97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB1261

 

Introduced 2/8/2011, by Sen. Christine Radogno

 

SYNOPSIS AS INTRODUCED:
 
15 ILCS 505/16.5

    Amends the State Treasurer Act. Makes a technical change in a Section concerning a college savings pool.


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A BILL FOR

 

SB1261LRB097 05540 PJG 45601 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
5Section 16.5 as follows:
 
6    (15 ILCS 505/16.5)
7    Sec. 16.5. College Savings Pool. The The State Treasurer
8may establish and administer a College Savings Pool to
9supplement and enhance the investment opportunities otherwise
10available to persons seeking to finance the costs of higher
11education. The State Treasurer, in administering the College
12Savings Pool, may receive moneys paid into the pool by a
13participant and may serve as the fiscal agent of that
14participant for the purpose of holding and investing those
15moneys.
16    "Participant", as used in this Section, means any person
17who has authority to withdraw funds, change the designated
18beneficiary, or otherwise exercise control over an account.
19"Donor", as used in this Section, means any person who makes
20investments in the pool. "Designated beneficiary", as used in
21this Section, means any person on whose behalf an account is
22established in the College Savings Pool by a participant. Both
23in-state and out-of-state persons may be participants, donors,

 

 

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1and designated beneficiaries in the College Savings Pool.
2    New accounts in the College Savings Pool may be processed
3through participating financial institutions. "Participating
4financial institution", as used in this Section, means any
5financial institution insured by the Federal Deposit Insurance
6Corporation and lawfully doing business in the State of
7Illinois and any credit union approved by the State Treasurer
8and lawfully doing business in the State of Illinois that
9agrees to process new accounts in the College Savings Pool.
10Participating financial institutions may charge a processing
11fee to participants to open an account in the pool that shall
12not exceed $30 until the year 2001. Beginning in 2001 and every
13year thereafter, the maximum fee limit shall be adjusted by the
14Treasurer based on the Consumer Price Index for the North
15Central Region as published by the United States Department of
16Labor, Bureau of Labor Statistics for the immediately preceding
17calendar year. Every contribution received by a financial
18institution for investment in the College Savings Pool shall be
19transferred from the financial institution to a location
20selected by the State Treasurer within one business day
21following the day that the funds must be made available in
22accordance with federal law. All communications from the State
23Treasurer to participants and donors shall reference the
24participating financial institution at which the account was
25processed.
26    The Treasurer may invest the moneys in the College Savings

 

 

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1Pool in the same manner and in the same types of investments
2provided for the investment of moneys by the Illinois State
3Board of Investment. To enhance the safety and liquidity of the
4College Savings Pool, to ensure the diversification of the
5investment portfolio of the pool, and in an effort to keep
6investment dollars in the State of Illinois, the State
7Treasurer may make a percentage of each account available for
8investment in participating financial institutions doing
9business in the State. The State Treasurer may deposit with the
10participating financial institution at which the account was
11processed the following percentage of each account at a
12prevailing rate offered by the institution, provided that the
13deposit is federally insured or fully collateralized and the
14institution accepts the deposit: 10% of the total amount of
15each account for which the current age of the beneficiary is
16less than 7 years of age, 20% of the total amount of each
17account for which the beneficiary is at least 7 years of age
18and less than 12 years of age, and 50% of the total amount of
19each account for which the current age of the beneficiary is at
20least 12 years of age. The Treasurer shall develop, publish,
21and implement an investment policy covering the investment of
22the moneys in the College Savings Pool. The policy shall be
23published (i) at least once each year in at least one newspaper
24of general circulation in both Springfield and Chicago and (ii)
25each year as part of the audit of the College Savings Pool by
26the Auditor General, which shall be distributed to all

 

 

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1participants. The Treasurer shall notify all participants in
2writing, and the Treasurer shall publish in a newspaper of
3general circulation in both Chicago and Springfield, any
4changes to the previously published investment policy at least
530 calendar days before implementing the policy. Any investment
6policy adopted by the Treasurer shall be reviewed and updated
7if necessary within 90 days following the date that the State
8Treasurer takes office.
9    Participants shall be required to use moneys distributed
10from the College Savings Pool for qualified expenses at
11eligible educational institutions. "Qualified expenses", as
12used in this Section, means the following: (i) tuition, fees,
13and the costs of books, supplies, and equipment required for
14enrollment or attendance at an eligible educational
15institution and (ii) certain room and board expenses incurred
16while attending an eligible educational institution at least
17half-time. "Eligible educational institutions", as used in
18this Section, means public and private colleges, junior
19colleges, graduate schools, and certain vocational
20institutions that are described in Section 481 of the Higher
21Education Act of 1965 (20 U.S.C. 1088) and that are eligible to
22participate in Department of Education student aid programs. A
23student shall be considered to be enrolled at least half-time
24if the student is enrolled for at least half the full-time
25academic work load for the course of study the student is
26pursuing as determined under the standards of the institution

 

 

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1at which the student is enrolled. Distributions made from the
2pool for qualified expenses shall be made directly to the
3eligible educational institution, directly to a vendor, or in
4the form of a check payable to both the beneficiary and the
5institution or vendor. Any moneys that are distributed in any
6other manner or that are used for expenses other than qualified
7expenses at an eligible educational institution shall be
8subject to a penalty of 10% of the earnings unless the
9beneficiary dies, becomes disabled, or receives a scholarship
10that equals or exceeds the distribution. Penalties shall be
11withheld at the time the distribution is made.
12    The Treasurer shall limit the contributions that may be
13made on behalf of a designated beneficiary based on the
14limitations established by the Internal Revenue Service. The
15contributions made on behalf of a beneficiary who is also a
16beneficiary under the Illinois Prepaid Tuition Program shall be
17further restricted to ensure that the contributions in both
18programs combined do not exceed the limit established for the
19College Savings Pool. The Treasurer shall provide the Illinois
20Student Assistance Commission each year at a time designated by
21the Commission, an electronic report of all participant
22accounts in the Treasurer's College Savings Pool, listing total
23contributions and disbursements from each individual account
24during the previous calendar year. As soon thereafter as is
25possible following receipt of the Treasurer's report, the
26Illinois Student Assistance Commission shall, in turn, provide

 

 

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1the Treasurer with an electronic report listing those College
2Savings Pool participants who also participate in the State's
3prepaid tuition program, administered by the Commission. The
4Commission shall be responsible for filing any combined tax
5reports regarding State qualified savings programs required by
6the United States Internal Revenue Service. The Treasurer shall
7work with the Illinois Student Assistance Commission to
8coordinate the marketing of the College Savings Pool and the
9Illinois Prepaid Tuition Program when considered beneficial by
10the Treasurer and the Director of the Illinois Student
11Assistance Commission. The Treasurer's office shall not
12publicize or otherwise market the College Savings Pool or
13accept any moneys into the College Savings Pool prior to March
141, 2000. The Treasurer shall provide a separate accounting for
15each designated beneficiary to each participant, the Illinois
16Student Assistance Commission, and the participating financial
17institution at which the account was processed. No interest in
18the program may be pledged as security for a loan. Moneys held
19in an account invested in the Illinois College Savings Pool
20shall be exempt from all claims of the creditors of the
21participant, donor, or designated beneficiary of that account,
22except for the non-exempt College Savings Pool transfers to or
23from the account as defined under subsection (j) of Section
2412-1001 of the Code of Civil Procedure (735 ILCS 5/12-1001(j)).
25    The assets of the College Savings Pool and its income and
26operation shall be exempt from all taxation by the State of

 

 

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1Illinois and any of its subdivisions. The accrued earnings on
2investments in the Pool once disbursed on behalf of a
3designated beneficiary shall be similarly exempt from all
4taxation by the State of Illinois and its subdivisions, so long
5as they are used for qualified expenses. Contributions to a
6College Savings Pool account during the taxable year may be
7deducted from adjusted gross income as provided in Section 203
8of the Illinois Income Tax Act. The provisions of this
9paragraph are exempt from Section 250 of the Illinois Income
10Tax Act.
11    The Treasurer shall adopt rules he or she considers
12necessary for the efficient administration of the College
13Savings Pool. The rules shall provide whatever additional
14parameters and restrictions are necessary to ensure that the
15College Savings Pool meets all of the requirements for a
16qualified state tuition program under Section 529 of the
17Internal Revenue Code (26 U.S.C. 529). The rules shall provide
18for the administration expenses of the pool to be paid from its
19earnings and for the investment earnings in excess of the
20expenses and all moneys collected as penalties to be credited
21or paid monthly to the several participants in the pool in a
22manner which equitably reflects the differing amounts of their
23respective investments in the pool and the differing periods of
24time for which those amounts were in the custody of the pool.
25Also, the rules shall require the maintenance of records that
26enable the Treasurer's office to produce a report for each

 

 

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1account in the pool at least annually that documents the
2account balance and investment earnings. Notice of any proposed
3amendments to the rules and regulations shall be provided to
4all participants prior to adoption. Amendments to rules and
5regulations shall apply only to contributions made after the
6adoption of the amendment.
7    Upon creating the College Savings Pool, the State Treasurer
8shall give bond with 2 or more sufficient sureties, payable to
9and for the benefit of the participants in the College Savings
10Pool, in the penal sum of $1,000,000, conditioned upon the
11faithful discharge of his or her duties in relation to the
12College Savings Pool.
13(Source: P.A. 95-23, eff. 8-3-07; 95-306, eff. 1-1-08; 95-521,
14eff. 8-28-07; 95-876, eff. 8-21-08.)