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1 | AN ACT concerning
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The State Treasurer Act is amended by changing | |||||||||||||||||||
5 | Section 16.5 as follows:
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6 | (15 ILCS 505/16.5)
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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.
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15 | "Participant", as used in this Section, means any person | |||||||||||||||||||
16 | who makes
investments in the pool. "Designated beneficiary", as | |||||||||||||||||||
17 | used in this Section,
means any person on whose behalf an | |||||||||||||||||||
18 | account is established in the College
Savings Pool by a | |||||||||||||||||||
19 | participant. Both in-state and out-of-state persons may be
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20 | participants and designated beneficiaries in the College | |||||||||||||||||||
21 | Savings Pool.
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22 | New accounts in the College Savings Pool may
shall be | |||||||||||||||||||
23 | processed through
participating financial institutions. | |||||||||||||||||||
24 | "Participating financial institution",
as used in this | |||||||||||||||||||
25 | Section, means any financial institution insured by the Federal
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26 | Deposit Insurance Corporation and lawfully doing business in | |||||||||||||||||||
27 | the State of
Illinois and any credit union approved by the | |||||||||||||||||||
28 | State Treasurer and lawfully
doing business in the State of | |||||||||||||||||||
29 | Illinois that agrees to process new accounts in
the College | |||||||||||||||||||
30 | Savings Pool. Participating financial institutions may charge | |||||||||||||||||||
31 | a
processing fee to participants to open an account in the pool | |||||||||||||||||||
32 | that shall not
exceed $30 until the year 2001. Beginning in |
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1 | 2001 and every year thereafter,
the maximum fee limit shall be | ||||||
2 | adjusted by the Treasurer based on the Consumer
Price Index for | ||||||
3 | the North Central Region as published by the United States
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4 | Department of Labor, Bureau of Labor Statistics for the | ||||||
5 | immediately preceding
calendar year. Every contribution | ||||||
6 | received by a financial institution for
investment in the | ||||||
7 | College Savings Pool shall be transferred from the financial
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8 | institution to a location selected by the State Treasurer | ||||||
9 | within one business
day following the day that the funds must | ||||||
10 | be made available in accordance with
federal law. All | ||||||
11 | communications from the State Treasurer to participants shall
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12 | reference the participating financial institution at which the | ||||||
13 | account was
processed.
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14 | The Treasurer may invest the moneys in the College Savings | ||||||
15 | Pool in the same
manner, in the same types of investments, and | ||||||
16 | subject to the same limitations
provided for the investment of | ||||||
17 | moneys by the Illinois State Board of
Investment. To enhance | ||||||
18 | the safety and liquidity of the College Savings Pool,
to ensure | ||||||
19 | the diversification of the investment portfolio of the pool, | ||||||
20 | and in
an effort to keep investment dollars in the State of | ||||||
21 | Illinois, the State
Treasurer may
shall make a percentage of | ||||||
22 | each account available for investment in
participating | ||||||
23 | financial institutions doing business in the State. The State
| ||||||
24 | Treasurer may
shall deposit with the participating financial | ||||||
25 | institution at which
the account was processed the following | ||||||
26 | percentage of each account at a
prevailing rate offered by the | ||||||
27 | institution, provided that the deposit is
federally insured or | ||||||
28 | fully collateralized and the institution accepts the
deposit: | ||||||
29 | 10% of the total amount of each account for which the current | ||||||
30 | age of
the beneficiary is less than 7 years of age, 20% of the | ||||||
31 | total amount of each
account for which the beneficiary is at | ||||||
32 | least 7 years of age and less than 12
years of age, and 50% of | ||||||
33 | the total amount of each account for which the current
age of | ||||||
34 | the beneficiary is at least 12 years of age. The State | ||||||
35 | Treasurer shall
adjust each account at least annually to ensure | ||||||
36 | compliance with this Section.
The Treasurer shall develop, |
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1 | publish, and implement an investment policy
covering the | ||||||
2 | investment of the moneys in the College Savings Pool. The | ||||||
3 | policy
shall be published (i) at least once each year in at | ||||||
4 | least one newspaper of
general circulation in both Springfield | ||||||
5 | and Chicago and (ii) each year as part
of the audit of the | ||||||
6 | College Savings Pool by the Auditor General, which shall be
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7 | distributed to all participants. The Treasurer shall notify all | ||||||
8 | participants
in writing, and the Treasurer shall publish in a | ||||||
9 | newspaper of general
circulation in both Chicago and | ||||||
10 | Springfield, any changes to the previously
published | ||||||
11 | investment policy at least 30 calendar days before implementing | ||||||
12 | the
policy. Any investment policy adopted by the Treasurer | ||||||
13 | shall be reviewed and
updated if necessary within 90 days | ||||||
14 | following the date that the State Treasurer
takes office.
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15 | Participants shall be required to use moneys distributed | ||||||
16 | from the College
Savings Pool for qualified expenses at | ||||||
17 | eligible educational institutions.
"Qualified expenses", as | ||||||
18 | used in this Section, means the following: (i)
tuition, fees, | ||||||
19 | and the costs of books, supplies, and equipment required for
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20 | enrollment or attendance at an eligible educational | ||||||
21 | institution and (ii)
certain room and board expenses incurred | ||||||
22 | while attending an eligible
educational institution at least | ||||||
23 | half-time. "Eligible educational
institutions", as used in | ||||||
24 | this Section, means public and private colleges,
junior | ||||||
25 | colleges, graduate schools, and certain vocational | ||||||
26 | institutions that are
described in Section 481 of the Higher | ||||||
27 | Education Act of 1965 (20 U.S.C. 1088)
and that are eligible to | ||||||
28 | participate in Department of Education student aid
programs. A | ||||||
29 | student shall be considered to be enrolled at
least half-time | ||||||
30 | if the student is enrolled for at least half the full-time
| ||||||
31 | academic work load for the course of study the student is | ||||||
32 | pursuing as
determined under the standards of the institution | ||||||
33 | at which the student is
enrolled. Distributions made from the | ||||||
34 | pool for qualified expenses shall be
made directly to the | ||||||
35 | eligible educational institution, directly to a vendor, or
in | ||||||
36 | the form of a check payable to both the beneficiary and the |
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1 | institution or
vendor. Any moneys that are distributed in any | ||||||
2 | other manner or that are used
for expenses other than qualified | ||||||
3 | expenses at an eligible educational
institution shall be | ||||||
4 | subject to a penalty of 10% of the earnings unless the
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5 | beneficiary dies, becomes disabled, or receives a scholarship | ||||||
6 | that equals or
exceeds the distribution. Penalties shall be | ||||||
7 | withheld at the time the
distribution is made.
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8 | The Treasurer shall limit the contributions that may be | ||||||
9 | made on behalf of a
designated beneficiary based on the | ||||||
10 | limitations established by the Internal Revenue Service
an | ||||||
11 | actuarial estimate of what is required to
pay tuition, fees, | ||||||
12 | and room and board for 5 undergraduate years at the highest
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13 | cost eligible educational institution . The contributions made | ||||||
14 | on behalf of a
beneficiary who is also a beneficiary under the | ||||||
15 | Illinois Prepaid Tuition
Program shall be further restricted to | ||||||
16 | ensure that the contributions in both
programs combined do not | ||||||
17 | exceed the limit established for the College Savings
Pool. The | ||||||
18 | Treasurer shall provide the Illinois Student Assistance | ||||||
19 | Commission
each year at a time designated by the Commission, an | ||||||
20 | electronic report of all
participant accounts in the | ||||||
21 | Treasurer's College Savings Pool, listing total
contributions | ||||||
22 | and disbursements from each individual account during the
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23 | previous calendar year. As soon thereafter as is possible | ||||||
24 | following receipt of
the Treasurer's report, the Illinois | ||||||
25 | Student Assistance Commission shall, in
turn, provide the | ||||||
26 | Treasurer with an electronic report listing those College
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27 | Savings Pool participants who also participate in the State's | ||||||
28 | prepaid tuition
program, administered by the Commission. The | ||||||
29 | Commission shall be responsible
for filing any combined tax | ||||||
30 | reports regarding State qualified savings programs
required by | ||||||
31 | the United States Internal Revenue Service. The Treasurer shall
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32 | work with the Illinois Student Assistance Commission to | ||||||
33 | coordinate the
marketing of the College Savings Pool and the | ||||||
34 | Illinois Prepaid Tuition
Program when considered beneficial by | ||||||
35 | the Treasurer and the Director of the
Illinois Student | ||||||
36 | Assistance
Commission. The Treasurer's office shall not |
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1 | publicize or otherwise market the
College Savings Pool or | ||||||
2 | accept any moneys into the College Savings Pool prior
to March | ||||||
3 | 1, 2000. The Treasurer shall provide a separate accounting for | ||||||
4 | each
designated beneficiary to each participant, the Illinois | ||||||
5 | Student Assistance
Commission, and the participating financial | ||||||
6 | institution at which the account
was processed. No interest in | ||||||
7 | the program may be pledged as security for a
loan.
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8 | The assets of the College Savings Pool and its income and | ||||||
9 | operation shall
be exempt from all taxation by the State of | ||||||
10 | Illinois and any of its
subdivisions. The accrued earnings on | ||||||
11 | investments in the Pool once disbursed
on behalf of a | ||||||
12 | designated beneficiary shall be similarly exempt from all
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13 | taxation by the State of Illinois and its subdivisions, so long | ||||||
14 | as they are
used for qualified expenses. Contributions to a | ||||||
15 | College Savings Pool account
during the taxable year may be | ||||||
16 | deducted from adjusted gross income as provided
in Section 203 | ||||||
17 | of the Illinois Income Tax Act. The provisions of this
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18 | paragraph are exempt from Section 250 of the Illinois Income | ||||||
19 | Tax Act.
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20 | The Treasurer shall adopt rules he or she considers | ||||||
21 | necessary for the
efficient administration of the College | ||||||
22 | Savings Pool. The rules shall provide
whatever additional | ||||||
23 | parameters and restrictions are necessary to ensure that
the | ||||||
24 | College Savings Pool meets all of the requirements for a | ||||||
25 | qualified state
tuition program under Section 529 of the | ||||||
26 | Internal Revenue Code (26 U.S.C. 529).
The rules shall provide | ||||||
27 | for the administration expenses of the pool to be paid
from its | ||||||
28 | earnings and for the investment earnings in excess of the | ||||||
29 | expenses and
all moneys collected as penalties to be credited | ||||||
30 | or paid monthly to the several
participants in the pool in a | ||||||
31 | manner which equitably reflects the differing
amounts of their | ||||||
32 | respective investments in the pool and the differing periods
of | ||||||
33 | time for which those amounts were in the custody of the pool. | ||||||
34 | Also, the
rules shall require the maintenance of records that | ||||||
35 | enable the Treasurer's
office to produce a report for each | ||||||
36 | account in the pool at least annually that
documents the |
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1 | account balance and investment earnings. Notice of any proposed
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2 | amendments to the rules and regulations shall be provided to | ||||||
3 | all participants
prior to adoption. Amendments to rules and | ||||||
4 | regulations shall apply only to
contributions made after the | ||||||
5 | adoption of the amendment.
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6 | Upon creating the College Savings Pool, the State Treasurer | ||||||
7 | shall give bond
with 2 or more sufficient sureties, payable to | ||||||
8 | and for the benefit of the
participants in the College Savings | ||||||
9 | Pool, in the penal sum of $1,000,000,
conditioned upon the | ||||||
10 | faithful discharge of his or her duties in relation to
the | ||||||
11 | College Savings Pool.
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12 | No contributions to the College Savings Pool authorized by | ||||||
13 | this Section
shall
be
considered in evaluating the financial | ||||||
14 | situation of the designated beneficiary
or be
deemed a | ||||||
15 | financial resource of or a form of financial aid or assistance | ||||||
16 | to the
designated beneficiary, for purposes of determining | ||||||
17 | eligibility for any
scholarship,
grant, or monetary assistance | ||||||
18 | awarded by the Illinois Student Assistance
Commission,
the | ||||||
19 | State, or any agency thereof; nor shall contributions to the | ||||||
20 | College
Savings Pool
reduce the amount of any scholarship, | ||||||
21 | grant, or monetary assistance that the
designated beneficiary | ||||||
22 | is eligible to be awarded by the Illinois Student
Assistance
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23 | Commission, the State, or any agency thereof in accordance with | ||||||
24 | the provisions
of any
State law.
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25 | (Source: P.A. 91-607, eff. 1-1-00; 91-829, eff. 1-1-01; 92-16, | ||||||
26 | eff. 6-28-01;
92-439, eff. 8-17-01; 92-626, eff. 7-11-02.)
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27 | Section 99. Effective date. This Act takes effect upon | ||||||
28 | becoming law.
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