SB1728ham002 97TH GENERAL ASSEMBLY

Rep. Jim Durkin

Filed: 5/19/2011

09700SB1728ham002 LRB097 00134 PJG 55926 a

AMENDMENT TO SENATE BILL 1728

AMENDMENT NO. ______. Amend Senate Bill 1728 by replacing everything after the enacting clause with the following:

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

(15 ILCS 505/16.5)

Sec. 16.5. College Savings Pool. The State Treasurer may establish and administer a College Savings Pool to supplement and enhance the investment opportunities otherwise available to persons seeking to finance the costs of higher education. The State Treasurer, in administering the College Savings Pool, may receive moneys paid into the pool by a participant and may serve as the fiscal agent of that participant for the purpose of holding and investing those moneys.

"Participant", as used in this Section, means any person who has authority to withdraw funds, change the designated beneficiary, or otherwise exercise control over an account. "Donor", as used in this Section, means any person who makes investments in the pool. "Designated beneficiary", as used in this Section, means any person on whose behalf an account is established in the College Savings Pool by a participant. Both in-state and out-of-state persons may be participants, donors, and designated beneficiaries in the College Savings Pool.

New accounts in the College Savings Pool may be processed through participating financial institutions. "Participating financial institution", as used in this Section, means any financial institution insured by the Federal Deposit Insurance Corporation and lawfully doing business in the State of Illinois and any credit union approved by the State Treasurer and lawfully doing business in the State of Illinois that agrees to process new accounts in the College Savings Pool. Participating financial institutions may charge a processing fee to participants to open an account in the pool that shall not exceed $30 until the year 2001. Beginning in 2001 and every year thereafter, the maximum fee limit shall be adjusted by the Treasurer based on the Consumer Price Index for the North Central Region as published by the United States Department of Labor, Bureau of Labor Statistics for the immediately preceding calendar year. Every contribution received by a financial institution for investment in the College Savings Pool shall be transferred from the financial institution to a location selected by the State Treasurer within one business day following the day that the funds must be made available in accordance with federal law. All communications from the State Treasurer to participants and donors shall reference the participating financial institution at which the account was processed.

The Treasurer may invest the moneys in the College Savings Pool in the same manner and in the same types of investments provided for the investment of moneys by the Illinois State Board of Investment. To enhance the safety and liquidity of the College Savings Pool, to ensure the diversification of the investment portfolio of the pool, and in an effort to keep investment dollars in the State of Illinois, the State Treasurer may make a percentage of each account available for investment in participating financial institutions doing business in the State. The State Treasurer may deposit with the participating financial institution at which the account was processed the following percentage of each account at a prevailing rate offered by the institution, provided that the deposit is federally insured or fully collateralized and the institution accepts the deposit: 10% of the total amount of each account for which the current age of the beneficiary is less than 7 years of age, 20% of the total amount of each account for which the beneficiary is at least 7 years of age and less than 12 years of age, and 50% of the total amount of each account for which the current age of the beneficiary is at least 12 years of age. The Treasurer shall develop, publish, and implement an investment policy covering the investment of the moneys in the College Savings Pool. The policy shall be published (i) at least once each year in at least one newspaper of general circulation in both Springfield and Chicago and (ii) each year as part of the audit of the College Savings Pool by the Auditor General, which shall be distributed to all participants. The Treasurer shall notify all participants in writing, and the Treasurer shall publish in a newspaper of general circulation in both Chicago and Springfield, any changes to the previously published investment policy at least 30 calendar days before implementing the policy. Any investment policy adopted by the Treasurer shall be reviewed and updated if necessary within 90 days following the date that the State Treasurer takes office.

Participants shall be required to use moneys distributed from the College Savings Pool for qualified expenses at eligible educational institutions. "Qualified expenses", as used in this Section, means the following: (i) tuition, fees, and the costs of books, supplies, and equipment required for enrollment or attendance at an eligible educational institution and (ii) certain room and board expenses incurred while attending an eligible educational institution at least half-time. "Eligible educational institutions", as used in this Section, means public and private colleges, junior colleges, graduate schools, and certain vocational institutions that are described in Section 481 of the Higher Education Act of 1965 (20 U.S.C. 1088) and that are eligible to participate in Department of Education student aid programs. A student shall be considered to be enrolled at least half-time if the student is enrolled for at least half the full-time academic work load for the course of study the student is pursuing as determined under the standards of the institution at which the student is enrolled. Distributions made from the pool for qualified expenses shall be made directly to the eligible educational institution, directly to a vendor, or in the form of a check payable to both the beneficiary and the institution or vendor. Any moneys that are distributed in any other manner or that are used for expenses other than qualified expenses at an eligible educational institution shall be subject to a penalty of 10% of the earnings unless the beneficiary dies, becomes disabled, or receives a scholarship that equals or exceeds the distribution. Penalties shall be withheld at the time the distribution is made.

The Treasurer shall limit the contributions that may be made on behalf of a designated beneficiary based on the limitations established by the Internal Revenue Service. The contributions made on behalf of a beneficiary who is also a beneficiary under the Illinois Prepaid Tuition Program shall be further restricted to ensure that the contributions in both programs combined do not exceed the limit established for the College Savings Pool. The Treasurer shall provide the Comptroller Illinois Student Assistance Commission each year at a time designated by the Comptroller Commission, an electronic report of all participant accounts in the Treasurer's College Savings Pool, listing total contributions and disbursements from each individual account during the previous calendar year. As soon thereafter as is possible following receipt of the Treasurer's report, the Comptroller Illinois Student Assistance Commission shall, in turn, provide the Treasurer with an electronic report listing those College Savings Pool participants who also participate in the State's prepaid tuition program, administered by the Comptroller Commission. The Commission shall be responsible for filing any combined tax reports regarding State qualified savings programs required by the United States Internal Revenue Service. The Treasurer shall work with the Illinois Student Assistance Commission and the Comptroller to coordinate the marketing of the College Savings Pool and the Illinois Prepaid Tuition Program when considered beneficial by the Treasurer and the Director of the Illinois Student Assistance Commission. The Treasurer's office shall not publicize or otherwise market the College Savings Pool or accept any moneys into the College Savings Pool prior to March 1, 2000. The Treasurer shall provide a separate accounting for each designated beneficiary to each participant, the Illinois Student Assistance Commission, Comptroller, and the participating financial institution at which the account was processed. No interest in the program may be pledged as security for a loan. Moneys held in an account invested in the Illinois College Savings Pool shall be exempt from all claims of the creditors of the participant, donor, or designated beneficiary of that account, except for the non-exempt College Savings Pool transfers to or from the account as defined under subsection (j) of Section 12-1001 of the Code of Civil Procedure (735 ILCS 5/12-1001(j)).

The assets of the College Savings Pool and its income and operation shall be exempt from all taxation by the State of Illinois and any of its subdivisions. The accrued earnings on investments in the Pool once disbursed on behalf of a designated beneficiary shall be similarly exempt from all taxation by the State of Illinois and its subdivisions, so long as they are used for qualified expenses. Contributions to a College Savings Pool account during the taxable year may be deducted from adjusted gross income as provided in Section 203 of the Illinois Income Tax Act. The provisions of this paragraph are exempt from Section 250 of the Illinois Income Tax Act.

The Treasurer shall adopt rules he or she considers necessary for the efficient administration of the College Savings Pool. The rules shall provide whatever additional parameters and restrictions are necessary to ensure that the College Savings Pool meets all of the requirements for a qualified state tuition program under Section 529 of the Internal Revenue Code (26 U.S.C. 529). The rules shall provide for the administration expenses of the pool to be paid from its earnings and for the investment earnings in excess of the expenses and all moneys collected as penalties to be credited or paid monthly to the several participants in the pool in a manner which equitably reflects the differing amounts of their respective investments in the pool and the differing periods of time for which those amounts were in the custody of the pool. Also, the rules shall require the maintenance of records that enable the Treasurer's office to produce a report for each account in the pool at least annually that documents the account balance and investment earnings. Notice of any proposed amendments to the rules and regulations shall be provided to all participants prior to adoption. Amendments to rules and regulations shall apply only to contributions made after the adoption of the amendment.

Upon creating the College Savings Pool, the State Treasurer shall give bond with 2 or more sufficient sureties, payable to and for the benefit of the participants in the College Savings Pool, in the penal sum of $1,000,000, conditioned upon the faithful discharge of his or her duties in relation to the College Savings Pool.

(Source: P.A. 95-23, eff. 8-3-07; 95-306, eff. 1-1-08; 95-521, eff. 8-28-07; 95-876, eff. 8-21-08.)

Section 10. The Illinois Prepaid Tuition Act is amended by changing Sections 10, 15, 20, 25, 30, 35, 45, 50, and 60 and by adding Section 75 as follows:

(110 ILCS 979/10)

Sec. 10. Definitions. In this Act:

"Illinois public university" means the University of Illinois, Illinois State University, Chicago State University, Governors State University, Southern Illinois University, Northern Illinois University, Eastern Illinois University, Western Illinois University, or Northeastern Illinois University.

"Illinois community college" means a public community college as defined in Section 1-2 of the Public Community College Act.

"Eligible institution" means an institution of higher learning, as defined in Section 10 of the Higher Education Student Assistance Act, whose students are eligible to receive benefits under Section 529(a) of the Internal Revenue Code of 1986, as specified by the federal Small Business Act of 1996 and subsequent amendments to this federal law.

"Illinois prepaid tuition contract" or "contract" means a contract entered into between the State and a Purchaser under Section 45 to provide for the higher education of a qualified beneficiary.

"Illinois prepaid tuition program" or "program" means the program created in Section 15.

"Purchaser" means a person who makes or has contracted to make payments under an Illinois prepaid tuition contract.

"Public institution of higher education" means an Illinois public university or Illinois community college.

"Nonpublic institution of higher education" means any eligible institution, other than a public institution of higher education.

"Qualified beneficiary" means (i) anyone who has been a resident of this State for at least 12 months prior to the date of the contract, or (ii) a nonresident, so long as the purchaser has been a resident of the State for at least 12 months prior to the date of the contract, or (iii) any person less than one year of age whose parent or legal guardian has been a resident of this State for at least 12 months prior to the date of the contract.

"Tuition" means the quarter or semester charges imposed on a qualified beneficiary to attend an eligible institution.

"Mandatory Fees" means those quarter or semester fees imposed upon all students enrolled at an eligible institution.

"Registration Fees" means the charges derived by combining tuition and mandatory fees.

"Contract Unit" means 15 credit hours of instruction at an eligible institution.

"Panel" means the investment advisory panel created under Section 20.

"Commission" means the Illinois Student Assistance Commission.

(Source: P.A. 96-1282, eff. 7-26-10.)

(110 ILCS 979/15)

Sec. 15. Creation of Illinois prepaid tuition program. There is created the Illinois prepaid tuition program to be administered by the Comptroller Illinois Student Assistance Commission. This program is to be administered so that the full cost of tuition and mandatory fees at Illinois public universities and Illinois community colleges may be paid in advance of enrollment through the prior purchase of an Illinois prepaid tuition contract. The Comptroller Commission may enter into contracts as may be necessary to provide for administration of the program and shall develop and implement rules and regulations necessary for the efficient administration of the program.

All reasonable charges incidental to the administration of the program by the Comptroller Commission shall be paid in the initial start-up period for the program's operation from the General Revenue Fund, pursuant to appropriations made for that purpose by the General Assembly. Those charges and expenses in subsequent years shall be paid exclusively from the Illinois Prepaid Tuition Trust Fund established by Section 35 of this Act.

(Source: P.A. 90-546, eff. 12-1-97.)

(110 ILCS 979/20)

Sec. 20. Investment Advisory Panel. The Illinois prepaid tuition program shall be administered by the Comptroller Illinois Student Assistance Commission, with advice and counsel from an investment advisory panel appointed by the Comptroller Commission. The Illinois prepaid tuition program shall be administratively housed within the Comptroller's office Commission, and the investment advisory panel shall have such duties as are specified in this Act.

The investment advisory panel shall consist of 7 members who are appointed by the Comptroller Commission, including one recommended by the State Treasurer, one recommended by the State Comptroller, one recommended by the Director of the Governor's Office of Management and Budget, and one recommended by the Executive Director of the Board of Higher Education. Each panel member shall possess knowledge, skill, and experience in at least one of the following areas of expertise: accounting, actuarial practice, risk management, or investment management. Members shall serve 3-year terms except that, in making the initial appointments, the Comptroller Commission shall appoint 2 members to serve for 2 years, 2 members to serve for 3 years, and 3 members to serve for 4 years. Any person appointed to fill a vacancy on the panel shall be appointed in a like manner and shall serve for only the unexpired term. Investment advisory panel members shall be eligible for reappointment and shall serve until a successor is appointed and confirmed. Panel members shall serve without compensation but shall be reimbursed for expenses. Before being installed as a member of the investment advisory panel, each nominee shall file verified written statements of economic interest with the Secretary of State as required by the Illinois Governmental Ethics Act and with the Board of Ethics as required by Executive Order of the Governor.

The investment advisory panel shall meet at least twice annually. At least once each year the Comptroller Commission Chairman shall designate a time and place at which the investment advisory panel shall meet publicly with the Comptroller Illinois Student Assistance Commission to discuss issues and concerns relating to the Illinois prepaid tuition program.

(Source: P.A. 94-793, eff. 5-19-06.)

(110 ILCS 979/25)

Sec. 25. Additional powers of the Comptroller Commission. The Comptroller Commission has the following specific powers relating to administration of the Illinois prepaid tuition program:

(1) To direct funds to be invested, if not required for immediate disbursement.

(2) To require a reasonable length of State residence for qualified beneficiaries of Illinois prepaid tuition contracts.

(3) To annually restrict the number of participants in any prepaid tuition plan authorized by the Comptroller Commission, provided that any person denied participation solely on the basis of such restriction shall be given priority consideration when opportunities to participate in the plan are offered during the subsequent year.

(4) To appropriately segregate contributions and payments to the Illinois prepaid tuition program into various accounts and funds.

(5) To solicit and accept gifts, grants, loans, and other financial assistance from any appropriate source, and to participate in any other way in any governmental program that will carry out the express purposes of this Section.

(6) To require and collect administrative fees and charges in connection with any transaction and to impose reasonable penalties, including default, for delinquent payments or for entering into an Illinois prepaid tuition contract on a fraudulent basis.

(7) To impose reasonable time limits on use of the Illinois prepaid tuition benefits provided by the program, so long as those limitations are specified within the Illinois prepaid tuition contract.

(8) To indicate the terms and conditions under which Illinois prepaid tuition contracts may be terminated and to impose reasonable fees and charges for such termination, so long as those terms and conditions are specified within the Illinois prepaid tuition contract.

(9) To provide for the receipt of contributions to the program in lump sum or installment payments.

(10) To require that purchasers of Illinois prepaid tuition contracts verify in writing or by any other method acceptable to the Comptroller Commission any requests for contract conversions, substitutions, transfers, cancellations, refund requests, or contract changes of any nature.

(Source: P.A. 90-546, eff. 12-1-97.)

(110 ILCS 979/30)

Sec. 30. Investment Advisory Panel duties and responsibilities.

(a) Advice and review. The panel shall offer advice and counseling regarding the investments of the Illinois prepaid tuition program with the objective of obtaining the best possible return on investments consistent with actuarial soundness of the program. The panel is required to annually review and advise the Comptroller Commission on provisions of the strategic investment plan for the prepaid tuition program. The panel is also charged with reviewing and advising the Comptroller Commission with regard to the annual report that describes the current financial condition of the program. The panel at its own discretion also may advise the Comptroller Commission on other aspects of the program.

(b) Investment plan. The Comptroller Commission annually shall adopt a comprehensive investment plan for purposes of this Section. The comprehensive investment plan shall specify the investment policies to be utilized by the Comptroller Commission in its administration of the Illinois Prepaid Tuition Trust Fund created by Section 35. The Comptroller Commission may direct that assets of those Funds be placed in savings accounts or may use the same to purchase fixed or variable life insurance or annuity contracts, securities, evidence of indebtedness, or other investment products pursuant to the comprehensive investment plan and in such proportions as may be designated or approved under that plan. The Comptroller Commission shall invest such assets with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character with like aims, and the Comptroller Commission shall diversify the investments of such assets so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so. Those insurance, annuity, savings, and investment products shall be underwritten and offered in compliance with applicable federal and State laws, rules, and regulations by persons who are authorized thereunder to provide those services. The Commission shall delegate responsibility for preparing the comprehensive investment plan to the Executive Director of the Commission. Nothing in this Section shall preclude the Comptroller Commission from contracting with a private corporation or institution to provide such services as may be a part of the comprehensive investment plan or as may be deemed necessary for implementation of the comprehensive investment plan, including, but not limited to, providing consolidated billing, individual and collective record keeping and accounting, and asset purchase, control, and safekeeping.

(c) Program management. The Comptroller Commission may not delegate its management functions, but may arrange to compensate for personalized investment advisory services rendered with respect to any or all of the investments under its control an investment advisor registered under Section 8 of the Illinois Securities Law of 1953 or any bank or other entity authorized by law to provide those services. Nothing contained herein shall preclude the Comptroller Commission from subscribing to general investment research services available for purchase or use by others. The Comptroller Commission also shall have authority to compensate for accounting, computing, and other necessary services.

(d) Annual report. The Comptroller Commission shall annually prepare or cause to be prepared a report setting forth in appropriate detail an accounting of all Illinois prepaid tuition program funds and a description of the financial condition of the program at the close of each fiscal year. Included in this report shall be an evaluation by at least one nationally recognized actuary of the financial viability of the program. This report shall be submitted to the Governor, the President of the Senate, the Speaker of the House of Representatives, the Auditor General, and the Board of Higher Education on or before March 1 of the subsequent fiscal year. This report also shall be made available to purchasers of Illinois prepaid tuition contracts and shall contain complete Illinois prepaid tuition contract sales information, including, but not limited to, projected postsecondary enrollment data for qualified beneficiaries.

(e) Marketing plan. Selection of a marketing agent for the Illinois prepaid tuition program must be approved by the Comptroller Commission. At least once every 3 years, the Comptroller Commission shall solicit proposals for marketing of the Illinois prepaid tuition program in accordance with the Illinois Securities Law of 1953 and any applicable provisions of federal law. The entity designated pursuant to this paragraph shall serve as a centralized marketing agent for the program and shall have exclusive responsibility for marketing the program. No contract for marketing the Illinois prepaid tuition program shall extend for longer than 3 years. Any materials produced for the purpose of marketing the program shall be submitted to the Comptroller Executive Director of the Commission for approval before they are made public. Any eligible institution may distribute marketing materials produced for the program, so long as the Comptroller Executive Director of the Commission approves the distribution in advance. Neither the State nor the Comptroller Commission shall be liable for misrepresentation of the program by a marketing agent.

(f) Accounting and audit. The Comptroller Commission shall annually cause to be prepared an accounting of the trust and shall transmit a copy of the accounting to the Governor, the President of the Senate, the Speaker of the House, and the minority leaders of the Senate and House of Representatives. The Comptroller Commission shall also make available this accounting of the trust to any purchaser of an Illinois prepaid tuition contract, upon request. The accounts of the Illinois prepaid tuition program shall be subject to annual audits by the Auditor General or a certified public accountant appointed by the Auditor General.

(Source: P.A. 96-1282, eff. 7-26-10.)

(110 ILCS 979/35)

Sec. 35. Illinois Prepaid Tuition Trust Fund.

(a) The Illinois Prepaid Tuition Trust Fund is created as the repository of all moneys received by the Comptroller Commission in conjunction with the Illinois prepaid tuition program. The Illinois Prepaid Tuition Trust Fund also shall be the official repository of all contributions, appropriations, interest and dividend payments, gifts, or other financial assets received by the Comptroller Commission in connection with operation of the Illinois prepaid tuition program. All such moneys shall be deposited in the Illinois Prepaid Tuition Trust Fund and held by the State Treasurer as ex-officio custodian thereof, outside of the State Treasury, separate and apart from all public moneys or funds of this State.

All interest or other earnings accruing or received on amounts in the Illinois Prepaid Tuition Trust Fund shall be credited to and retained by the Fund. Moneys, interest, or other earnings paid into the Fund shall not be transferred or allocated by the Commission, the State Treasurer, or the State Comptroller to any other fund, nor shall the Governor authorize any such transfer or allocation, while any contracts are outstanding. The State Comptroller shall not offset moneys paid to institutions from the Illinois Prepaid Tuition Trust Fund (unless the Trust Fund moneys are used for child support). In addition, no moneys, interest, or other earnings paid into the Fund shall be used, temporarily or otherwise, for interfund borrowing or be otherwise used or appropriated except as expressly authorized in this Act.

The Illinois Prepaid Tuition Trust Fund and each individual participant account that may be created in that Fund in conjunction with the Illinois prepaid tuition program shall be subject to audit in the same manner as funds and accounts belonging to the State of Illinois and shall be protected by the official bond given by the State Treasurer.

(b) The Comptroller Commission from time to time shall direct the State Treasurer to invest moneys in the Illinois Prepaid Tuition Trust Fund that are not needed for immediate disbursement, in accordance with provisions of the investment plan approved by the Comptroller Commission.

(c) The Comptroller Executive Director of the Commission shall, at such times and in such amounts as shall be necessary, prepare and send to the State Comptroller vouchers requesting payment from the Illinois Prepaid Tuition Trust Fund for: (i) registration fee payments to eligible institutions on behalf of qualified beneficiaries of Illinois prepaid tuition contracts, and (ii) payments associated with administration of the Illinois prepaid tuition program.

(d) The Governor shall indicate in a separate document submitted concurrent with each annual State budget the estimated amount of moneys in the Illinois Prepaid Tuition Trust Fund which shall be necessary and sufficient, during that State fiscal year, to discharge all obligations anticipated under Illinois prepaid tuition contracts. The Governor also shall indicate in a separate document submitted concurrent with each annual State budget the amount of moneys from the Illinois Prepaid Tuition Trust Fund necessary to cover anticipated expenses associated with administration of the program. The Comptroller Commission shall obtain concurrence from a nationally recognized actuary as to all amounts necessary for the program to meet its obligations. These amounts shall be certified annually to the Governor by the Comptroller Commission no later than January 30.

During the first 18 months of operation of the Illinois prepaid tuition program, the Governor shall request an appropriation to the Comptroller Commission from general funds sufficient to pay for start-up costs associated with establishment of the program. This appropriation constitutes a loan that shall be repaid to the General Revenue Fund within 5 years by the Comptroller Commission from prepaid tuition program contributions. Subsequent program administrative costs shall be provided from reasonable fees and charges equitably assessed to purchasers of prepaid tuition contracts.

(e) If the Comptroller Commission determines that there are insufficient moneys in the Illinois Prepaid Tuition Trust Fund to pay contractual obligations in the next succeeding fiscal year, the Comptroller Commission shall certify the amount necessary to meet these obligations to the Board of Higher Education, the Governor, the President of the Senate, and the Speaker of the House of Representatives. The Governor shall submit the amount so certified to the General Assembly as soon as practicable, but no later than the end of the current State fiscal year.

(f) In the event the Comptroller Commission, with the concurrence of the Governor, determines the program to be financially infeasible, the Comptroller Commission may discontinue, prospectively, the operation of the program. Any qualified beneficiary who has been accepted by and is enrolled or will within 5 years enroll at an eligible institution shall be entitled to exercise the complete benefits specified in the Illinois prepaid tuition contract. All other contract holders shall receive an appropriate refund of all contributions and accrued interest up to the time that the program is discontinued.

(Source: P.A. 96-1282, eff. 7-26-10.)

(110 ILCS 979/45)

Sec. 45. Illinois prepaid tuition contracts.

(a) The Comptroller Commission may enter into an Illinois prepaid tuition contract with a purchaser under which the Comptroller Commission contracts on behalf of the State to pay full tuition and mandatory fees at an Illinois public university or Illinois community college for a qualified beneficiary to attend the eligible institution to which the qualified beneficiary is admitted. Each contract shall contain terms, conditions, and provisions that the Comptroller Commission determines to be necessary for ensuring the educational objectives and sustainable financial viability of the Illinois prepaid tuition program.

(b) Each contract shall have one designated purchaser and one designated qualified beneficiary. Unless otherwise specified in the contract, the purchaser owns the contract and retains any tax liability for its assets only until the first distribution of benefits. Contracts shall be purchased in units of 15 credit hours.

(c) Without exception, benefits may be received by a qualified beneficiary of an Illinois prepaid tuition contract no earlier than 3 years from the date the contract is purchased.

(d) A prepaid tuition contract shall contain, but is not limited to, provisions for (i) refunds or withdrawals in certain circumstances, with or without interest or penalties; (ii) conversion of the contract at the time of distribution from accrued prepayment value at one type of eligible institution to the accrued prepayment value at a different type of eligible institution; (iii) portability of the accrued value of the prepayment value for use at an eligible institution located outside this State ; (iv) transferability of the contract benefits within the qualified beneficiary's immediate family; and (v) a specified benefit period during which the contract may be redeemed.

(e) Each Illinois prepaid tuition contract also shall contain, at minimum, all of the following:

(1) The amount of payment or payments and the number of payments required from a purchaser on behalf of a qualified beneficiary.

(2) The terms and conditions under which purchasers shall remit payments, including, but not limited to, the date or dates upon which each payment shall be due.

(3) Provisions for late payment charges and for default.

(4) Provisions for penalty fees payable incident to an authorized withdrawal.

(5) The name, date of birth, and social security number of the qualified beneficiary on whose behalf the contract is drawn and the terms and conditions under which the contract may be transferred to another qualified beneficiary.

(6) The name and social security number of any person who may terminate the contract, together with terms that specify whether the contract may be terminated by the purchaser, the qualified beneficiary, a specific designated person, or any combination of these persons.

(7) The terms and conditions under which a contract may be terminated, the name and social security number of the person entitled to any refund due as a result of the termination of the contract pursuant to those terms and conditions, and the method for determining the amount of a refund.

(8) The time limitations, if any, within which the qualified beneficiary must claim his or her benefits through the program.

(9) Other terms and conditions determined by the Comptroller Commission to be appropriate.

(f) In addition to the contract provisions set forth in subsection (e), each Illinois prepaid tuition contract shall include:

(1) The number of credit hours contracted by the purchaser.

(2) The type of eligible institution and the prepaid tuition plan toward which the credit hours shall be applied.

(3) The explicit contractual obligation of the Comptroller Commission to the qualified beneficiary to provide a specific number of credit hours of undergraduate instruction at an eligible institution, not to exceed the maximum number of credit hours required for the conference of a degree that corresponds to the plan purchased on behalf of the qualified beneficiary.

(g) The Comptroller Commission shall indicate by rule the conditions under which refunds are payable to a contract purchaser. Generally, no refund shall exceed the amount paid into the Illinois Prepaid Tuition Trust Fund by the purchaser. In the event that a contract is converted from a Public University Plan described in subsection (j) of this Section to a Community College Plan described in subsection (k) of this Section, the refund amount shall be reduced by the amount transferred to the Illinois community college on behalf of the qualified beneficiary. Except where the Comptroller Commission may otherwise rule, refunds may exceed the amount paid into the Illinois Prepaid Tuition Trust Fund only under the following circumstances:

(1) If the qualified beneficiary is awarded a grant or scholarship at a public institution of higher education, the terms of which duplicate the benefits included in the Illinois prepaid tuition contract, then moneys paid for the purchase of the contract shall be returned to the purchaser, upon request, in semester installments that coincide with the matriculation by the qualified beneficiary, in an amount equal to the current cost of tuition and mandatory fees at the public institution of higher education where the qualified beneficiary is enrolled.

(1.5) If the qualified beneficiary is awarded a grant or scholarship while enrolled at either an eligible nonpublic institution of higher education or an eligible public or private out-of-state higher education institution, the terms of which duplicate the benefits included in the Illinois prepaid tuition contract, then money paid for the purchase of the contract shall be returned to the purchaser, upon request, in semester installments that coincide with the matriculation by the qualified beneficiary. The amount paid shall not exceed the current average mean-weighted credit hour value of the registration fees purchased under the contract.

(2) In the event of the death or total disability of the qualified beneficiary, moneys paid for the purchase of the Illinois prepaid tuition contract shall be returned to the purchaser together with all accrued earnings.

(3) If an Illinois prepaid tuition contract is converted from a Public University Plan to a Community College Plan, then the amount refunded shall be the value of the original Illinois prepaid tuition contract minus the value of the contract after conversion.

No refund shall be authorized under an Illinois prepaid tuition contract for any semester partially attended but not completed.

The Comptroller Commission, by rule, shall set forth specific procedures for making contract payments in conjunction with grants and scholarships awarded to contract beneficiaries.

Moneys paid into or out of the Illinois Prepaid Tuition Trust Fund by or on behalf of the purchaser or the qualified beneficiary of an Illinois prepaid tuition contract are exempt from all claims of creditors of the purchaser or beneficiary, so long as the contract has not been terminated.

The State or any State agency, county, municipality, or other political subdivision, by contract or collective bargaining agreement, may agree with any employee to remit payments toward the purchase of Illinois prepaid tuition contracts through payroll deductions made by the appropriate officer or officers of the entity making the payments. Such payments shall be held and administered in accordance with this Act.

(h) Nothing in this Act shall be construed as a promise or guarantee that a qualified beneficiary will be admitted to an eligible institution or to a particular eligible institution, will be allowed to continue enrollment at an eligible institution after admission, or will be graduated from an eligible institution.

(i) The Comptroller Commission shall develop and make prepaid tuition contracts available under a minimum of at least 2 independent plans to be known as the Public University Plan and the Community College Plan.

Contracts shall be purchased in units of 15 credit hours at either an Illinois public university or an Illinois community college. The minimum purchase amount per qualified beneficiary shall be one unit or 15 credit hours. The maximum purchase amount shall be 9 units (or 135 credit hours) for the Public University Plan and 4 units (or 60 credit hours) for the Community College Plan.

(j) Public University Plan. Through the Public University Plan, the Illinois prepaid tuition contract shall provide prepaid registration fees, which include full tuition costs as well as mandatory fees, for a specified number of undergraduate credit hours, not to exceed the maximum number of credit hours required for the conference of a baccalaureate degree. In determining the cost of participation in the Public University Plan, the Comptroller Commission shall reference the combined mean-weighted current registration fees from Illinois public universities.

In the event that a qualified beneficiary for whatever reason chooses to attend an Illinois community college, the qualified beneficiary may convert the average number of credit hours required for the conference of an associate degree from the Public University Plan to the Community College Plan and may retain the remaining Public University Plan credit hours or may request a refund for prepaid credit hours in excess of those required for conference of an associate degree. In determining the amount of any refund, the Comptroller Commission also shall recognize the current relative credit hour cost of the 2 plans when making any conversion.

Qualified beneficiaries shall bear the cost of any laboratory or other non-mandatory fees associated with enrollment in specific courses. Qualified beneficiaries who are not Illinois residents shall bear the difference in cost between in-state registration fees guaranteed by the prepaid tuition contract and tuition and other charges assessed upon out-of-state students by the eligible institution.

(k) Community College Plan. Through the Community College Plan, the Illinois prepaid tuition contract shall provide prepaid registration fees, which include full tuition costs as well as mandatory fees, for a specified number of undergraduate credit hours, not to exceed the maximum number of credit hours required for the conference of an associate degree. In determining the cost of participation in the Community College Plan, the Comptroller Commission shall reference the combined mean-weighted current registration fees from all Illinois community colleges.

In the event that a qualified beneficiary for whatever reason chooses to attend an Illinois public university, the qualified beneficiary's prepaid tuition contract shall be converted for use at that Illinois public university by referencing the current average mean-weighted credit hour value of registration fees at Illinois community colleges relative to the corresponding value of registration fees at Illinois public universities.

Qualified beneficiaries shall bear the cost of any laboratory or other non-mandatory fees associated with enrollment in specific courses. Qualified beneficiaries who are not Illinois residents shall bear the difference in cost between in-state registration fees guaranteed by the prepaid tuition contract and tuition and other charges assessed upon out-of-state students by the eligible institution.

(l) A qualified beneficiary may apply the benefits of any Illinois prepaid tuition contract toward a nonpublic institution of higher education. In the event that a qualified beneficiary for whatever reason chooses to attend a nonpublic institution of higher education, the qualified beneficiary's prepaid tuition contract shall be converted for use at that nonpublic institution of higher education by referencing the current average mean-weighted credit hour value of registration fees purchased under the contract. The Comptroller Commission shall transfer, or cause to have transferred, this amount, less a transfer fee, to the nonpublic institution on behalf of the beneficiary. In the event that the cost of registration charged to the beneficiary at the nonpublic institution of higher education is less than the aggregate value of the Illinois prepaid tuition contract, any remaining amount shall be transferred in subsequent semesters until the transfer value is fully depleted.

(m) A qualified beneficiary may apply the benefits of any Illinois prepaid tuition contract toward an eligible out-of-state college or university. Institutional eligibility for out-of-state colleges and universities shall be determined by the Comptroller Commission according to standards substantially equivalent to those for an eligible institution located in this State, as described in the definition of "institution of higher learning" in Section 10 of the Higher Education Student Assistance Act. In the event that a qualified beneficiary for whatever reason chooses to attend an eligible out-of-state college or university, the qualified beneficiary's prepaid tuition contract shall be converted for use at that college or university by referencing the current average mean-weighted credit hour value of registration fees purchased under the contract. The Comptroller Commission shall transfer, or cause to have transferred, this amount, less a transfer fee, to the college or university on behalf of the beneficiary. In the event that the cost of registration charged to the beneficiary at the eligible out-of-state college or university is less than the aggregate value of the Illinois prepaid tuition contract, any remaining amount shall be transferred in subsequent semesters until the transfer value is fully depleted.

(n) Illinois prepaid tuition contracts may be purchased either by lump sum or by installments. No penalty shall be assessed for early payment of installment contracts.

(o) The Comptroller Commission shall annually adjust the price of new contracts, in accordance with the annual changes in registration fees at Illinois public universities and community colleges.

(Source: P.A. 95-217, eff. 8-16-07; 96-1282, eff. 7-26-10.)

(110 ILCS 979/50)

Sec. 50. Confidentiality and disclosure. Information that (i) identifies the purchasers or qualified beneficiaries of any Illinois prepaid tuition contract or any terms or provisions of any such contract as those terms and provisions relate to a particular purchaser or qualified beneficiary, or (ii) discloses any other matter relating to the participation of any such purchaser or qualified beneficiary in the Illinois prepaid tuition program or in any independent plan under which that program is administered, is exempt from inspection, copying, or disclosure under the Freedom of Information Act. The Comptroller Commission may authorize the program's records administrator to release such information to appropriate personnel at the eligible institution at which the beneficiary may enroll or is enrolled or to another state or federal agency, for purposes that the Comptroller Commission deems appropriate, in accordance with applicable state and federal law. However, any such institution or agency to which that information is released shall ensure the continued confidentiality of the information.

(Source: P.A. 96-1282, eff. 7-26-10.)

(110 ILCS 979/60)

Sec. 60. Securities Registration Exemption. Illinois prepaid tuition contracts shall be exempt from registration under the Illinois Securities Law of 1953. However no contract may be sold or otherwise transferred by the purchaser or qualified beneficiary without the prior approval of the Comptroller Commission, except in accordance with the terms explicitly set forth in the contract.

(Source: P.A. 90-546, eff. 12-1-97.)

(110 ILCS 979/75 new)

Sec. 75. Successor agency. For purposes of the Successor Agency Act and Section 9b of the State Finance Act, the office of the Comptroller is the successor to the Illinois Student Assistance Commission for purposes of this Act. The office of the Comptroller succeeds to and assumes all powers, duties, rights, responsibilities, personnel, assets, liabilities, and indebtedness of the Illinois Student Assistance Commission under this Act. Any reference in any law, rule, form, or other document to the Illinois Student Assistance Commission with respect to this Act is deemed to be a reference to the office of the Comptroller.

Section 99. Effective date. This Act takes effect upon becoming law.".