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| [ House Amendment 001 ] |
91_HB0851sam001
LRB9112936TAtmam
1 AMENDMENT TO HOUSE BILL 851
2 AMENDMENT NO. . Amend House Bill 851 by replacing
3 the title with the following:
4 "AN ACT to amend the State Treasurer Act by amending
5 Section 16.5."; and
6 by replacing everything after the enacting clause with the
7 following:
8 "Section 5. The State Treasurer Act is amended by
9 changing Section 16.5 as follows:
10 (15 ILCS 505/16.5)
11 Sec. 16.5. College Savings Pool. The State Treasurer may
12 establish and administer a College Savings Pool to supplement
13 and enhance the investment opportunities otherwise available
14 to persons seeking to finance the costs of higher education.
15 The State Treasurer, in administering the College Savings
16 Pool, may receive moneys paid into the pool by a participant
17 and may serve as the fiscal agent of that participant for the
18 purpose of holding and investing those moneys.
19 "Participant", as used in this Section, means any person
20 that makes investments in the pool. "Designated beneficiary",
21 as used in this Section, means any person on whose behalf an
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1 account is established in the College Savings Pool by a
2 participant. Both in-state and out-of-state persons may be
3 participants and designated beneficiaries in the College
4 Savings Pool.
5 New accounts in the College Savings Pool shall be
6 processed through participating financial institutions.
7 "Participating financial institution", as used in this
8 Section, means any financial institution insured by the
9 Federal Deposit Insurance Corporation and lawfully doing
10 business in the State of Illinois and any credit union
11 approved by the State Treasurer and lawfully doing business
12 in the State of Illinois that agrees to process new accounts
13 in the College Savings Pool. Participating financial
14 institutions may charge a processing fee to participants to
15 open an account in the pool that shall not exceed $30 until
16 the year 2001. Beginning in 2001 and every year thereafter,
17 the maximum fee limit shall be adjusted by the Treasurer
18 based on the Consumer Price Index for the North Central
19 Region as published by the United States Department of Labor,
20 Bureau of Labor Statistics for the immediately preceding
21 calendar year. Every contribution received by a financial
22 institution for investment in the College Savings Pool shall
23 be transferred from the financial institution to a location
24 selected by the State Treasurer within one business day
25 following the day that the funds must be made available in
26 accordance with federal law. All communications from the
27 State Treasurer to participants shall reference the
28 participating financial institution at which the account was
29 processed.
30 The Treasurer may invest the moneys in the College
31 Savings Pool in the same manner, in the same types of
32 investments, and subject to the same limitations provided for
33 the investment of moneys by the Illinois State Board of
34 Investment. To enhance the safety and liquidity of the
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1 College Savings Pool, to ensure the diversification of the
2 investment portfolio of the pool, and in an effort to keep
3 investment dollars in the State of Illinois, the State
4 Treasurer shall make a percentage of each account available
5 for investment in participating financial institutions doing
6 business in the State. The State Treasurer shall deposit
7 with the participating financial institution at which the
8 account was processed the following percentage of each
9 account at a prevailing rate offered by the institution,
10 provided that the deposit is federally insured or fully
11 collateralized and the institution accepts the deposit: 10%
12 of the total amount of each account for which the current age
13 of the beneficiary is less than 7 years of age, 20% of the
14 total amount of each account for which the beneficiary is at
15 least 7 years of age and less than 12 years of age, and 50%
16 of the total amount of each account for which the current age
17 of the beneficiary is at least 12 years of age. The State
18 Treasurer shall adjust each account at least annually to
19 ensure compliance with this Section. The Treasurer shall
20 develop, publish, and implement an investment policy covering
21 the investment of the moneys in the College Savings Pool. The
22 policy shall be published (i) at least once each year in at
23 least one newspaper of general circulation in both
24 Springfield and Chicago and (ii) each year as part of the
25 audit of the College Savings Pool by the Auditor General,
26 which shall be distributed to all participants. The Treasurer
27 shall notify all participants in writing, and the Treasurer
28 shall publish in a newspaper of general circulation in both
29 Chicago and Springfield, any changes to the previously
30 published investment policy at least 30 calendar days before
31 implementing the policy. Any investment policy adopted by the
32 Treasurer shall be reviewed and updated if necessary within
33 90 days following the date that the State Treasurer takes
34 office.
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1 Participants shall be required to use moneys distributed
2 from the College Savings Pool for qualified expenses at
3 eligible educational institutions. "Qualified expenses", as
4 used in this Section, means the following: (i) tuition, fees,
5 and the costs of books, supplies, and equipment required for
6 enrollment or attendance at an eligible educational
7 institution and (ii) certain room and board expenses incurred
8 while attending an eligible educational institution at least
9 half-time. "Eligible educational institutions", as used in
10 this Section, means public and private colleges, junior
11 colleges, graduate schools, and certain vocational
12 institutions that are described in Section 481 of the Higher
13 Education Act of 1965 (20 U.S.C. 1088) and that are eligible
14 to participate in Department of Education student aid
15 programs. A student shall be considered to be enrolled at
16 least half-time if the student is enrolled for at least half
17 the full-time academic work load for the course of study the
18 student is pursuing as determined under the standards of the
19 institution at which the student is enrolled. Distributions
20 made from the pool for qualified expenses shall be made
21 directly to the eligible educational institution, directly to
22 a vendor, or in the form of a check payable to both the
23 beneficiary and the institution or vendor, or directly to the
24 designated beneficiary in a manner that is permissible under
25 Section 529 of the Internal Revenue Code. Any moneys that are
26 distributed in any other manner or that are used for expenses
27 other than qualified expenses at an eligible educational
28 institution shall be subject to a penalty of 10% of the
29 earnings unless the beneficiary dies, becomes disabled, or
30 receives a scholarship that equals or exceeds the
31 distribution. Penalties shall be withheld at the time the
32 distribution is made.
33 The Treasurer shall limit the contributions that may be
34 made on behalf of a designated beneficiary based on an
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1 actuarial estimate of what is required to pay tuition, fees,
2 and room and board for 5 undergraduate years at the highest
3 cost eligible educational institution. The contributions made
4 on behalf of a beneficiary who is also a beneficiary under
5 the Illinois Prepaid Tuition Program shall be further
6 restricted to ensure that the contributions in both programs
7 combined do not exceed the limit established for the College
8 Savings Pool. The Treasurer shall provide the Illinois
9 Student Assistance Commission each year at a time designated
10 by the Commission, an electronic report of all participant
11 accounts in the Treasurer's College Savings Pool, listing
12 total contributions and disbursements from each individual
13 account during the previous calendar year. As soon
14 thereafter as is possible following receipt of the
15 Treasurer's report, the Illinois Student Assistance
16 Commission shall, in turn, provide the Treasurer with an
17 electronic report listing those College Savings Pool
18 participants who also participate in the State's prepaid
19 tuition program, administered by the Commission. The
20 Commission shall be responsible for filing any combined tax
21 reports regarding State qualified savings programs required
22 by the United States Internal Revenue Service. The Treasurer
23 shall work with the Illinois Student Assistance Commission to
24 coordinate the marketing of the College Savings Pool and the
25 Illinois Prepaid Tuition Program when considered beneficial
26 by the Treasurer and the Director of the Illinois Student
27 Assistance Commission. The Treasurer's office shall not
28 publicize or otherwise market the College Savings Pool or
29 accept any moneys into the College Savings Pool prior to
30 March 1, 2000. The Treasurer shall provide a separate
31 accounting for each designated beneficiary to each
32 participant, the Illinois Student Assistance Commission, and
33 the participating financial institution at which the account
34 was processed. No interest in the program may be pledged as
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1 security for a loan.
2 The assets of the College Savings Pool and its income and
3 operation shall be exempt from all taxation by the State of
4 Illinois and any of its subdivisions. The accrued earnings
5 on investments in the Pool once disbursed on behalf of a
6 designated beneficiary shall be similarly exempt from all
7 taxation by the State of Illinois and its subdivisions, so
8 long as they are used for qualified expenses. The provisions
9 of this paragraph are exempt from Section 250 of the Illinois
10 Income Tax Act.
11 The Treasurer shall adopt rules he or she considers
12 necessary for the efficient administration of the College
13 Savings Pool. The rules shall provide whatever additional
14 parameters and restrictions are necessary to ensure that the
15 College Savings Pool meets all of the requirements for a
16 qualified state tuition program under Section 529 of the
17 Internal Revenue Code (26 U.S.C. 529 52). The rules shall
18 provide for the administration expenses of the pool to be
19 paid from its earnings and for the investment earnings in
20 excess of the expenses and all moneys collected as penalties
21 to be credited or paid monthly to the several participants in
22 the pool in a manner which equitably reflects the differing
23 amounts of their respective investments in the pool and the
24 differing periods of time for which those amounts were in the
25 custody of the pool. Also, the rules shall require the
26 maintenance of records that enable the Treasurer's office to
27 produce a report for each account in the pool at least
28 annually that documents the account balance and investment
29 earnings. Notice of any proposed amendments to the rules and
30 regulations shall be provided to all participants prior to
31 adoption. Amendments to rules and regulations shall apply
32 only to contributions made after the adoption of the
33 amendment.
34 Upon creating the College Savings Pool, the State
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1 Treasurer shall give bond with 2 or more sufficient sureties,
2 payable to and for the benefit of the participants in the
3 College Savings Pool, in the penal sum of $1,000,000,
4 conditioned upon the faithful discharge of his or her duties
5 in relation to the College Savings Pool.
6 (Source: P.A. 91-607, eff. 1-1-00; 91-829, eff. 1-1-01;
7 revised 7-3-00.)
8 Section 99. Effective date. This Act takes effect upon
9 becoming law.".