code, and who
12has authority to withdraw funds, direct withdrawal of funds,
13change the designated beneficiary, or otherwise exercise
14control over an account in the College Savings Pool.
15    "Donor" means any person or entity who makes contributions
16to an account in the College Savings Pool.
17    "Designated beneficiary" means any individual designated
18as the beneficiary of an account in the College Savings Pool by
19an account owner. A designated beneficiary must have a valid
20social security number or taxpayer identification number. In
21the case of an account established as part of a scholarship
22program permitted under Section 529 of the Internal Revenue
23Code, the designated beneficiary is any individual receiving



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1benefits accumulated in the account as a scholarship.
2    "Eligible educational institution" means public and
3private colleges, junior colleges, graduate schools, and
4certain vocational institutions that are described in Section
51001 of the Higher Education Resource and Student Assistance
6Chapter of Title 20 of the United States Code (20 U.S.C. 1001)
7and that are eligible to participate in Department of
8Education student aid programs.
9    "Member of the family" has the same meaning ascribed to
10that term under Section 529 of the Internal Revenue Code.
11    "Nonqualified withdrawal" means a distribution from an
12account other than a distribution that (i) is used for the
13qualified expenses of the designated beneficiary; (ii) results
14from the beneficiary's death or disability; (iii) is a
15rollover to another account in the College Savings Pool; or
16(iv) is a rollover to an ABLE account, as defined in Section
1716.6 of this Act, or any distribution that, within 60 days
18after such distribution, is transferred to an ABLE account of
19the designated beneficiary or a member of the family of the
20designated beneficiary to the extent that the distribution,
21when added to all other contributions made to the ABLE account
22for the taxable year, does not exceed the limitation under
23Section 529A(b) of the Internal Revenue Code; or (v) is a
24rollover to a Roth IRA account to the extent permitted by
25Section 529 of the Internal Revenue Code.
26    "Qualified expenses" means: (i) tuition, fees, and the



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1costs of books, supplies, and equipment required for
2enrollment or attendance at an eligible educational
3institution; (ii) expenses for special needs services, in the
4case of a special needs beneficiary, which are incurred in
5connection with such enrollment or attendance; (iii) certain
6expenses, to the extent they qualify as qualified higher
7education expenses under Section 529 of the Internal Revenue
8Code, for the purchase of computer or peripheral equipment or
9Internet access and related services, if such equipment,
10software, or services are to be used primarily by the
11beneficiary during any of the years the beneficiary is
12enrolled at an eligible educational institution, except that,
13such expenses shall not include expenses for computer software
14designed for sports, games, or hobbies, unless the software is
15predominantly educational in nature; (iv) room and board
16expenses incurred while attending an eligible educational
17institution at least half-time; (v) expenses for fees, books,
18supplies, and equipment required for the participation of a
19designated beneficiary in an apprenticeship program registered
20and certified with the Secretary of Labor under the National
21Apprenticeship Act (29 U.S.C. 50); and (vi) amounts paid as
22principal or interest on any qualified education loan of the
23designated beneficiary or a sibling of the designated
24beneficiary, as allowed under Section 529 of the Internal
25Revenue Code. A student shall be considered to be enrolled at
26least half-time if the student is enrolled for at least half



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1the full-time academic workload for the course of study the
2student is pursuing as determined under the standards of the
3institution at which the student is enrolled.
4    (b) Establishment of the Pool. The State Treasurer may
5establish and administer the College Savings Pool as a
6qualified tuition program under Section 529 of the Internal
7Revenue Code. The Pool may consist of one or more college
8savings programs. The State Treasurer, in administering the
9College Savings Pool, may: (1) receive, hold, and invest
10moneys paid into the Pool; and (2) perform any other action he
11or she deems necessary to administer the Pool, including any
12other actions necessary to ensure that the Pool operates as a
13qualified tuition program in accordance with Section 529 of
14the Internal Revenue Code.
15    (c) Administration of the College Savings Pool. The State
16Treasurer may delegate duties related to the College Savings
17Pool to one or more contractors. The contributions deposited
18in the Pool, and any earnings thereon, shall not constitute
19property of the State or be commingled with State funds and the
20State shall have no claim to or against, or interest in, such
21funds; provided that the fees collected by the State Treasurer
22in accordance with this Act, scholarship programs administered
23by the State Treasurer, and seed funds deposited by the State
24Treasurer under Section 16.8 of the Act are State funds.
25    (c-5) College Savings Pool Account Summaries. The State
26Treasurer shall provide a separate accounting for each



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1designated beneficiary. The separate accounting shall be
2provided to the account owner of the account for the
3designated beneficiary at least annually and shall show the
4account balance, the investment in the account, the investment
5earnings, and the distributions from the account.
6    (d) Availability of the College Savings Pool. The State
7Treasurer may permit persons, including trustees of trusts and
8custodians under a Uniform Transfers to Minors Act or Uniform
9Gifts to Minors Act account, and certain legal entities to be
10account owners, including as part of a scholarship program,
11provided that: (1) an individual, trustee or custodian must
12have a valid social security number or taxpayer identification
13number, be at least 18 years of age, and have a valid United
14States street address; and (2) a legal entity must have a valid
15taxpayer identification number and a valid United States
16street address. In-state and out-of-state persons, trustees,
17custodians, and legal entities may be account owners and
18donors, and both in-state and out-of-state individuals may be
19designated beneficiaries in the College Savings Pool.
20    (e) Fees. Any fees, costs, and expenses, including
21investment fees and expenses and payments to third parties,
22related to the College Savings Pool, shall be paid from the
23assets of the College Savings Pool. The State Treasurer shall
24establish fees to be imposed on accounts to cover such fees,
25costs, and expenses, to the extent not paid directly out of the
26investments of the College Savings Pool, and to maintain an



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1adequate reserve fund in line with industry standards for
2government operated funds. The Treasurer must use his or her
3best efforts to keep these fees as low as possible and
4consistent with administration of high quality competitive
5college savings programs.
6    (f) Investments in the State. To enhance the safety and
7liquidity of the College Savings Pool, to ensure the
8diversification of the investment portfolio of the College
9Savings Pool, and in an effort to keep investment dollars in
10the State of Illinois, the State Treasurer may make a
11percentage of each account available for investment in
12participating financial institutions doing business in the
14    (g) Investment policy. The Treasurer shall develop,
15publish, and implement an investment policy covering the
16investment of the moneys in each of the programs in the College
17Savings Pool. The policy shall be published each year as part
18of the audit of the College Savings Pool by the Auditor
19General, which shall be distributed to all account owners in
20such program. The Treasurer shall notify all account owners in
21such program in writing, and the Treasurer shall publish in a
22newspaper of general circulation in both Chicago and
23Springfield, any changes to the previously published
24investment policy at least 30 calendar days before
25implementing the policy. Any investment policy adopted by the
26Treasurer shall be reviewed and updated if necessary within 90



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1days following the date that the State Treasurer takes office.
2    (h) Investment restrictions. An account owner may,
3directly or indirectly, direct the investment of his or her
4account only as provided in Section 529(b)(4) of the Internal
5Revenue Code. Donors and designated beneficiaries, in those
6capacities, may not, directly or indirectly, direct the
7investment of an account.
8    (i) Distributions. Distributions from an account in the
9College Savings Pool may be used for the designated
10beneficiary's qualified expenses, and if not used in that
11manner, may be considered a nonqualified withdrawal. Funds
12contained in a College Savings Pool account may be rolled over
14        (1) an eligible ABLE account, as defined in Section
15    16.6 of this Act to the extent permitted by Section 529 of
16    the Internal Revenue Code; , or
17        (2) another qualified tuition program, to the extent
18    permitted by Section 529 of the Internal Revenue Code; or
19        (3) a Roth IRA account, to the extent permitted by
20    Section 529 of the Internal Revenue Code.
21    Distributions made from the College Savings Pool may be
22made directly to the eligible educational institution,
23directly to a vendor, in the form of a check payable to both
24the designated beneficiary and the institution or vendor,
25directly to the designated beneficiary or account owner, or in
26any other manner that is permissible under Section 529 of the



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1Internal Revenue Code.
2    (j) Contributions. Contributions to the College Savings
3Pool shall be as follows:
4        (1) Contributions to an account in the College Savings
5    Pool may be made only in cash.
6        (2) The Treasurer shall limit the contributions that
7    may be made to the College Savings Pool on behalf of a
8    designated beneficiary, as required under Section 529 of
9    the Internal Revenue Code, to prevent contributions for
10    the benefit of a designated beneficiary in excess of those
11    necessary to provide for the qualified expenses of the
12    designated beneficiary. The Pool shall not permit any
13    additional contributions to an account as soon as the sum
14    of (i) the aggregate balance in all accounts in the Pool
15    for the designated beneficiary and (ii) the aggregate
16    contributions in the Illinois Prepaid Tuition Program for
17    the designated beneficiary reaches the specified balance
18    limit established from time to time by the Treasurer.
19    (k) Illinois Student Assistance Commission. The Treasurer
20and the Illinois Student Assistance Commission shall each
21cooperate in providing each other with account information, as
22necessary, to prevent contributions in excess of those
23necessary to provide for the qualified expenses of the
24designated beneficiary, as described in subsection (j).
25    The Treasurer shall work with the Illinois Student
26Assistance Commission to coordinate the marketing of the



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1College Savings Pool and the Illinois Prepaid Tuition Program
2when considered beneficial by the Treasurer and the Director
3of the Illinois Student Assistance Commission.
4    (l) Prohibition; exemption. No interest in the program, or
5any portion thereof, may be used as security for a loan. Moneys
6held in an account invested in the College Savings Pool shall
7be exempt from all claims of the creditors of the account
8owner, donor, or designated beneficiary of that account,
9except for the non-exempt College Savings Pool transfers to or
10from the account as defined under subsection (j) of Section
1112-1001 of the Code of Civil Procedure.
12    (m) Taxation. The assets of the College Savings Pool and
13its income and operation shall be exempt from all taxation by
14the State of Illinois and any of its subdivisions. The accrued
15earnings on investments in the Pool once disbursed on behalf
16of a designated beneficiary shall be similarly exempt from all
17taxation by the State of Illinois and its subdivisions, so
18long as they are used for qualified expenses. Contributions to
19a College Savings Pool account during the taxable year may be
20deducted from adjusted gross income as provided in Section 203
21of the Illinois Income Tax Act. The provisions of this
22paragraph are exempt from Section 250 of the Illinois Income
23Tax Act.
24    (n) Rules. The Treasurer shall adopt rules he or she
25considers necessary for the efficient administration of the
26College Savings Pool. The rules shall provide whatever



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1additional parameters and restrictions are necessary to ensure
2that the College Savings Pool meets all the requirements for a
3qualified tuition program under Section 529 of the Internal
4Revenue Code.
5    Notice of any proposed amendments to the rules and
6regulations shall be provided to all account owners prior to
8    (o) Bond. The State Treasurer shall give bond with at
9least one surety, payable to and for the benefit of the account
10owners in the College Savings Pool, in the penal sum of
11$10,000,000, conditioned upon the faithful discharge of his or
12her duties in relation to the College Savings Pool.
13    (p) The changes made to subsections (c) and (e) of this
14Section by Public Act 101-26 are intended to be a restatement
15and clarification of existing law.
16(Source: P.A. 101-26, eff. 6-21-19; 101-81, eff. 7-12-19;
17102-186, eff. 7-30-21.)
18    (15 ILCS 505/16.8)
19    Sec. 16.8. Illinois Higher Education Savings Program.
20    (a) Definitions. As used in this Section:
21    "Beneficiary" means an eligible child named as a recipient
22of seed funds.
23    "Eligible child" means a child born or adopted after
24December 31, 2022, to a parent who is a resident of Illinois at
25the time of the birth or adoption, as evidenced by



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1documentation received by the Treasurer from the Department of
2Revenue, the Department of Public Health, or another State or
3local government agency, or a parent or legal guardian of the
5    "Eligible educational institution" means institutions that
6are described in Section 1001 of the federal Higher Education
7Act of 1965 that are eligible to participate in Department of
8Education student aid programs.
9    "Fund" means the Illinois Higher Education Savings Program
11    "Omnibus account" means the pooled collection of seed
12funds owned and managed by the State Treasurer in the College
13Savings Pool under this Act.
14    "Program" means the Illinois Higher Education Savings
16    "Qualified higher education expense" means the following:
17(i) tuition, fees, and the costs of books, supplies, and
18equipment required for enrollment or attendance at an eligible
19educational institution; (ii) expenses for special needs
20services, in the case of a special needs beneficiary, which
21are incurred in connection with such enrollment or attendance;
22(iii) certain expenses for the purchase of computer or
23peripheral equipment, computer software, or Internet access
24and related services as defined under Section 529 of the
25Internal Revenue Code; (iv) room and board expenses incurred
26while attending an eligible educational institution at least



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1half-time; (v) expenses for fees, books, supplies, and
2equipment required for the participation of a designated
3beneficiary in an apprenticeship program registered and
4certified with the Secretary of Labor under the National
5Apprenticeship Act (29 U.S.C. 50); and (vi) amounts paid as
6principal or interest on any qualified education loan of the
7designated beneficiary or a sibling of the designated
8beneficiary, as allowed under Section 529 of the Internal
9Revenue Code.
10    "Seed funds" means the deposit made by the State Treasurer
11into the Omnibus Accounts for Program beneficiaries.
12    (b) Program established. The State Treasurer shall
13establish the Illinois Higher Education Savings Program as a
14part of the College Savings Pool under Section 16.5 of this
15Act, subject to appropriation by the General Assembly. The
16State Treasurer shall administer the Program for the purposes
17of expanding access to higher education through savings.
18    (c) Program enrollment. The State Treasurer shall enroll
19all eligible children in the Program beginning in 2023, after
20receiving records of recent births, adoptions, or dependents
21from the Department of Revenue, the Department of Public
22Health, or another State or local government agency designated
23by the Treasurer, or documentation as may be required by the
24Treasurer from a parent or legal guardian of the eligible
25child. Notwithstanding any court order which would otherwise
26prevent the release of information, the Department of Public



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1Health is authorized to release the information specified
2under this subsection (c) to the State Treasurer for the
3purposes of the Program established under this Section.
4        (1) Beginning in 2021, the Department of Public Health
5    shall provide the State Treasurer with information on
6    recent Illinois births and adoptions including, but not
7    limited to: the full name, residential address, birth
8    date, and birth record number of the child and the full
9    name and residential address of the child's parent or
10    legal guardian for the purpose of enrolling eligible
11    children in the Program. This data shall be provided to
12    the State Treasurer by the Department of Public Health on
13    a quarterly basis, no later than 30 days after the end of
14    each quarter, or some other date and frequency as mutually
15    agreed to by the State Treasurer and the Department of
16    Public Health.
17        (1.5) Beginning in 2021, the Department of Revenue
18    shall provide the State Treasurer with information on tax
19    filers claiming dependents or the adoption tax credit
20    including, but not limited to: the full name, residential
21    address, email address, phone number, birth date, and
22    social security number or taxpayer identification number
23    of the dependent child and of the child's parent or legal
24    guardian for the purpose of enrolling eligible children in
25    the Program. This data shall be provided to the State
26    Treasurer by the Department of Revenue on at least an



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1    annual basis, by July 1 of each year or another date
2    jointly determined by the State Treasurer and the
3    Department of Revenue. Notwithstanding anything to the
4    contrary contained within this paragraph (2), the
5    Department of Revenue shall not be required to share any
6    information that would be contrary to federal law,
7    regulation, or Internal Revenue Service Publication 1075.
8        (2) The State Treasurer shall ensure the security and
9    confidentiality of the information provided by the
10    Department of Revenue, the Department of Public Health, or
11    another State or local government agency, and it shall not
12    be subject to release under the Freedom of Information
13    Act.
14        (3) Information provided under this Section shall only
15    be used by the State Treasurer for the Program and shall
16    not be used for any other purpose.
17        (4) The State Treasurer and any vendors working on the
18    Program shall maintain strict confidentiality of any
19    information provided under this Section, and shall
20    promptly provide written or electronic notice to the
21    providing agency of any security breach. The providing
22    State or local government agency shall remain the sole and
23    exclusive owner of information provided under this
24    Section.
25    (d) Seed funds. After receiving information on recent
26births, adoptions, or dependents from the Department of



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1Revenue, the Department of Public Health, or another State or
2local government agency, or documentation as may be required
3by the State Treasurer from a parent or legal guardian of the
4eligible child, the State Treasurer shall make deposits into
5an omnibus account on behalf of eligible children. The State
6Treasurer shall be the owner of the omnibus accounts.
7        (1) Deposit amount. The seed fund deposit for each
8    eligible child shall be in the amount of $50. This amount
9    may be increased by the State Treasurer by rule. The State
10    Treasurer may use or deposit funds appropriated by the
11    General Assembly together with moneys received as gifts,
12    grants, or contributions into the Fund. If insufficient
13    funds are available in the Fund, the State Treasurer may
14    reduce the deposit amount or forego deposits.
15        (2) Use of seed funds. Seed funds, including any
16    interest, dividends, and other earnings accrued, will be
17    eligible for use by a beneficiary for qualified higher
18    education expenses if:
19            (A) the parent or guardian of the eligible child
20        claimed the seed funds for the beneficiary by the
21        beneficiary's 10th birthday;
22            (B) the beneficiary has completed secondary
23        education or has reached the age of 18; and
24            (C) the beneficiary is currently a resident of the
25        State of Illinois. Non-residents are not eligible to
26        claim or use seed funds.



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1        (3) Notice of seed fund availability. The State
2    Treasurer shall make a good faith effort to notify
3    beneficiaries and their parents or legal guardians of the
4    seed funds' availability and the deadline to claim such
5    funds.
6        (4) Unclaimed seed funds. Seed funds and any interest
7    earnings that are unclaimed by the beneficiary's 10th
8    birthday or unused by the beneficiary's 26th birthday will
9    be considered forfeited. Unclaimed and unused seed funds
10    and any interest earnings will remain in the omnibus
11    account for future beneficiaries.
12    (e) Financial education. The State Treasurer may develop
13educational materials that support the financial literacy of
14beneficiaries and their legal guardians, and may do so in
15collaboration with State and federal agencies, including, but
16not limited to, the Illinois State Board of Education and
17existing nonprofit agencies with expertise in financial
18literacy and education.
19    (f) Supplementary deposits and partnerships. The State
20Treasurer may make supplementary deposits to children in
21financially insecure households if sufficient funds are
22available. Furthermore, the State Treasurer may develop
23partnerships with private, nonprofit, or governmental
24organizations to provide additional savings incentives,
25including conditional cash transfers or matching contributions
26that provide a savings incentive based on specific actions



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1taken or other criteria.
2    (g) Illinois Higher Education Savings Program Fund. The
3Illinois Higher Education Savings Program Fund is hereby
4established as a special fund in the State treasury. The Fund
5shall be the official repository of all contributions,
6appropriated funds, interest, and dividend payments, gifts, or
7other financial assets received by the State Treasurer in
8connection with the operation of the Program or related
9partnerships. All such moneys shall be deposited into the Fund
10and held by the State Treasurer as custodian thereof. The
11State Treasurer may accept gifts, grants, awards, matching
12contributions, interest income, and appropriated funds from
13individuals, businesses, governments, and other third-party
14sources to implement the Program on terms that the Treasurer
15deems advisable. All interest or other earnings accruing or
16received on amounts in the Illinois Higher Education Savings
17Program Fund shall be credited to and retained by the Fund and
18used for the benefit of the Program. Assets of the Fund must at
19all times be preserved, invested, and expended only for the
20purposes of the Program and must be held for the benefit of the
21beneficiaries. Assets may not be transferred or used by the
22State or the State Treasurer for any purposes other than the
23purposes of the Program. In addition, no moneys, interest, or
24other earnings paid into the Fund shall be used, temporarily
25or otherwise, for inter-fund borrowing or be otherwise used or
26appropriated except as expressly authorized by this Act.



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1Notwithstanding the requirements of this subsection (g),
2amounts in the Fund may be used by the State Treasurer to pay
3the administrative costs of the Program.
4    (g-5) Fund deposits and payments. On July 15 of each year,
5beginning July 15, 2023, or as soon thereafter as practical,
6the State Comptroller shall direct and the State Treasurer
7shall transfer the sum of $2,500,000, or the amount that is
8appropriated annually by the General Assembly, whichever is
9greater, from the General Revenue Fund to the Illinois Higher
10Education Savings Program Fund to be used for the
11administration and operation of the Program.
12    (h) Audits and reports. The State Treasurer shall include
13the Illinois Higher Education Savings Program as part of the
14audit of the College Savings Pool described in Section 16.5.
15The State Treasurer shall annually prepare a report that
16includes a summary of the Program operations for the preceding
17fiscal year, including the number of children enrolled in the
18Program, the total amount of seed fund deposits, the rate of
19seed deposits claimed, and, to the extent data is reported and
20available, the racial, ethnic, socioeconomic, and geographic
21data of beneficiaries and of children in financially insecure
22households who may receive automatic bonus deposits. Such
23other information that is relevant to make a full disclosure
24of the operations of the Program and Fund may also be reported.
25The report shall be made available on the Treasurer's website
26by January 31 each year, starting in January of 2024. The State



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1Treasurer may include the Program in other reports as
3    (i) Rules. The State Treasurer may adopt rules necessary
4to implement this Section.
5(Source: P.A. 102-129, eff. 7-23-21; 102-558, eff. 8-20-21;
6102-1047, eff. 1-1-23; 103-8, eff. 6-7-23.)
7    Section 99. Effective date. This Act takes effect upon
8becoming law.