SB0535sam001 101ST GENERAL ASSEMBLY

Sen. Scott M. Bennett

Filed: 5/9/2019

10100SB0535sam001 LRB101 04296 AXK 60483 a

AMENDMENT TO SENATE BILL 535

AMENDMENT NO. ______. Amend Senate Bill 535 by replacing everything after the enacting clause with the following:

"Section 5. The Illinois Prepaid Tuition Act is amended by changing Sections 30 and 35 as follows:

(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 Commission on provisions of the strategic investment plan for the prepaid tuition program. The panel is also charged with reviewing and advising the 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 Commission on other aspects of the program.

(b) Investment plan. The 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 Commission in its administration of the Illinois Prepaid Tuition Trust Fund created by Section 35. The 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 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 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 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.

(b-5) Investment duties. Beginning January 1, 2015, with respect to any investments for which it is responsible under this Section or any other law, the Commission shall be subject to the same requirements as are imposed upon the board of trustees of a retirement system under subsections (5) and (9) of Section 1-109.1 of the Illinois Pension Code and Section Sections 1-109.1(5.1), 1-109.1(9), and 1-113.21 of the Illinois Pension Code, to the extent that those requirements are not in direct conflict with any other requirement of law to which the Commission is subject.

(c) Program management. The 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 Commission from subscribing to general investment research services available for purchase or use by others. The Commission also shall have authority to compensate for accounting, computing, and other necessary services.

(d) Annual report. The 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 Commission. At least once every 3 years, the 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 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 Executive Director of the Commission approves the distribution in advance. Neither the State nor the Commission shall be liable for misrepresentation of the program by a marketing agent.

(f) Accounting and audit. The 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 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. 98-1022, eff. 1-1-15.)

(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 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 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 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 Commission.

(c) The 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 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 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 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 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 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 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) (Blank). In the event the Commission, with the concurrence of the Governor, determines the program to be financially infeasible, the 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.

(g) If moneys in the Illinois Prepaid Tuition Trust Fund are insufficient to cover obligations under this Section, this subsection shall constitute an irrevocable and continuing appropriation from the General Revenue Fund to the Commission for the purposes of paying obligations in accordance with the provisions of this Section. The full faith and credit of the State of Illinois is pledged for the punctual payment of such obligations.

(h) Notwithstanding any other provision of this Act to the contrary, beginning on the effective date of this amendatory Act of the 101st General Assembly, no new Illinois prepaid tuition contracts under this Act may be made available for purchase.

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