Full Text of HB0261 097th General Assembly
HB0261 97TH GENERAL ASSEMBLY |
| | 97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012 HB0261 Introduced 01/25/11, by Rep. Linda Chapa LaVia SYNOPSIS AS INTRODUCED: |
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Amends the State Treasurer Act. Requires that the Office of the State Treasurer collect data to produce a report that provides information about participants in the College Savings Pool. Sets forth the requirements for the report. Provides that on December 1, 2012, and each December 1 thereafter, the Office of the State Treasurer must submit the report to the General Assembly and the Governor and make the report available to the public.
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| | | FISCAL NOTE ACT MAY APPLY | |
| | A BILL FOR |
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| 1 | | AN ACT concerning State government.
| 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 changing | 5 | | Section 16.5 as follows:
| 6 | | (15 ILCS 505/16.5)
| 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 State Treasurer, in administering the College Savings
Pool, | 12 | | may 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 | | who has authority to withdraw funds, change the designated | 17 | | beneficiary, or otherwise exercise control over an account. | 18 | | "Donor", as used in this Section, means any person who makes
| 19 | | investments in the pool. "Designated beneficiary", as used in | 20 | | this Section,
means any person on whose behalf an account is | 21 | | established in the College
Savings Pool by a participant. Both | 22 | | in-state and out-of-state persons may be
participants, donors, | 23 | | and designated beneficiaries in the College Savings Pool.
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| 1 | | New accounts in the College Savings Pool may be processed | 2 | | through
participating financial institutions. "Participating | 3 | | financial institution",
as used in this Section, means any | 4 | | financial institution insured by the Federal
Deposit Insurance | 5 | | Corporation and lawfully doing business in the State of
| 6 | | Illinois and any credit union approved by the State Treasurer | 7 | | and lawfully
doing business in the State of Illinois that | 8 | | agrees to process new accounts in
the College Savings Pool. | 9 | | Participating financial institutions may charge a
processing | 10 | | fee to participants to open an account in the pool that shall | 11 | | not
exceed $30 until the year 2001. Beginning in 2001 and every | 12 | | year thereafter,
the maximum fee limit shall be adjusted by the | 13 | | Treasurer based on the Consumer
Price Index for the North | 14 | | Central Region as published by the United States
Department of | 15 | | Labor, Bureau of Labor Statistics for the immediately preceding
| 16 | | calendar year. Every contribution received by a financial | 17 | | institution for
investment in the College Savings Pool shall be | 18 | | transferred from the financial
institution to a location | 19 | | selected by the State Treasurer within one business
day | 20 | | following the day that the funds must be made available in | 21 | | accordance with
federal law. All communications from the State | 22 | | Treasurer to participants and donors shall
reference the | 23 | | participating financial institution at which the account was
| 24 | | processed.
| 25 | | The Treasurer may invest the moneys in the College Savings | 26 | | Pool in the same
manner and in the same types of investments
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| 1 | | provided for the investment of moneys by the Illinois State | 2 | | Board of
Investment. To enhance the safety and liquidity of the | 3 | | College Savings Pool,
to ensure the diversification of the | 4 | | investment portfolio of the pool, and in
an effort to keep | 5 | | investment dollars in the State of Illinois, the State
| 6 | | Treasurer may make a percentage of each account available for | 7 | | investment in
participating financial institutions doing | 8 | | business in the State. The State
Treasurer may deposit with the | 9 | | participating financial institution at which
the account was | 10 | | processed the following percentage of each account at a
| 11 | | prevailing rate offered by the institution, provided that the | 12 | | deposit is
federally insured or fully collateralized and the | 13 | | institution accepts the
deposit: 10% of the total amount of | 14 | | each account for which the current age of
the beneficiary is | 15 | | less than 7 years of age, 20% of the total amount of each
| 16 | | account for which the beneficiary is at least 7 years of age | 17 | | and less than 12
years of age, and 50% of the total amount of | 18 | | each account for which the current
age of the beneficiary is at | 19 | | least 12 years of age.
The Treasurer shall develop, publish, | 20 | | and implement an investment policy
covering the investment of | 21 | | the moneys in the College Savings Pool. The policy
shall be | 22 | | published (i) at least once each year in at least one newspaper | 23 | | of
general circulation in both Springfield and Chicago and (ii) | 24 | | each year as part
of the audit of the College Savings Pool by | 25 | | the Auditor General, which shall be
distributed to all | 26 | | participants. The Treasurer shall notify all participants
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| 1 | | writing, and the Treasurer shall publish in a newspaper of | 2 | | general
circulation in both Chicago and Springfield, any | 3 | | changes to the previously
published investment policy at least | 4 | | 30 calendar days before implementing the
policy. Any investment | 5 | | policy adopted by the Treasurer shall be reviewed and
updated | 6 | | if necessary within 90 days following the date that the State | 7 | | Treasurer
takes office.
| 8 | | Participants shall be required to use moneys distributed | 9 | | from the College
Savings Pool for qualified expenses at | 10 | | eligible educational institutions.
"Qualified expenses", as | 11 | | used in this Section, means the following: (i)
tuition, fees, | 12 | | and the costs of books, supplies, and equipment required for
| 13 | | enrollment or attendance at an eligible educational | 14 | | institution and (ii)
certain room and board expenses incurred | 15 | | while attending an eligible
educational institution at least | 16 | | half-time. "Eligible educational
institutions", as used in | 17 | | this Section, means public and private colleges,
junior | 18 | | colleges, graduate schools, and certain vocational | 19 | | institutions that are
described in Section 481 of the Higher | 20 | | Education Act of 1965 (20 U.S.C. 1088)
and that are eligible to | 21 | | participate in Department of Education student aid
programs. A | 22 | | student shall be considered to be enrolled at
least half-time | 23 | | if the student is enrolled for at least half the full-time
| 24 | | academic work load for the course of study the student is | 25 | | pursuing as
determined under the standards of the institution | 26 | | at which the student is
enrolled. Distributions made from the |
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| 1 | | pool for qualified expenses shall be
made directly to the | 2 | | eligible educational institution, directly to a vendor, or
in | 3 | | the form of a check payable to both the beneficiary and the | 4 | | institution or
vendor. Any moneys that are distributed in any | 5 | | other manner or that are used
for expenses other than qualified | 6 | | expenses at an eligible educational
institution shall be | 7 | | subject to a penalty of 10% of the earnings unless the
| 8 | | beneficiary dies, becomes disabled, or receives a scholarship | 9 | | that equals or
exceeds the distribution. Penalties shall be | 10 | | withheld at the time the
distribution is made.
| 11 | | The Treasurer shall limit the contributions that may be | 12 | | made on behalf of a
designated beneficiary based on the | 13 | | limitations established by the Internal Revenue Service. The | 14 | | contributions made on behalf of a
beneficiary who is also a | 15 | | beneficiary under the Illinois Prepaid Tuition
Program shall be | 16 | | further restricted to ensure that the contributions in both
| 17 | | programs combined do not exceed the limit established for the | 18 | | College Savings
Pool. The Treasurer shall provide the Illinois | 19 | | Student Assistance Commission
each year at a time designated by | 20 | | the Commission, an electronic report of all
participant | 21 | | accounts in the Treasurer's College Savings Pool, listing total
| 22 | | contributions and disbursements from each individual account | 23 | | during the
previous calendar year. As soon thereafter as is | 24 | | possible following receipt of
the Treasurer's report, the | 25 | | Illinois Student Assistance Commission shall, in
turn, provide | 26 | | the Treasurer with an electronic report listing those College
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| 1 | | Savings Pool participants who also participate in the State's | 2 | | prepaid tuition
program, administered by the Commission. The | 3 | | Commission shall be responsible
for filing any combined tax | 4 | | reports regarding State qualified savings programs
required by | 5 | | the United States Internal Revenue Service. The Treasurer shall
| 6 | | work with the Illinois Student Assistance Commission to | 7 | | coordinate the
marketing of the College Savings Pool and the | 8 | | Illinois Prepaid Tuition
Program when considered beneficial by | 9 | | the Treasurer and the Director of the
Illinois Student | 10 | | Assistance
Commission. The Treasurer's office shall not | 11 | | publicize or otherwise market the
College Savings Pool or | 12 | | accept any moneys into the College Savings Pool prior
to March | 13 | | 1, 2000. The Treasurer shall provide a separate accounting for | 14 | | each
designated beneficiary to each participant, the Illinois | 15 | | Student Assistance
Commission, and the participating financial | 16 | | institution at which the account
was processed. No interest in | 17 | | the program may be pledged as security for a
loan. Moneys held | 18 | | in an account invested in the Illinois College Savings Pool | 19 | | shall be exempt from all claims of the creditors of the | 20 | | participant, donor, or designated beneficiary of that account, | 21 | | except for the non-exempt College Savings Pool transfers to or | 22 | | from the account as defined under subsection (j) of Section | 23 | | 12-1001 of the Code of Civil Procedure (735 ILCS 5/12-1001(j)).
| 24 | | The assets of the College Savings Pool and its income and | 25 | | operation shall
be exempt from all taxation by the State of | 26 | | Illinois and any of its
subdivisions. The accrued earnings on |
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| 1 | | investments in the Pool once disbursed
on behalf of a | 2 | | designated beneficiary shall be similarly exempt from all
| 3 | | taxation by the State of Illinois and its subdivisions, so long | 4 | | as they are
used for qualified expenses. Contributions to a | 5 | | College Savings Pool account
during the taxable year may be | 6 | | deducted from adjusted gross income as provided
in Section 203 | 7 | | of the Illinois Income Tax Act. The provisions of this
| 8 | | paragraph are exempt from Section 250 of the Illinois Income | 9 | | Tax Act.
| 10 | | The Treasurer shall adopt rules he or she considers | 11 | | necessary for the
efficient administration of the College | 12 | | Savings Pool. The rules shall provide
whatever additional | 13 | | parameters and restrictions are necessary to ensure that
the | 14 | | College Savings Pool meets all of the requirements for a | 15 | | qualified state
tuition program under Section 529 of the | 16 | | Internal Revenue Code (26 U.S.C. 529).
The rules shall provide | 17 | | for the administration expenses of the pool to be paid
from its | 18 | | earnings and for the investment earnings in excess of the | 19 | | expenses and
all moneys collected as penalties to be credited | 20 | | or paid monthly to the several
participants in the pool in a | 21 | | manner which equitably reflects the differing
amounts of their | 22 | | respective investments in the pool and the differing periods
of | 23 | | time for which those amounts were in the custody of the pool. | 24 | | Also, the
rules shall require the collection of data and | 25 | | maintenance of records that enable the Treasurer's
office to | 26 | | produce a report that provides information concerning |
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| 1 | | participants, including, but not limited to, the following: (i) | 2 | | race and ethnicity, (ii) annual household income, (iii) highest | 3 | | level of education, (iv) how the participant first learned | 4 | | about the program, (v) how the participant intends to finance | 5 | | the program, and (vi) aggregate total number of participants in | 6 | | each county and municipality within the State. On December 1, | 7 | | 2012, and each December 1 thereafter, the Treasurer's office | 8 | | shall issue a report on these findings to the Governor and | 9 | | General Assembly and make the report available to the public | 10 | | for review. The rules shall also require the maintenance of | 11 | | records that enable the Treasurer's office to produce a report | 12 | | for each account in the pool at least annually that
documents | 13 | | the account balance and investment earnings. Notice of any | 14 | | proposed
amendments to the rules and regulations shall be | 15 | | provided to all participants
prior to adoption. Amendments to | 16 | | rules and regulations shall apply only to
contributions made | 17 | | after the adoption of the amendment.
| 18 | | Upon creating the College Savings Pool, the State Treasurer | 19 | | shall give bond
with 2 or more sufficient sureties, payable to | 20 | | and for the benefit of the
participants in the College Savings | 21 | | Pool, in the penal sum of $1,000,000,
conditioned upon the | 22 | | faithful discharge of his or her duties in relation to
the | 23 | | College Savings Pool.
| 24 | | (Source: P.A. 95-23, eff. 8-3-07; 95-306, eff. 1-1-08; 95-521, | 25 | | eff. 8-28-07; 95-876, eff. 8-21-08.)
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