State of Illinois
91st General Assembly

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[ Introduced ][ Engrossed ][ House Amendment 001 ]
[ Conference Committee Report 001 ]


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.

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