Illinois General Assembly - Full Text of HB6578
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Full Text of HB6578  99th General Assembly




State of Illinois
2015 and 2016


Introduced , by Rep. Jay Hoffman


20 ILCS 1605/2  from Ch. 120, par. 1152
20 ILCS 1605/9.1
20 ILCS 1605/20  from Ch. 120, par. 1170
20 ILCS 1605/21.10 new
30 ILCS 105/5.875 new

    Amends the Illinois Lottery Law. Requires the Department of the Lottery to offer a special instant scratch-off game for the treatment, education, and prevention of epilepsy. Requires the net revenue from that game to be deposited into the Overcoming Epilepsy Fund. Provides that moneys deposited into the Overcoming Epilepsy Fund shall be used by the Department of Public Health for the purpose of making grants to organizations in Illinois that participate in the treatment, education, and prevention of epilepsy. Authorizes the Department to adopt rules necessary to implement and administer the game. Amends the State Finance Act to create the Overcoming Epilepsy Fund as a special fund in the State treasury. Effective immediately.

LRB099 21791 AMC 48515 b






HB6578LRB099 21791 AMC 48515 b

1    AN ACT concerning State government.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Lottery Law is amended by changing
5Sections 2, 9.1, and 20 and by adding Section 21.10 as follows:
6    (20 ILCS 1605/2)  (from Ch. 120, par. 1152)
7    Sec. 2. This Act is enacted to implement and establish
8within the State a lottery to be conducted by the State through
9the Department. The entire net proceeds of the Lottery are to
10be used for the support of the State's Common School Fund,
11except as provided in subsection (o) of Section 9.1 and
12Sections 21.2, 21.5, 21.6, 21.7, 21.8, and 21.9, and 21.10. The
13General Assembly finds that it is in the public interest for
14the Department to conduct the functions of the Lottery with the
15assistance of a private manager under a management agreement
16overseen by the Department. The Department shall be accountable
17to the General Assembly and the people of the State through a
18comprehensive system of regulation, audits, reports, and
19enduring operational oversight. The Department's ongoing
20conduct of the Lottery through a management agreement with a
21private manager shall act to promote and ensure the integrity,
22security, honesty, and fairness of the Lottery's operation and
23administration. It is the intent of the General Assembly that



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1the Department shall conduct the Lottery with the assistance of
2a private manager under a management agreement at all times in
3a manner consistent with 18 U.S.C. 1307(a)(1), 1307(b)(1),
5(Source: P.A. 98-649, eff. 6-16-14.)
6    (20 ILCS 1605/9.1)
7    Sec. 9.1. Private manager and management agreement.
8    (a) As used in this Section:
9    "Offeror" means a person or group of persons that responds
10to a request for qualifications under this Section.
11    "Request for qualifications" means all materials and
12documents prepared by the Department to solicit the following
13from offerors:
14        (1) Statements of qualifications.
15        (2) Proposals to enter into a management agreement,
16    including the identity of any prospective vendor or vendors
17    that the offeror intends to initially engage to assist the
18    offeror in performing its obligations under the management
19    agreement.
20    "Final offer" means the last proposal submitted by an
21offeror in response to the request for qualifications,
22including the identity of any prospective vendor or vendors
23that the offeror intends to initially engage to assist the
24offeror in performing its obligations under the management



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1    "Final offeror" means the offeror ultimately selected by
2the Governor to be the private manager for the Lottery under
3subsection (h) of this Section.
4    (b) By September 15, 2010, the Governor shall select a
5private manager for the total management of the Lottery with
6integrated functions, such as lottery game design, supply of
7goods and services, and advertising and as specified in this
9    (c) Pursuant to the terms of this subsection, the
10Department shall endeavor to expeditiously terminate the
11existing contracts in support of the Lottery in effect on the
12effective date of this amendatory Act of the 96th General
13Assembly in connection with the selection of the private
14manager. As part of its obligation to terminate these contracts
15and select the private manager, the Department shall establish
16a mutually agreeable timetable to transfer the functions of
17existing contractors to the private manager so that existing
18Lottery operations are not materially diminished or impaired
19during the transition. To that end, the Department shall do the
21        (1) where such contracts contain a provision
22    authorizing termination upon notice, the Department shall
23    provide notice of termination to occur upon the mutually
24    agreed timetable for transfer of functions;
25        (2) upon the expiration of any initial term or renewal
26    term of the current Lottery contracts, the Department shall



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1    not renew such contract for a term extending beyond the
2    mutually agreed timetable for transfer of functions; or
3        (3) in the event any current contract provides for
4    termination of that contract upon the implementation of a
5    contract with the private manager, the Department shall
6    perform all necessary actions to terminate the contract on
7    the date that coincides with the mutually agreed timetable
8    for transfer of functions.
9    If the contracts to support the current operation of the
10Lottery in effect on the effective date of this amendatory Act
11of the 96th General Assembly are not subject to termination as
12provided for in this subsection (c), then the Department may
13include a provision in the contract with the private manager
14specifying a mutually agreeable methodology for incorporation.
15    (c-5) The Department shall include provisions in the
16management agreement whereby the private manager shall, for a
17fee, and pursuant to a contract negotiated with the Department
18(the "Employee Use Contract"), utilize the services of current
19Department employees to assist in the administration and
20operation of the Lottery. The Department shall be the employer
21of all such bargaining unit employees assigned to perform such
22work for the private manager, and such employees shall be State
23employees, as defined by the Personnel Code. Department
24employees shall operate under the same employment policies,
25rules, regulations, and procedures, as other employees of the
26Department. In addition, neither historical representation



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1rights under the Illinois Public Labor Relations Act, nor
2existing collective bargaining agreements, shall be disturbed
3by the management agreement with the private manager for the
4management of the Lottery.
5    (d) The management agreement with the private manager shall
6include all of the following:
7        (1) A term not to exceed 10 years, including any
8    renewals.
9        (2) A provision specifying that the Department:
10            (A) shall exercise actual control over all
11        significant business decisions;
12            (A-5) has the authority to direct or countermand
13        operating decisions by the private manager at any time;
14            (B) has ready access at any time to information
15        regarding Lottery operations;
16            (C) has the right to demand and receive information
17        from the private manager concerning any aspect of the
18        Lottery operations at any time; and
19            (D) retains ownership of all trade names,
20        trademarks, and intellectual property associated with
21        the Lottery.
22        (3) A provision imposing an affirmative duty on the
23    private manager to provide the Department with material
24    information and with any information the private manager
25    reasonably believes the Department would want to know to
26    enable the Department to conduct the Lottery.



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1        (4) A provision requiring the private manager to
2    provide the Department with advance notice of any operating
3    decision that bears significantly on the public interest,
4    including, but not limited to, decisions on the kinds of
5    games to be offered to the public and decisions affecting
6    the relative risk and reward of the games being offered, so
7    the Department has a reasonable opportunity to evaluate and
8    countermand that decision.
9        (5) A provision providing for compensation of the
10    private manager that may consist of, among other things, a
11    fee for services and a performance based bonus as
12    consideration for managing the Lottery, including terms
13    that may provide the private manager with an increase in
14    compensation if Lottery revenues grow by a specified
15    percentage in a given year.
16        (6) (Blank).
17        (7) A provision requiring the deposit of all Lottery
18    proceeds to be deposited into the State Lottery Fund except
19    as otherwise provided in Section 20 of this Act.
20        (8) A provision requiring the private manager to locate
21    its principal office within the State.
22        (8-5) A provision encouraging that at least 20% of the
23    cost of contracts entered into for goods and services by
24    the private manager in connection with its management of
25    the Lottery, other than contracts with sales agents or
26    technical advisors, be awarded to businesses that are a



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1    minority owned business, a female owned business, or a
2    business owned by a person with disability, as those terms
3    are defined in the Business Enterprise for Minorities,
4    Females, and Persons with Disabilities Act.
5        (9) A requirement that so long as the private manager
6    complies with all the conditions of the agreement under the
7    oversight of the Department, the private manager shall have
8    the following duties and obligations with respect to the
9    management of the Lottery:
10            (A) The right to use equipment and other assets
11        used in the operation of the Lottery.
12            (B) The rights and obligations under contracts
13        with retailers and vendors.
14            (C) The implementation of a comprehensive security
15        program by the private manager.
16            (D) The implementation of a comprehensive system
17        of internal audits.
18            (E) The implementation of a program by the private
19        manager to curb compulsive gambling by persons playing
20        the Lottery.
21            (F) A system for determining (i) the type of
22        Lottery games, (ii) the method of selecting winning
23        tickets, (iii) the manner of payment of prizes to
24        holders of winning tickets, (iv) the frequency of
25        drawings of winning tickets, (v) the method to be used
26        in selling tickets, (vi) a system for verifying the



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1        validity of tickets claimed to be winning tickets,
2        (vii) the basis upon which retailer commissions are
3        established by the manager, and (viii) minimum
4        payouts.
5        (10) A requirement that advertising and promotion must
6    be consistent with Section 7.8a of this Act.
7        (11) A requirement that the private manager market the
8    Lottery to those residents who are new, infrequent, or
9    lapsed players of the Lottery, especially those who are
10    most likely to make regular purchases on the Internet as
11    permitted by law.
12        (12) A code of ethics for the private manager's
13    officers and employees.
14        (13) A requirement that the Department monitor and
15    oversee the private manager's practices and take action
16    that the Department considers appropriate to ensure that
17    the private manager is in compliance with the terms of the
18    management agreement, while allowing the manager, unless
19    specifically prohibited by law or the management
20    agreement, to negotiate and sign its own contracts with
21    vendors.
22        (14) A provision requiring the private manager to
23    periodically file, at least on an annual basis, appropriate
24    financial statements in a form and manner acceptable to the
25    Department.
26        (15) Cash reserves requirements.



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1        (16) Procedural requirements for obtaining the prior
2    approval of the Department when a management agreement or
3    an interest in a management agreement is sold, assigned,
4    transferred, or pledged as collateral to secure financing.
5        (17) Grounds for the termination of the management
6    agreement by the Department or the private manager.
7        (18) Procedures for amendment of the agreement.
8        (19) A provision requiring the private manager to
9    engage in an open and competitive bidding process for any
10    procurement having a cost in excess of $50,000 that is not
11    a part of the private manager's final offer. The process
12    shall favor the selection of a vendor deemed to have
13    submitted a proposal that provides the Lottery with the
14    best overall value. The process shall not be subject to the
15    provisions of the Illinois Procurement Code, unless
16    specifically required by the management agreement.
17        (20) The transition of rights and obligations,
18    including any associated equipment or other assets used in
19    the operation of the Lottery, from the manager to any
20    successor manager of the lottery, including the
21    Department, following the termination of or foreclosure
22    upon the management agreement.
23        (21) Right of use of copyrights, trademarks, and
24    service marks held by the Department in the name of the
25    State. The agreement must provide that any use of them by
26    the manager shall only be for the purpose of fulfilling its



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1    obligations under the management agreement during the term
2    of the agreement.
3        (22) The disclosure of any information requested by the
4    Department to enable it to comply with the reporting
5    requirements and information requests provided for under
6    subsection (p) of this Section.
7    (e) Notwithstanding any other law to the contrary, the
8Department shall select a private manager through a competitive
9request for qualifications process consistent with Section
1020-35 of the Illinois Procurement Code, which shall take into
12        (1) the offeror's ability to market the Lottery to
13    those residents who are new, infrequent, or lapsed players
14    of the Lottery, especially those who are most likely to
15    make regular purchases on the Internet;
16        (2) the offeror's ability to address the State's
17    concern with the social effects of gambling on those who
18    can least afford to do so;
19        (3) the offeror's ability to provide the most
20    successful management of the Lottery for the benefit of the
21    people of the State based on current and past business
22    practices or plans of the offeror; and
23        (4) the offeror's poor or inadequate past performance
24    in servicing, equipping, operating or managing a lottery on
25    behalf of Illinois, another State or foreign government and
26    attracting persons who are not currently regular players of



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1    a lottery.
2    (f) The Department may retain the services of an advisor or
3advisors with significant experience in financial services or
4the management, operation, and procurement of goods, services,
5and equipment for a government-run lottery to assist in the
6preparation of the terms of the request for qualifications and
7selection of the private manager. Any prospective advisor
8seeking to provide services under this subsection (f) shall
9disclose any material business or financial relationship
10during the past 3 years with any potential offeror, or with a
11contractor or subcontractor presently providing goods,
12services, or equipment to the Department to support the
13Lottery. The Department shall evaluate the material business or
14financial relationship of each prospective advisor. The
15Department shall not select any prospective advisor with a
16substantial business or financial relationship that the
17Department deems to impair the objectivity of the services to
18be provided by the prospective advisor. During the course of
19the advisor's engagement by the Department, and for a period of
20one year thereafter, the advisor shall not enter into any
21business or financial relationship with any offeror or any
22vendor identified to assist an offeror in performing its
23obligations under the management agreement. Any advisor
24retained by the Department shall be disqualified from being an
25offeror. The Department shall not include terms in the request
26for qualifications that provide a material advantage whether



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1directly or indirectly to any potential offeror, or any
2contractor or subcontractor presently providing goods,
3services, or equipment to the Department to support the
4Lottery, including terms contained in previous responses to
5requests for proposals or qualifications submitted to
6Illinois, another State or foreign government when those terms
7are uniquely associated with a particular potential offeror,
8contractor, or subcontractor. The request for proposals
9offered by the Department on December 22, 2008 as
10"LOT08GAMESYS" and reference number "22016176" is declared
12    (g) The Department shall select at least 2 offerors as
13finalists to potentially serve as the private manager no later
14than August 9, 2010. Upon making preliminary selections, the
15Department shall schedule a public hearing on the finalists'
16proposals and provide public notice of the hearing at least 7
17calendar days before the hearing. The notice must include all
18of the following:
19        (1) The date, time, and place of the hearing.
20        (2) The subject matter of the hearing.
21        (3) A brief description of the management agreement to
22    be awarded.
23        (4) The identity of the offerors that have been
24    selected as finalists to serve as the private manager.
25        (5) The address and telephone number of the Department.
26    (h) At the public hearing, the Department shall (i) provide



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1sufficient time for each finalist to present and explain its
2proposal to the Department and the Governor or the Governor's
3designee, including an opportunity to respond to questions
4posed by the Department, Governor, or designee and (ii) allow
5the public and non-selected offerors to comment on the
6presentations. The Governor or a designee shall attend the
7public hearing. After the public hearing, the Department shall
8have 14 calendar days to recommend to the Governor whether a
9management agreement should be entered into with a particular
10finalist. After reviewing the Department's recommendation, the
11Governor may accept or reject the Department's recommendation,
12and shall select a final offeror as the private manager by
13publication of a notice in the Illinois Procurement Bulletin on
14or before September 15, 2010. The Governor shall include in the
15notice a detailed explanation and the reasons why the final
16offeror is superior to other offerors and will provide
17management services in a manner that best achieves the
18objectives of this Section. The Governor shall also sign the
19management agreement with the private manager.
20    (i) Any action to contest the private manager selected by
21the Governor under this Section must be brought within 7
22calendar days after the publication of the notice of the
23designation of the private manager as provided in subsection
24(h) of this Section.
25    (j) The Lottery shall remain, for so long as a private
26manager manages the Lottery in accordance with provisions of



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1this Act, a Lottery conducted by the State, and the State shall
2not be authorized to sell or transfer the Lottery to a third
4    (k) Any tangible personal property used exclusively in
5connection with the lottery that is owned by the Department and
6leased to the private manager shall be owned by the Department
7in the name of the State and shall be considered to be public
8property devoted to an essential public and governmental
10    (l) The Department may exercise any of its powers under
11this Section or any other law as necessary or desirable for the
12execution of the Department's powers under this Section.
13    (m) Neither this Section nor any management agreement
14entered into under this Section prohibits the General Assembly
15from authorizing forms of gambling that are not in direct
16competition with the Lottery.
17    (n) The private manager shall be subject to a complete
18investigation in the third, seventh, and tenth years of the
19agreement (if the agreement is for a 10-year term) by the
20Department in cooperation with the Auditor General to determine
21whether the private manager has complied with this Section and
22the management agreement. The private manager shall bear the
23cost of an investigation or reinvestigation of the private
24manager under this subsection.
25    (o) The powers conferred by this Section are in addition
26and supplemental to the powers conferred by any other law. If



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1any other law or rule is inconsistent with this Section,
2including, but not limited to, provisions of the Illinois
3Procurement Code, then this Section controls as to any
4management agreement entered into under this Section. This
5Section and any rules adopted under this Section contain full
6and complete authority for a management agreement between the
7Department and a private manager. No law, procedure,
8proceeding, publication, notice, consent, approval, order, or
9act by the Department or any other officer, Department, agency,
10or instrumentality of the State or any political subdivision is
11required for the Department to enter into a management
12agreement under this Section. This Section contains full and
13complete authority for the Department to approve any contracts
14entered into by a private manager with a vendor providing
15goods, services, or both goods and services to the private
16manager under the terms of the management agreement, including
17subcontractors of such vendors.
18    Upon receipt of a written request from the Chief
19Procurement Officer, the Department shall provide to the Chief
20Procurement Officer a complete and un-redacted copy of the
21management agreement or any contract that is subject to the
22Department's approval authority under this subsection (o). The
23Department shall provide a copy of the agreement or contract to
24the Chief Procurement Officer in the time specified by the
25Chief Procurement Officer in his or her written request, but no
26later than 5 business days after the request is received by the



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1Department. The Chief Procurement Officer must retain any
2portions of the management agreement or of any contract
3designated by the Department as confidential, proprietary, or
4trade secret information in complete confidence pursuant to
5subsection (g) of Section 7 of the Freedom of Information Act.
6The Department shall also provide the Chief Procurement Officer
7with reasonable advance written notice of any contract that is
8pending Department approval.
9    Notwithstanding any other provision of this Section to the
10contrary, the Chief Procurement Officer shall adopt
11administrative rules, including emergency rules, to establish
12a procurement process to select a successor private manager if
13a private management agreement has been terminated. The
14selection process shall at a minimum take into account the
15criteria set forth in items (1) through (4) of subsection (e)
16of this Section and may include provisions consistent with
17subsections (f), (g), (h), and (i) of this Section. The Chief
18Procurement Officer shall also implement and administer the
19adopted selection process upon the termination of a private
20management agreement. The Department, after the Chief
21Procurement Officer certifies that the procurement process has
22been followed in accordance with the rules adopted under this
23subsection (o), shall select a final offeror as the private
24manager and sign the management agreement with the private
26    Except as provided in Sections 21.2, 21.5, 21.6, 21.7,



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121.8, and 21.9, and 21.10, the Department shall distribute all
2proceeds of lottery tickets and shares sold in the following
3priority and manner:
4        (1) The payment of prizes and retailer bonuses.
5        (2) The payment of costs incurred in the operation and
6    administration of the Lottery, including the payment of
7    sums due to the private manager under the management
8    agreement with the Department.
9        (3) On the last day of each month or as soon thereafter
10    as possible, the State Comptroller shall direct and the
11    State Treasurer shall transfer from the State Lottery Fund
12    to the Common School Fund an amount that is equal to the
13    proceeds transferred in the corresponding month of fiscal
14    year 2009, as adjusted for inflation, to the Common School
15    Fund.
16        (4) On or before the last day of each fiscal year,
17    deposit any remaining proceeds, subject to payments under
18    items (1), (2), and (3) into the Capital Projects Fund each
19    fiscal year.
20    (p) The Department shall be subject to the following
21reporting and information request requirements:
22        (1) the Department shall submit written quarterly
23    reports to the Governor and the General Assembly on the
24    activities and actions of the private manager selected
25    under this Section;
26        (2) upon request of the Chief Procurement Officer, the



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1    Department shall promptly produce information related to
2    the procurement activities of the Department and the
3    private manager requested by the Chief Procurement
4    Officer; the Chief Procurement Officer must retain
5    confidential, proprietary, or trade secret information
6    designated by the Department in complete confidence
7    pursuant to subsection (g) of Section 7 of the Freedom of
8    Information Act; and
9        (3) at least 30 days prior to the beginning of the
10    Department's fiscal year, the Department shall prepare an
11    annual written report on the activities of the private
12    manager selected under this Section and deliver that report
13    to the Governor and General Assembly.
14(Source: P.A. 97-464, eff. 8-19-11; 98-463, eff. 8-16-13;
1598-649, eff. 6-16-14.)
16    (20 ILCS 1605/20)  (from Ch. 120, par. 1170)
17    Sec. 20. State Lottery Fund.
18    (a) There is created in the State Treasury a special fund
19to be known as the "State Lottery Fund". Such fund shall
20consist of all revenues received from (1) the sale of lottery
21tickets or shares, (net of commissions, fees representing those
22expenses that are directly proportionate to the sale of tickets
23or shares at the agent location, and prizes of less than $600
24which have been validly paid at the agent level), (2)
25application fees, and (3) all other sources including moneys



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1credited or transferred thereto from any other fund or source
2pursuant to law. Interest earnings of the State Lottery Fund
3shall be credited to the Common School Fund.
4    (b) The receipt and distribution of moneys under Section
521.5 of this Act shall be in accordance with Section 21.5.
6    (c) The receipt and distribution of moneys under Section
721.6 of this Act shall be in accordance with Section 21.6.
8    (d) The receipt and distribution of moneys under Section
921.7 of this Act shall be in accordance with Section 21.7.
10    (e) The receipt and distribution of moneys under Section
1121.8 of this Act shall be in accordance with Section 21.8.
12    (f) The receipt and distribution of moneys under Section
1321.9 of this Act shall be in accordance with Section 21.9.
14    (g) The receipt and distribution of moneys under Section
1521.10 of this Act shall be in accordance with Section 21.10.
16(Source: P.A. 98-649, eff. 6-16-14.)
17    (20 ILCS 1605/21.10 new)
18    Sec. 21.10. Overcoming Epilepsy scratch-off game.
19    (a) The Department shall offer a special instant
20scratch-off game for the treatment, education, and prevention
21of epilepsy. The game shall commence on January 1, 2017 or as
22soon thereafter, in the discretion of the Director, as is
23reasonably practical. The operation of the game shall be
24governed by this Act and any rules adopted by the Department.
25If any provision of this Section is inconsistent with any other



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1provision of this Act, then this Section governs.
2    (b) The Overcoming Epilepsy Fund is created as a special
3fund in the State treasury. The net revenue from the Overcoming
4Epilepsy scratch-off game created under this Section shall be
5deposited into the Fund for appropriation by the General
6Assembly to the Department of Public Health for the purpose of
7making grants to organizations in Illinois that participate in
8the treatment, education, and prevention of epilepsy.
9    Moneys received for the purposes of this Section,
10including, without limitation, net revenue from the special
11instant scratch-off game and from gifts, grants, and awards
12from any public or private entity, must be deposited into the
13Fund. Any interest earned on moneys in the Fund must be
14deposited into the Fund.
15    For purposes of this subsection (b), "net revenue" means
16the total amount for which tickets have been sold less the sum
17of the amount paid out in the prizes and the actual
18administrative expenses of the Department solely related to the
19scratch-off game under this Section.
20    (c) During the time that tickets are sold for the
21Overcoming Epilepsy scratch-off game, the Department shall not
22unreasonably diminish the efforts devoted to marketing any
23other instant scratch-off lottery game.
24    (d) The Department may adopt any rules necessary to
25implement and administer the provisions of this Section.



HB6578- 21 -LRB099 21791 AMC 48515 b

1    Section 10. The State Finance Act is amended by adding
2Section 5.875 as follows:
3    (30 ILCS 105/5.875 new)
4    Sec. 5.875. The Overcoming Epilepsy Fund.
5    Section 99. Effective date. This Act takes effect upon
6becoming law.