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91_SB1014enr SB1014 Enrolled LRB9105628DHmg 1 AN ACT concerning the State Treasurer. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The State Treasurer Act is amended by adding 5 Section 16.5 as follows: 6 (15 ILCS 505/16.5 new) 7 Sec. 16.5. College Savings Pool. The State Treasurer may 8 establish and administer a College Savings Pool to supplement 9 and enhance the investment opportunities otherwise available 10 to persons seeking to finance the costs of higher education. 11 The Treasurer, in administering the College Savings Pool, may 12 receive moneys paid into the pool by a participant and may 13 serve as the fiscal agent of that participant for the purpose 14 of holding and investing those moneys. 15 "Participant", as used in this Section, means any person 16 that makes investments in the pool. "Designated beneficiary", 17 as used in this Section, means any person on whose behalf an 18 account is established in the College Savings Pool by a 19 participant. Both in-state and out-of-state persons may be 20 participants and designated beneficiaries in the College 21 Savings Pool. 22 New accounts in the College Savings Pool shall be 23 processed through participating financial institutions. 24 "Participating financial institution", as used in this 25 Section, means any financial institution insured by the 26 Federal Deposit Insurance Corporation and lawfully doing 27 business in the State of Illinois and any credit union 28 approved by the State Treasurer and lawfully doing business 29 in the State of Illinois that agrees to process new accounts 30 in the College Savings Pool. Participating financial 31 institutions may charge a processing fee to participants to SB1014 Enrolled -2- LRB9105628DHmg 1 open an account in the pool that shall not exceed $30 until 2 the year 2001. Beginning in 2001 and every year thereafter, 3 the maximum fee limit shall be adjusted by the Treasurer 4 based on the Consumer Price Index for the North Central 5 Region as published by the United States Department of Labor, 6 Bureau of Labor Statistics for the immediately preceding 7 calendar year. Every contribution received by a financial 8 institution for investment in the College Savings Pool shall 9 be transferred from the financial institution to a location 10 selected by the State Treasurer within one business day 11 following the day that the funds must be made available in 12 accordance with federal law. All communications from the 13 State Treasurer to participants shall reference the 14 participating financial institution at which the account was 15 processed. 16 The Treasurer may invest the moneys in the College 17 Savings Pool in the same manner, in the same types of 18 investments, and subject to the same limitations provided for 19 the investment of moneys by the Illinois State Board of 20 Investment. To enhance the safety and liquidity of the 21 College Savings Pool, to ensure the diversification of the 22 investment portfolio of the pool, and in an effort to keep 23 investment dollars in the State of Illinois, the State 24 Treasurer shall make a percentage of each account available 25 for investment in participating financial institutions doing 26 business in the State. The State Treasurer shall deposit 27 with the participating financial institution at which the 28 account was processed the following percentage of each 29 account at a prevailing rate offered by the institution, 30 provided that the deposit is federally insured or fully 31 collateralized and the institution accepts the deposit: 10% 32 of the total amount of each account for which the current age 33 of the beneficiary is less than 7 years of age, 20% of the 34 total amount of each account for which the beneficiary is at SB1014 Enrolled -3- LRB9105628DHmg 1 least 7 years of age and less than 12 years of age, and 50% 2 of the total amount of each account for which the current age 3 of the beneficiary is at least 12 years of age. The State 4 Treasurer shall adjust each account at least annually to 5 ensure compliance with this Section. The Treasurer shall 6 develop, publish, and implement an investment policy covering 7 the investment of the moneys in the College Savings Pool. The 8 policy shall be published (i) at least once each year in at 9 least one newspaper of general circulation in both 10 Springfield and Chicago and (ii) each year as part of the 11 audit of the College Savings Pool by the Auditor General, 12 which shall be distributed to all participants. The Treasurer 13 shall notify all participants in writing, and the Treasurer 14 shall publish in a newspaper of general circulation in both 15 Chicago and Springfield, any changes to the previously 16 published investment policy at least 30 calendar days before 17 implementing the policy. Any investment policy adopted by the 18 Treasurer shall be reviewed and updated if necessary within 19 90 days following the date that the State Treasurer takes 20 office. 21 Participants shall be required to use moneys distributed 22 from the College Savings Pool for qualified expenses at 23 eligible educational institutions. "Qualified expenses", as 24 used in this Section, means the following: (i) tuition, fees, 25 and the costs of books, supplies, and equipment required for 26 enrollment or attendance at an eligible educational 27 institution and (ii) certain room and board expenses incurred 28 while attending an eligible educational institution at least 29 half-time. "Eligible educational institutions", as used in 30 this Section, means public and private colleges, junior 31 colleges, graduate schools, and certain vocational 32 institutions that are described in Section 481 of the Higher 33 Education Act of 1965 (20 U.S.C. 1088) and that are eligible 34 to participate in Department of Education student aid SB1014 Enrolled -4- LRB9105628DHmg 1 programs. A student shall be considered to be enrolled at 2 least half-time if the student is enrolled for at least half 3 the full-time academic work load for the course of study the 4 student is pursuing as determined under the standards of the 5 institution at which the student is enrolled. Distributions 6 made from the pool for qualified expenses shall be made 7 directly to the eligible educational institution, directly to 8 a vendor, or in the form of a check payable to both the 9 beneficiary and the institution or vendor. Any moneys that 10 are distributed in any other manner or that are used for 11 expenses other than qualified expenses at an eligible 12 educational institution shall be subject to a penalty of 10% 13 of the earnings unless the beneficiary dies, becomes 14 disabled, or receives a scholarship that equals or exceeds 15 the distribution. Penalties shall be withheld at the time the 16 distribution is made. 17 The Treasurer shall limit the contributions that may be 18 made on behalf of a designated beneficiary based on an 19 actuarial estimate of what is required to pay tuition, fees, 20 and room and board for 5 undergraduate years at the highest 21 cost eligible educational institution. The contributions made 22 on behalf of a beneficiary who is also a beneficiary under 23 the Illinois Prepaid Tuition Program shall be further 24 restricted to ensure that the contributions in both programs 25 combined do not exceed the limit established for the College 26 Savings Pool. The Treasurer shall provide the Illinois 27 Student Assistance Commission each year at a time designated 28 by the Commission, an electronic report of all participant 29 accounts in the Treasurer's College Savings Pool, listing 30 total contributions and disbursements from each individual 31 account during the previous calendar year. As soon 32 thereafter as is possible following receipt of the 33 Treasurer's report, the Illinois Student Assistance 34 Commission shall, in turn, provide the Treasurer with an SB1014 Enrolled -5- LRB9105628DHmg 1 electronic report listing those College Savings Pool 2 participants who also participate in the State's prepaid 3 tuition program, administered by the Commission. The 4 Commission shall be responsible for filing any combined tax 5 reports regarding State qualified savings programs required 6 by the United States Internal Revenue Service. The Treasurer 7 shall work with the Illinois Student Assistance Commission to 8 coordinate the marketing of the College Savings Pool and the 9 Illinois Prepaid Tuition Program when considered beneficial 10 by the Treasurer and the Director of the Illinois Student 11 Assistance Commission. The Treasurer's office shall not 12 publicize or otherwise market the College Savings Pool or 13 accept any moneys into the College Savings Pool prior to 14 March 1, 2000. The Treasurer shall provide a separate 15 accounting for each designated beneficiary to each 16 participant, the Illinois Student Assistance Commission, and 17 the participating financial institution at which the account 18 was processed. No interest in the program may be pledged as 19 security for a loan. 20 The Treasurer shall adopt rules he or she considers 21 necessary for the efficient administration of the College 22 Savings Pool. The rules shall provide whatever additional 23 parameters and restrictions are necessary to ensure that the 24 College Savings Pool meets all of the requirements for a 25 qualified state tuition program under Section 529 of the 26 Internal Revenue Code (26 U.S.C. 52). The rules shall provide 27 for the administration expenses of the pool to be paid from 28 its earnings and for the investment earnings in excess of the 29 expenses and all moneys collected as penalties to be credited 30 or paid monthly to the several participants in the pool in a 31 manner which equitably reflects the differing amounts of 32 their respective investments in the pool and the differing 33 periods of time for which those amounts were in the custody 34 of the pool. Also, the rules shall require the maintenance of SB1014 Enrolled -6- LRB9105628DHmg 1 records that enable the Treasurer's office to produce a 2 report for each account in the pool at least annually that 3 documents the account balance and investment earnings. Notice 4 of any proposed amendments to the rules and regulations shall 5 be provided to all participants prior to adoption. Amendments 6 to rules and regulations shall apply only to contributions 7 made after the adoption of the amendment. 8 Upon creating the College Savings Pool, the State 9 Treasurer shall give bond with 2 or more sufficient sureties, 10 payable to and for the benefit of the participants in the 11 College Savings Pool, in the penal sum of $1,000,000, 12 conditioned upon the faithful discharge of his or her duties 13 in relation to the College Savings Pool.