State of Illinois
91st General Assembly

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SB464 Re-enrolled                              LRB9104095NTsb

 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:
SB464 Re-enrolled              -2-             LRB9104095NTsb
 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
SB464 Re-enrolled              -3-             LRB9104095NTsb
 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
SB464 Re-enrolled              -4-             LRB9104095NTsb
 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
SB464 Re-enrolled              -5-             LRB9104095NTsb
 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. The Commission shall invest such assets with
32    the   care,   skill,   prudence,   and  diligence  under  the
33    circumstances then prevailing that a prudent man acting in  a
SB464 Re-enrolled              -6-             LRB9104095NTsb
 1    like capacity and familiar with such matters would use in the
 2    conduct  of an enterprise of a like character with like aims,
 3    and the Commission shall diversify the  investments  of  such
 4    assets  so  as  to  minimize the risk of large losses, unless
 5    under the circumstances it is clearly prudent not to  do  so.
 6    Those  insurance,  annuity,  savings, and investment products
 7    shall  be  underwritten  and  offered  in   compliance   with
 8    applicable  federal and State laws, rules, and regulations by
 9    persons  who  are  authorized  thereunder  to  provide  those
10    services.  The Commission shall delegate  responsibility  for
11    preparing  the comprehensive investment plan to the Executive
12    Director of the Commission.  Nothing in  this  Section  shall
13    preclude  the  Commission  from  contracting  with  a private
14    corporation or institution to provide such services as may be
15    a part of the comprehensive investment  plan  or  as  may  be
16    deemed  necessary  for  implementation  of  the comprehensive
17    investment plan, including, but  not  limited  to,  providing
18    consolidated   billing,   individual  and  collective  record
19    keeping and accounting,  and  asset  purchase,  control,  and
20    safekeeping.
21        (c)  Program management.  The Commission may not delegate
22    its  management  functions, but may arrange to compensate for
23    personalized  investment  advisory  services  rendered   with
24    respect to any or all of the investments under its control an
25    investment advisor registered under Section 8 of the Illinois
26    Securities Law of 1953 or any bank or other entity authorized
27    by  law  to provide those services.  Nothing contained herein
28    shall preclude the Commission  from  subscribing  to  general
29    investment research services available for purchase or use by
30    others.    The   Commission  also  shall  have  authority  to
31    compensate for accounting,  computing,  and  other  necessary
32    services.
33        (d)  Annual   report.    The  Commission  shall  annually
34    prepare or cause to be prepared a  report  setting  forth  in
SB464 Re-enrolled              -7-             LRB9104095NTsb
 1    appropriate  detail  an  accounting  of  all Illinois prepaid
 2    tuition program funds and  a  description  of  the  financial
 3    condition  of  the  program at the close of each fiscal year.
 4    Included in this report shall be an evaluation  by  at  least
 5    one  nationally recognized actuary of the financial viability
 6    of the program.   This  report  shall  be  submitted  to  the
 7    Governor,  the  President  of  the Senate, the Speaker of the
 8    House of Representatives, the Auditor General, and the  Board
 9    of  Higher  Education  on or before March 1 of the subsequent
10    fiscal year.  This report also shall  be  made  available  to
11    purchasers  of  Illinois  prepaid tuition contracts and shall
12    contain complete  Illinois  prepaid  tuition  contract  sales
13    information,   including,   but  not  limited  to,  projected
14    postsecondary enrollment data for qualified beneficiaries.
15        (e)  Marketing plan.  Selection of a marketing agent  for
16    the  Illinois prepaid tuition program must be approved by the
17    Commission.  At least once  every  3  years,  the  Commission
18    shall solicit proposals for marketing of the Illinois prepaid
19    tuition  program  in  accordance with the Illinois Securities
20    Law of 1953 and any applicable  provisions  of  federal  law.
21    The  entity designated pursuant to this paragraph shall serve
22    as a centralized marketing agent for the  program  and  shall
23    have  exclusive responsibility for marketing the program.  No
24    contract for marketing the Illinois prepaid  tuition  program
25    shall extend for longer than 3 years.  Any materials produced
26    for  the  purpose of marketing the program shall be submitted
27    to the Executive Director  of  the  Commission  for  approval
28    before  they  are  made  public.   Any  Illinois MAP-eligible
29    institution may distribute marketing materials  produced  for
30    the  program,  so  long  as  the  Executive  Director  of the
31    Commission approves the distribution in advance.  Neither the
32    State   nor   the   Commission   shall    be    liable    for
33    misrepresentation of the program by a marketing agent.
34        (f)  Accounting and audit.  The Commission shall annually
SB464 Re-enrolled              -8-             LRB9104095NTsb
 1    cause  to  be  prepared  an accounting of the trust and shall
 2    transmit a copy  of  the  accounting  to  the  Governor,  the
 3    President  of  the  Senate, the Speaker of the House, and the
 4    minority leaders of the Senate and House of  Representatives.
 5    The  Commission  shall also make available this accounting of
 6    the trust to any purchaser of  an  Illinois  prepaid  tuition
 7    contract, upon request.  The accounts of the Illinois prepaid
 8    tuition  program  shall  be  subject  to annual audits by the
 9    Auditor General or a certified public accountant appointed by
10    the Auditor General.
11    (Source: P.A. 90-546, eff. 12-1-97.)

12        Section  99.  Effective  date.   This  Act  takes  effect
13    January 1, 2000.

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