Illinois General Assembly - Full Text of SB0207
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Full Text of SB0207  100th General Assembly


Sen. Antonio Muñoz

Filed: 3/7/2017





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2    AMENDMENT NO. ______. Amend Senate Bill 207 by replacing
3everything after the enacting clause with the following:
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 21.5, 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



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1to the General Assembly and the people of the State through a
2comprehensive system of regulation, audits, reports, and
3enduring operational oversight. The Department's ongoing
4conduct of the Lottery through a management agreement with a
5private manager shall act to promote and ensure the integrity,
6security, honesty, and fairness of the Lottery's operation and
7administration. It is the intent of the General Assembly that
8the Department shall conduct the Lottery with the assistance of
9a private manager under a management agreement at all times in
10a manner consistent with 18 U.S.C. 1307(a)(1), 1307(b)(1),
12(Source: P.A. 98-649, eff. 6-16-14; 99-933, eff. 1-27-17.)
13    (20 ILCS 1605/9.1)
14    Sec. 9.1. Private manager and management agreement.
15    (a) As used in this Section:
16    "Offeror" means a person or group of persons that responds
17to a request for qualifications under this Section.
18    "Request for qualifications" means all materials and
19documents prepared by the Department to solicit the following
20from offerors:
21        (1) Statements of qualifications.
22        (2) Proposals to enter into a management agreement,
23    including the identity of any prospective vendor or vendors
24    that the offeror intends to initially engage to assist the
25    offeror in performing its obligations under the management



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1    agreement.
2    "Final offer" means the last proposal submitted by an
3offeror in response to the request for qualifications,
4including the identity of any prospective vendor or vendors
5that the offeror intends to initially engage to assist the
6offeror in performing its obligations under the management
8    "Final offeror" means the offeror ultimately selected by
9the Governor to be the private manager for the Lottery under
10subsection (h) of this Section.
11    (b) By September 15, 2010, the Governor shall select a
12private manager for the total management of the Lottery with
13integrated functions, such as lottery game design, supply of
14goods and services, and advertising and as specified in this
16    (c) Pursuant to the terms of this subsection, the
17Department shall endeavor to expeditiously terminate the
18existing contracts in support of the Lottery in effect on the
19effective date of this amendatory Act of the 96th General
20Assembly in connection with the selection of the private
21manager. As part of its obligation to terminate these contracts
22and select the private manager, the Department shall establish
23a mutually agreeable timetable to transfer the functions of
24existing contractors to the private manager so that existing
25Lottery operations are not materially diminished or impaired
26during the transition. To that end, the Department shall do the



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2        (1) where such contracts contain a provision
3    authorizing termination upon notice, the Department shall
4    provide notice of termination to occur upon the mutually
5    agreed timetable for transfer of functions;
6        (2) upon the expiration of any initial term or renewal
7    term of the current Lottery contracts, the Department shall
8    not renew such contract for a term extending beyond the
9    mutually agreed timetable for transfer of functions; or
10        (3) in the event any current contract provides for
11    termination of that contract upon the implementation of a
12    contract with the private manager, the Department shall
13    perform all necessary actions to terminate the contract on
14    the date that coincides with the mutually agreed timetable
15    for transfer of functions.
16    If the contracts to support the current operation of the
17Lottery in effect on the effective date of this amendatory Act
18of the 96th General Assembly are not subject to termination as
19provided for in this subsection (c), then the Department may
20include a provision in the contract with the private manager
21specifying a mutually agreeable methodology for incorporation.
22    (c-5) The Department shall include provisions in the
23management agreement whereby the private manager shall, for a
24fee, and pursuant to a contract negotiated with the Department
25(the "Employee Use Contract"), utilize the services of current
26Department employees to assist in the administration and



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1operation of the Lottery. The Department shall be the employer
2of all such bargaining unit employees assigned to perform such
3work for the private manager, and such employees shall be State
4employees, as defined by the Personnel Code. Department
5employees shall operate under the same employment policies,
6rules, regulations, and procedures, as other employees of the
7Department. In addition, neither historical representation
8rights under the Illinois Public Labor Relations Act, nor
9existing collective bargaining agreements, shall be disturbed
10by the management agreement with the private manager for the
11management of the Lottery.
12    (d) The management agreement with the private manager shall
13include all of the following:
14        (1) A term not to exceed 10 years, including any
15    renewals.
16        (2) A provision specifying that the Department:
17            (A) shall exercise actual control over all
18        significant business decisions;
19            (A-5) has the authority to direct or countermand
20        operating decisions by the private manager at any time;
21            (B) has ready access at any time to information
22        regarding Lottery operations;
23            (C) has the right to demand and receive information
24        from the private manager concerning any aspect of the
25        Lottery operations at any time; and
26            (D) retains ownership of all trade names,



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1        trademarks, and intellectual property associated with
2        the Lottery.
3        (3) A provision imposing an affirmative duty on the
4    private manager to provide the Department with material
5    information and with any information the private manager
6    reasonably believes the Department would want to know to
7    enable the Department to conduct the Lottery.
8        (4) A provision requiring the private manager to
9    provide the Department with advance notice of any operating
10    decision that bears significantly on the public interest,
11    including, but not limited to, decisions on the kinds of
12    games to be offered to the public and decisions affecting
13    the relative risk and reward of the games being offered, so
14    the Department has a reasonable opportunity to evaluate and
15    countermand that decision.
16        (5) A provision providing for compensation of the
17    private manager that may consist of, among other things, a
18    fee for services and a performance based bonus as
19    consideration for managing the Lottery, including terms
20    that may provide the private manager with an increase in
21    compensation if Lottery revenues grow by a specified
22    percentage in a given year.
23        (6) (Blank).
24        (7) A provision requiring the deposit of all Lottery
25    proceeds to be deposited into the State Lottery Fund except
26    as otherwise provided in Section 20 of this Act.



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1        (8) A provision requiring the private manager to locate
2    its principal office within the State.
3        (8-5) A provision encouraging that at least 20% of the
4    cost of contracts entered into for goods and services by
5    the private manager in connection with its management of
6    the Lottery, other than contracts with sales agents or
7    technical advisors, be awarded to businesses that are a
8    minority owned business, a female owned business, or a
9    business owned by a person with disability, as those terms
10    are defined in the Business Enterprise for Minorities,
11    Females, and Persons with Disabilities Act.
12        (9) A requirement that so long as the private manager
13    complies with all the conditions of the agreement under the
14    oversight of the Department, the private manager shall have
15    the following duties and obligations with respect to the
16    management of the Lottery:
17            (A) The right to use equipment and other assets
18        used in the operation of the Lottery.
19            (B) The rights and obligations under contracts
20        with retailers and vendors.
21            (C) The implementation of a comprehensive security
22        program by the private manager.
23            (D) The implementation of a comprehensive system
24        of internal audits.
25            (E) The implementation of a program by the private
26        manager to curb compulsive gambling by persons playing



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1        the Lottery.
2            (F) A system for determining (i) the type of
3        Lottery games, (ii) the method of selecting winning
4        tickets, (iii) the manner of payment of prizes to
5        holders of winning tickets, (iv) the frequency of
6        drawings of winning tickets, (v) the method to be used
7        in selling tickets, (vi) a system for verifying the
8        validity of tickets claimed to be winning tickets,
9        (vii) the basis upon which retailer commissions are
10        established by the manager, and (viii) minimum
11        payouts.
12        (10) A requirement that advertising and promotion must
13    be consistent with Section 7.8a of this Act.
14        (11) A requirement that the private manager market the
15    Lottery to those residents who are new, infrequent, or
16    lapsed players of the Lottery, especially those who are
17    most likely to make regular purchases on the Internet as
18    permitted by law.
19        (12) A code of ethics for the private manager's
20    officers and employees.
21        (13) A requirement that the Department monitor and
22    oversee the private manager's practices and take action
23    that the Department considers appropriate to ensure that
24    the private manager is in compliance with the terms of the
25    management agreement, while allowing the manager, unless
26    specifically prohibited by law or the management



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1    agreement, to negotiate and sign its own contracts with
2    vendors.
3        (14) A provision requiring the private manager to
4    periodically file, at least on an annual basis, appropriate
5    financial statements in a form and manner acceptable to the
6    Department.
7        (15) Cash reserves requirements.
8        (16) Procedural requirements for obtaining the prior
9    approval of the Department when a management agreement or
10    an interest in a management agreement is sold, assigned,
11    transferred, or pledged as collateral to secure financing.
12        (17) Grounds for the termination of the management
13    agreement by the Department or the private manager.
14        (18) Procedures for amendment of the agreement.
15        (19) A provision requiring the private manager to
16    engage in an open and competitive bidding process for any
17    procurement having a cost in excess of $50,000 that is not
18    a part of the private manager's final offer. The process
19    shall favor the selection of a vendor deemed to have
20    submitted a proposal that provides the Lottery with the
21    best overall value. The process shall not be subject to the
22    provisions of the Illinois Procurement Code, unless
23    specifically required by the management agreement.
24        (20) The transition of rights and obligations,
25    including any associated equipment or other assets used in
26    the operation of the Lottery, from the manager to any



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1    successor manager of the lottery, including the
2    Department, following the termination of or foreclosure
3    upon the management agreement.
4        (21) Right of use of copyrights, trademarks, and
5    service marks held by the Department in the name of the
6    State. The agreement must provide that any use of them by
7    the manager shall only be for the purpose of fulfilling its
8    obligations under the management agreement during the term
9    of the agreement.
10        (22) The disclosure of any information requested by the
11    Department to enable it to comply with the reporting
12    requirements and information requests provided for under
13    subsection (p) of this Section.
14    (e) Notwithstanding any other law to the contrary, the
15Department shall select a private manager through a competitive
16request for qualifications process consistent with Section
1720-35 of the Illinois Procurement Code, which shall take into
19        (1) the offeror's ability to market the Lottery to
20    those residents who are new, infrequent, or lapsed players
21    of the Lottery, especially those who are most likely to
22    make regular purchases on the Internet;
23        (2) the offeror's ability to address the State's
24    concern with the social effects of gambling on those who
25    can least afford to do so;
26        (3) the offeror's ability to provide the most



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1    successful management of the Lottery for the benefit of the
2    people of the State based on current and past business
3    practices or plans of the offeror; and
4        (4) the offeror's poor or inadequate past performance
5    in servicing, equipping, operating or managing a lottery on
6    behalf of Illinois, another State or foreign government and
7    attracting persons who are not currently regular players of
8    a lottery.
9    (f) The Department may retain the services of an advisor or
10advisors with significant experience in financial services or
11the management, operation, and procurement of goods, services,
12and equipment for a government-run lottery to assist in the
13preparation of the terms of the request for qualifications and
14selection of the private manager. Any prospective advisor
15seeking to provide services under this subsection (f) shall
16disclose any material business or financial relationship
17during the past 3 years with any potential offeror, or with a
18contractor or subcontractor presently providing goods,
19services, or equipment to the Department to support the
20Lottery. The Department shall evaluate the material business or
21financial relationship of each prospective advisor. The
22Department shall not select any prospective advisor with a
23substantial business or financial relationship that the
24Department deems to impair the objectivity of the services to
25be provided by the prospective advisor. During the course of
26the advisor's engagement by the Department, and for a period of



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1one year thereafter, the advisor shall not enter into any
2business or financial relationship with any offeror or any
3vendor identified to assist an offeror in performing its
4obligations under the management agreement. Any advisor
5retained by the Department shall be disqualified from being an
6offeror. The Department shall not include terms in the request
7for qualifications that provide a material advantage whether
8directly or indirectly to any potential offeror, or any
9contractor or subcontractor presently providing goods,
10services, or equipment to the Department to support the
11Lottery, including terms contained in previous responses to
12requests for proposals or qualifications submitted to
13Illinois, another State or foreign government when those terms
14are uniquely associated with a particular potential offeror,
15contractor, or subcontractor. The request for proposals
16offered by the Department on December 22, 2008 as
17"LOT08GAMESYS" and reference number "22016176" is declared
19    (g) The Department shall select at least 2 offerors as
20finalists to potentially serve as the private manager no later
21than August 9, 2010. Upon making preliminary selections, the
22Department shall schedule a public hearing on the finalists'
23proposals and provide public notice of the hearing at least 7
24calendar days before the hearing. The notice must include all
25of the following:
26        (1) The date, time, and place of the hearing.



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1        (2) The subject matter of the hearing.
2        (3) A brief description of the management agreement to
3    be awarded.
4        (4) The identity of the offerors that have been
5    selected as finalists to serve as the private manager.
6        (5) The address and telephone number of the Department.
7    (h) At the public hearing, the Department shall (i) provide
8sufficient time for each finalist to present and explain its
9proposal to the Department and the Governor or the Governor's
10designee, including an opportunity to respond to questions
11posed by the Department, Governor, or designee and (ii) allow
12the public and non-selected offerors to comment on the
13presentations. The Governor or a designee shall attend the
14public hearing. After the public hearing, the Department shall
15have 14 calendar days to recommend to the Governor whether a
16management agreement should be entered into with a particular
17finalist. After reviewing the Department's recommendation, the
18Governor may accept or reject the Department's recommendation,
19and shall select a final offeror as the private manager by
20publication of a notice in the Illinois Procurement Bulletin on
21or before September 15, 2010. The Governor shall include in the
22notice a detailed explanation and the reasons why the final
23offeror is superior to other offerors and will provide
24management services in a manner that best achieves the
25objectives of this Section. The Governor shall also sign the
26management agreement with the private manager.



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1    (i) Any action to contest the private manager selected by
2the Governor under this Section must be brought within 7
3calendar days after the publication of the notice of the
4designation of the private manager as provided in subsection
5(h) of this Section.
6    (j) The Lottery shall remain, for so long as a private
7manager manages the Lottery in accordance with provisions of
8this Act, a Lottery conducted by the State, and the State shall
9not be authorized to sell or transfer the Lottery to a third
11    (k) Any tangible personal property used exclusively in
12connection with the lottery that is owned by the Department and
13leased to the private manager shall be owned by the Department
14in the name of the State and shall be considered to be public
15property devoted to an essential public and governmental
17    (l) The Department may exercise any of its powers under
18this Section or any other law as necessary or desirable for the
19execution of the Department's powers under this Section.
20    (m) Neither this Section nor any management agreement
21entered into under this Section prohibits the General Assembly
22from authorizing forms of gambling that are not in direct
23competition with the Lottery.
24    (n) The private manager shall be subject to a complete
25investigation in the third, seventh, and tenth years of the
26agreement (if the agreement is for a 10-year term) by the



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1Department in cooperation with the Auditor General to determine
2whether the private manager has complied with this Section and
3the management agreement. The private manager shall bear the
4cost of an investigation or reinvestigation of the private
5manager under this subsection.
6    (o) The powers conferred by this Section are in addition
7and supplemental to the powers conferred by any other law. If
8any other law or rule is inconsistent with this Section,
9including, but not limited to, provisions of the Illinois
10Procurement Code, then this Section controls as to any
11management agreement entered into under this Section. This
12Section and any rules adopted under this Section contain full
13and complete authority for a management agreement between the
14Department and a private manager. No law, procedure,
15proceeding, publication, notice, consent, approval, order, or
16act by the Department or any other officer, Department, agency,
17or instrumentality of the State or any political subdivision is
18required for the Department to enter into a management
19agreement under this Section. This Section contains full and
20complete authority for the Department to approve any contracts
21entered into by a private manager with a vendor providing
22goods, services, or both goods and services to the private
23manager under the terms of the management agreement, including
24subcontractors of such vendors.
25    Upon receipt of a written request from the Chief
26Procurement Officer, the Department shall provide to the Chief



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1Procurement Officer a complete and un-redacted copy of the
2management agreement or any contract that is subject to the
3Department's approval authority under this subsection (o). The
4Department shall provide a copy of the agreement or contract to
5the Chief Procurement Officer in the time specified by the
6Chief Procurement Officer in his or her written request, but no
7later than 5 business days after the request is received by the
8Department. The Chief Procurement Officer must retain any
9portions of the management agreement or of any contract
10designated by the Department as confidential, proprietary, or
11trade secret information in complete confidence pursuant to
12subsection (g) of Section 7 of the Freedom of Information Act.
13The Department shall also provide the Chief Procurement Officer
14with reasonable advance written notice of any contract that is
15pending Department approval.
16    Notwithstanding any other provision of this Section to the
17contrary, the Chief Procurement Officer shall adopt
18administrative rules, including emergency rules, to establish
19a procurement process to select a successor private manager if
20a private management agreement has been terminated. The
21selection process shall at a minimum take into account the
22criteria set forth in items (1) through (4) of subsection (e)
23of this Section and may include provisions consistent with
24subsections (f), (g), (h), and (i) of this Section. The Chief
25Procurement Officer shall also implement and administer the
26adopted selection process upon the termination of a private



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1management agreement. The Department, after the Chief
2Procurement Officer certifies that the procurement process has
3been followed in accordance with the rules adopted under this
4subsection (o), shall select a final offeror as the private
5manager and sign the management agreement with the private
7    Except as provided in Sections 21.5, 21.6, 21.7, 21.8, and
821.9, and 21.10, the Department shall distribute all proceeds
9of lottery tickets and shares sold in the following priority
10and manner:
11        (1) The payment of prizes and retailer bonuses.
12        (2) The payment of costs incurred in the operation and
13    administration of the Lottery, including the payment of
14    sums due to the private manager under the management
15    agreement with the Department.
16        (3) On the last day of each month or as soon thereafter
17    as possible, the State Comptroller shall direct and the
18    State Treasurer shall transfer from the State Lottery Fund
19    to the Common School Fund an amount that is equal to the
20    proceeds transferred in the corresponding month of fiscal
21    year 2009, as adjusted for inflation, to the Common School
22    Fund.
23        (4) On or before the last day of each fiscal year,
24    deposit any remaining proceeds, subject to payments under
25    items (1), (2), and (3) into the Capital Projects Fund each
26    fiscal year.



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1    (p) The Department shall be subject to the following
2reporting and information request requirements:
3        (1) the Department shall submit written quarterly
4    reports to the Governor and the General Assembly on the
5    activities and actions of the private manager selected
6    under this Section;
7        (2) upon request of the Chief Procurement Officer, the
8    Department shall promptly produce information related to
9    the procurement activities of the Department and the
10    private manager requested by the Chief Procurement
11    Officer; the Chief Procurement Officer must retain
12    confidential, proprietary, or trade secret information
13    designated by the Department in complete confidence
14    pursuant to subsection (g) of Section 7 of the Freedom of
15    Information Act; and
16        (3) at least 30 days prior to the beginning of the
17    Department's fiscal year, the Department shall prepare an
18    annual written report on the activities of the private
19    manager selected under this Section and deliver that report
20    to the Governor and General Assembly.
21(Source: P.A. 98-463, eff. 8-16-13; 98-649, eff. 6-16-14;
2299-933, eff. 1-27-17.)
23    (20 ILCS 1605/20)  (from Ch. 120, par. 1170)
24    Sec. 20. State Lottery Fund.
25    (a) There is created in the State Treasury a special fund



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1to be known as the "State Lottery Fund". Such fund shall
2consist of all revenues received from (1) the sale of lottery
3tickets or shares, (net of commissions, fees representing those
4expenses that are directly proportionate to the sale of tickets
5or shares at the agent location, and prizes of less than $600
6which have been validly paid at the agent level), (2)
7application fees, and (3) all other sources including moneys
8credited or transferred thereto from any other fund or source
9pursuant to law. Interest earnings of the State Lottery Fund
10shall be credited to the Common School Fund.
11    (b) The receipt and distribution of moneys under Section
1221.5 of this Act shall be in accordance with Section 21.5.
13    (c) The receipt and distribution of moneys under Section
1421.6 of this Act shall be in accordance with Section 21.6.
15    (d) The receipt and distribution of moneys under Section
1621.7 of this Act shall be in accordance with Section 21.7.
17    (e) The receipt and distribution of moneys under Section
1821.8 of this Act shall be in accordance with Section 21.8.
19    (f) The receipt and distribution of moneys under Section
2021.9 of this Act shall be in accordance with Section 21.9.
21    (g) The receipt and distribution of moneys under Section
2221.10 of this Act shall be in accordance with Section 21.10.
23(Source: P.A. 98-649, eff. 6-16-14.)
24    (20 ILCS 1605/21.10 new)
25    Sec. 21.10. Scratch-off for State police memorials.



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1    (a) The Department shall offer a special instant
2scratch-off game for the benefit of State police memorials. The
3game shall commence on January 1, 2018 or as soon thereafter,
4at the discretion of the Director, as is reasonably practical.
5The operation of the game shall be governed by this Act and any
6rules adopted by the Department. If any provision of this
7Section is inconsistent with any other provision of this Act,
8then this Section governs.
9    (b) The net revenue from the State police memorials
10scratch-off game shall be deposited into the Criminal Justice
11Information Projects Fund and distributed equally, as soon as
12practical but at least on a monthly basis, to the Chicago
13Police Memorial Foundation Fund, the Police Memorial Committee
14Fund, and the Illinois State Police Memorial Fund. Moneys
15transferred to the funds under this Section shall be used,
16subject to appropriation, to fund grants for building and
17maintaining memorials and parks; holding annual memorial
18commemorations; giving scholarships to children of officers
19killed or catastrophically injured in the line of duty, or
20those interested in pursuing a career in law enforcement; and
21providing financial assistance to police officers and their
22families when a police officer is killed or injured in the line
23of duty.
24    Moneys collected from the State police memorials special
25instant scratch-off game shall be used only as a supplemental
26financial resource and shall not supplant existing moneys that



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1may be appropriated under Section 9.1 of the Illinois Criminal
2Justice Information Act.
3    For purposes of this subsection, "net revenue" means the
4total amount for which tickets have been sold less the sum of
5the amount paid out in the prizes and the actual administrative
6expenses of the Department solely related to the scratch-off
7game under this Section.
8    (c) During the time that tickets are sold for the State
9police memorials scratch-off game, the Department shall not
10unreasonably diminish the efforts devoted to marketing any
11other instant scratch-off lottery game.
12    (d) The Department may adopt any rules necessary to
13implement and administer the provisions of this Section.
14    Section 10. The Illinois Criminal Justice Information Act
15is amended by changing Section 9.1 as follows:
16    (20 ILCS 3930/9.1)
17    Sec. 9.1. Criminal Justice Information Projects Fund. The
18Criminal Justice Information Projects Fund is hereby created as
19a special fund in the State Treasury. Grants and other moneys
20obtained by the Authority from governmental entities (other
21than the federal government), private sources, and
22not-for-profit organizations for use in investigating criminal
23justice issues or undertaking other criminal justice
24information projects, or pursuant to the uses identified in



10000SB0207sam001- 22 -LRB100 04961 MJP 23001 a

1Section 21.10 of the Illinois Lottery Law, shall be deposited
2into the Fund. Moneys in the Fund may be used by the Authority,
3subject to appropriation, for undertaking such projects and for
4the operating and other expenses of the Authority incidental to
5those projects. Any interest earned on moneys in the Fund must
6be deposited into the Fund.
7(Source: P.A. 88-538.)
8    Section 99. Effective date. This Act takes effect upon
9becoming law.".