State of Illinois
91st General Assembly

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

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

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

 7        (15 ILCS 505/16.5)
 8        Sec. 16.5.  College Savings Pool. The State Treasurer may
 9    establish and administer a College Savings Pool to supplement
10    and enhance the investment opportunities otherwise  available
11    to  persons seeking to finance the costs of higher education.
12    The State Treasurer, in  administering  the  College  Savings
13    Pool,  may receive moneys paid into the pool by a participant
14    and may serve as the fiscal agent of that participant for the
15    purpose of holding and investing those moneys.
16        "Participant", as used in this Section, means any  person
17    that makes investments in the pool. "Designated beneficiary",
18    as  used in this Section, means any person on whose behalf an
19    account is established in  the  College  Savings  Pool  by  a
20    participant.  Both  in-state  and out-of-state persons may be
21    participants and  designated  beneficiaries  in  the  College
22    Savings Pool.
23        New  accounts  in  the  College  Savings  Pool  shall  be
24    processed   through   participating  financial  institutions.
25    "Participating  financial  institution",  as  used  in   this
26    Section,  means  any  financial  institution  insured  by the
27    Federal Deposit  Insurance  Corporation  and  lawfully  doing
28    business  in  the  State  of  Illinois  and  any credit union
29    approved by the State Treasurer and lawfully  doing  business
30    in  the State of Illinois that agrees to process new accounts
31    in  the  College  Savings  Pool.    Participating   financial
                            -2-                LRB9110258JMdv
 1    institutions  may  charge a processing fee to participants to
 2    open an account in the pool that shall not exceed  $30  until
 3    the  year 2001.  Beginning in 2001 and every year thereafter,
 4    the maximum fee limit shall  be  adjusted  by  the  Treasurer
 5    based  on  the  Consumer  Price  Index  for the North Central
 6    Region as published by the United States Department of Labor,
 7    Bureau of Labor  Statistics  for  the  immediately  preceding
 8    calendar  year.   Every  contribution received by a financial
 9    institution for investment in the College Savings Pool  shall
10    be  transferred  from the financial institution to a location
11    selected by the  State  Treasurer  within  one  business  day
12    following  the  day  that the funds must be made available in
13    accordance with federal law.   All  communications  from  the
14    State   Treasurer   to   participants   shall  reference  the
15    participating financial institution at which the account  was
16    processed.
17        The  Treasurer  may  invest  the  moneys  in  the College
18    Savings Pool in  the  same  manner,  in  the  same  types  of
19    investments, and subject to the same limitations provided for
20    the  investment  of  moneys  by  the  Illinois State Board of
21    Investment. To  enhance  the  safety  and  liquidity  of  the
22    College  Savings  Pool,  to ensure the diversification of the
23    investment portfolio of the pool, and in an  effort  to  keep
24    investment  dollars  in  the  State  of  Illinois,  the State
25    Treasurer shall make a percentage of each  account  available
26    for  investment in participating financial institutions doing
27    business in the State.  The  State  Treasurer  shall  deposit
28    with  the  participating  financial  institution at which the
29    account  was  processed  the  following  percentage  of  each
30    account at a prevailing  rate  offered  by  the  institution,
31    provided  that  the  deposit  is  federally  insured or fully
32    collateralized and the institution accepts the  deposit:  10%
33    of the total amount of each account for which the current age
34    of  the  beneficiary  is less than 7 years of age, 20% of the
                            -3-                LRB9110258JMdv
 1    total amount of each account for which the beneficiary is  at
 2    least  7  years of age and less than 12 years of age, and 50%
 3    of the total amount of each account for which the current age
 4    of the beneficiary is at least 12 years of  age.   The  State
 5    Treasurer  shall  adjust  each  account  at least annually to
 6    ensure compliance with this Section.    The  Treasurer  shall
 7    develop, publish, and implement an investment policy covering
 8    the investment of the moneys in the College Savings Pool. The
 9    policy  shall  be published (i) at least once each year in at
10    least  one  newspaper  of   general   circulation   in   both
11    Springfield  and  Chicago  and  (ii) each year as part of the
12    audit of the College Savings Pool  by  the  Auditor  General,
13    which shall be distributed to all participants. The Treasurer
14    shall  notify  all participants in writing, and the Treasurer
15    shall publish in a newspaper of general circulation  in  both
16    Chicago  and  Springfield,  any  changes  to  the  previously
17    published  investment policy at least 30 calendar days before
18    implementing the policy. Any investment policy adopted by the
19    Treasurer shall be reviewed and updated if  necessary  within
20    90  days  following  the  date that the State Treasurer takes
21    office.
22        Participants shall be required to use moneys  distributed
23    from  the  College  Savings  Pool  for  qualified expenses at
24    eligible educational institutions. "Qualified  expenses",  as
25    used in this Section, means the following: (i) tuition, fees,
26    and  the costs of books, supplies, and equipment required for
27    enrollment  or  attendance   at   an   eligible   educational
28    institution and (ii) certain room and board expenses incurred
29    while  attending an eligible educational institution at least
30    half-time. "Eligible educational institutions",  as  used  in
31    this  Section,  means  public  and  private  colleges, junior
32    colleges,   graduate   schools,   and   certain    vocational
33    institutions  that are described in Section 481 of the Higher
34    Education Act of 1965 (20 U.S.C. 1088) and that are  eligible
                            -4-                LRB9110258JMdv
 1    to   participate  in  Department  of  Education  student  aid
 2    programs. A student shall be considered  to  be  enrolled  at
 3    least  half-time if the student is enrolled for at least half
 4    the full-time academic work load for the course of study  the
 5    student  is pursuing as determined under the standards of the
 6    institution at which the student is  enrolled.  Distributions
 7    made  from  the  pool  for  qualified  expenses shall be made
 8    directly to the eligible educational institution, directly to
 9    a vendor, or in the form of  a  check  payable  to  both  the
10    beneficiary  and  the  institution or vendor. Any moneys that
11    are distributed in any other manner  or  that  are  used  for
12    expenses   other  than  qualified  expenses  at  an  eligible
13    educational institution shall be subject to a penalty of  10%
14    of   the   earnings  unless  the  beneficiary  dies,  becomes
15    disabled, or receives a scholarship that  equals  or  exceeds
16    the distribution. Penalties shall be withheld at the time the
17    distribution is made.
18        The  Treasurer  shall limit the contributions that may be
19    made on behalf  of  a  designated  beneficiary  based  on  an
20    actuarial  estimate of what is required to pay tuition, fees,
21    and room and board for 5 undergraduate years at  the  highest
22    cost eligible educational institution. The contributions made
23    on  behalf  of  a beneficiary who is also a beneficiary under
24    the  Illinois  Prepaid  Tuition  Program  shall  be   further
25    restricted  to ensure that the contributions in both programs
26    combined do not exceed the limit established for the  College
27    Savings  Pool.  The  Treasurer  shall  provide  the  Illinois
28    Student  Assistance Commission each year at a time designated
29    by the Commission, an electronic report  of  all  participant
30    accounts  in  the  Treasurer's  College Savings Pool, listing
31    total contributions and disbursements  from  each  individual
32    account   during   the   previous  calendar  year.   As  soon
33    thereafter  as  is  possible   following   receipt   of   the
34    Treasurer's   report,   the   Illinois   Student   Assistance
                            -5-                LRB9110258JMdv
 1    Commission  shall,  in  turn,  provide  the Treasurer with an
 2    electronic  report  listing  those   College   Savings   Pool
 3    participants  who  also  participate  in  the State's prepaid
 4    tuition  program,  administered  by  the   Commission.    The
 5    Commission  shall  be responsible for filing any combined tax
 6    reports regarding State qualified savings  programs  required
 7    by the United States Internal Revenue Service.  The Treasurer
 8    shall work with the Illinois Student Assistance Commission to
 9    coordinate  the marketing of the College Savings Pool and the
10    Illinois Prepaid Tuition Program when  considered  beneficial
11    by  the  Treasurer  and  the Director of the Illinois Student
12    Assistance  Commission.  The  Treasurer's  office  shall  not
13    publicize or otherwise market the  College  Savings  Pool  or
14    accept  any  moneys  into  the  College Savings Pool prior to
15    March  1,  2000.  The  Treasurer  shall  provide  a  separate
16    accounting  for   each   designated   beneficiary   to   each
17    participant,  the Illinois Student Assistance Commission, and
18    the participating financial institution at which the  account
19    was  processed.  No interest in the program may be pledged as
20    security for a loan.
21        The Treasurer shall  adopt  rules  he  or  she  considers
22    necessary  for  the  efficient  administration of the College
23    Savings Pool. The rules  shall  provide  whatever  additional
24    parameters  and restrictions are necessary to ensure that the
25    College Savings Pool meets all  of  the  requirements  for  a
26    qualified  state  tuition  program  under  Section 529 of the
27    Internal Revenue Code (26 U.S.C. 52). The rules shall provide
28    for the administration expenses of the pool to be  paid  from
29    its earnings and for the investment earnings in excess of the
30    expenses and all moneys collected as penalties to be credited
31    or  paid monthly to the several participants in the pool in a
32    manner which equitably  reflects  the  differing  amounts  of
33    their  respective  investments  in the pool and the differing
34    periods of time for which those amounts were in  the  custody
                            -6-                LRB9110258JMdv
 1    of the pool. Also, the rules shall require the maintenance of
 2    records  that  enable  the  Treasurer's  office  to produce a
 3    report for each account in the pool at  least  annually  that
 4    documents the account balance and investment earnings. Notice
 5    of any proposed amendments to the rules and regulations shall
 6    be provided to all participants prior to adoption. Amendments
 7    to  rules  and  regulations shall apply only to contributions
 8    made after the adoption of the amendment.
 9        Upon  creating  the  College  Savings  Pool,  the   State
10    Treasurer shall give bond with 2 or more sufficient sureties,
11    payable  to  and  for  the benefit of the participants in the
12    College  Savings  Pool,  in  the  penal  sum  of  $1,000,000,
13    conditioned upon the faithful discharge of his or her  duties
14    in relation to the College Savings Pool.
15    (Source: P.A. 91-607, eff. 1-1-00.)

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