Bill Text: IL SB1758 | 2017-2018 | 100th General Assembly | Engrossed

Bill Title: Amends the State Treasurer Act. Modifies the term "qualified expenses" for the purpose of participant requirements in the use of the College Savings Pool established under the Act. Effective immediately.

Spectrum: Partisan Bill (Democrat 7-0)

Status: (Engrossed) 2017-05-26 - Added Alternate Co-Sponsor Rep. Deb Conroy [SB1758 Detail]

Download: Illinois-2017-SB1758-Engrossed.html

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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 State Treasurer Act is amended by changing
5Section 16.5 as follows:
6 (15 ILCS 505/16.5)
7 Sec. 16.5. College Savings Pool. The State Treasurer may
8establish and administer a College Savings Pool to supplement
9and enhance the investment opportunities otherwise available
10to persons seeking to finance the costs of higher education.
11The State Treasurer, in administering the College Savings Pool,
12may receive moneys paid into the pool by a participant and may
13serve as the fiscal agent of that participant for the purpose
14of holding and investing those moneys.
15 "Participant", as used in this Section, means any person
16who has authority to withdraw funds, change the designated
17beneficiary, or otherwise exercise control over an account.
18"Donor", as used in this Section, means any person who makes
19investments in the pool. "Designated beneficiary", as used in
20this Section, means any person on whose behalf an account is
21established in the College Savings Pool by a participant. Both
22in-state and out-of-state persons may be participants, donors,
23and designated beneficiaries in the College Savings Pool. The

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1College Savings Pool must be available to any individual with a
2valid social security number or taxpayer identification number
3for the benefit of any individual with a valid social security
4number or taxpayer identification number, unless a contract in
5effect on August 1, 2011 (the effective date of Public Act
697-233) does not allow for taxpayer identification numbers, in
7which case taxpayer identification numbers must be allowed upon
8the expiration of the contract.
9 New accounts in the College Savings Pool may be processed
10through participating financial institutions. "Participating
11financial institution", as used in this Section, means any
12financial institution insured by the Federal Deposit Insurance
13Corporation and lawfully doing business in the State of
14Illinois and any credit union approved by the State Treasurer
15and lawfully doing business in the State of Illinois that
16agrees to process new accounts in the College Savings Pool.
17Participating financial institutions may charge a processing
18fee to participants to open an account in the pool that shall
19not exceed $30 until the year 2001. Beginning in 2001 and every
20year thereafter, the maximum fee limit shall be adjusted by the
21Treasurer based on the Consumer Price Index for the North
22Central Region as published by the United States Department of
23Labor, Bureau of Labor Statistics for the immediately preceding
24calendar year. Every contribution received by a financial
25institution for investment in the College Savings Pool shall be
26transferred from the financial institution to a location

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1selected by the State Treasurer within one business day
2following the day that the funds must be made available in
3accordance with federal law. All communications from the State
4Treasurer to participants and donors shall reference the
5participating financial institution at which the account was
7 The Treasurer may invest the moneys in the College Savings
8Pool in the same manner and in the same types of investments
9provided for the investment of moneys by the Illinois State
10Board of Investment. To enhance the safety and liquidity of the
11College Savings Pool, to ensure the diversification of the
12investment portfolio of the pool, and in an effort to keep
13investment dollars in the State of Illinois, the State
14Treasurer may make a percentage of each account available for
15investment in participating financial institutions doing
16business in the State. The State Treasurer may deposit with the
17participating financial institution at which the account was
18processed the following percentage of each account at a
19prevailing rate offered by the institution, provided that the
20deposit is federally insured or fully collateralized and the
21institution accepts the deposit: 10% of the total amount of
22each account for which the current age of the beneficiary is
23less than 7 years of age, 20% of the total amount of each
24account for which the beneficiary is at least 7 years of age
25and less than 12 years of age, and 50% of the total amount of
26each account for which the current age of the beneficiary is at

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1least 12 years of age. The Treasurer shall develop, publish,
2and implement an investment policy covering the investment of
3the moneys in the College Savings Pool. The policy shall be
4published each year as part of the audit of the College Savings
5Pool by the Auditor General, which shall be distributed to all
6participants. The Treasurer shall notify all participants in
7writing, and the Treasurer shall publish in a newspaper of
8general circulation in both Chicago and Springfield, any
9changes to the previously published investment policy at least
1030 calendar days before implementing the policy. Any investment
11policy adopted by the Treasurer shall be reviewed and updated
12if necessary within 90 days following the date that the State
13Treasurer takes office.
14 Participants shall be required to use moneys distributed
15from the College Savings Pool for qualified expenses at
16eligible educational institutions. "Qualified expenses", as
17used in this Section, means the following: (i) tuition, fees,
18and the costs of books, supplies, and equipment required for
19enrollment or attendance at an eligible educational
20institution; (ii) expenses for special needs services, in the
21case of a special needs beneficiary, which are incurred in
22connection with such enrollment or attendance; (iii) certain
23expenses for the purchase of computer or peripheral equipment,
24as defined in Section 168 of the federal Internal Revenue Code
25(26 U.S.C. 168), computer software, as defined in Section 197
26of the federal Internal Revenue Code (26 U.S.C. 197), or

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1internet access and related services, if such equipment,
2software, or services are to be used primarily by the
3beneficiary during any of the years the beneficiary is enrolled
4at an eligible educational institution, except that, such
5expenses shall not include expenses for computer software
6designed for sports, games, or hobbies, unless the software is
7predominantly educational in nature; and (iv) (ii) certain room
8and board expenses incurred while attending an eligible
9educational institution at least half-time. "Eligible
10educational institutions", as used in this Section, means
11public and private colleges, junior colleges, graduate
12schools, and certain vocational institutions that are
13described in Section 481 of the Higher Education Act of 1965
14(20 U.S.C. 1088) and that are eligible to participate in
15Department of Education student aid programs. A student shall
16be considered to be enrolled at least half-time if the student
17is enrolled for at least half the full-time academic work load
18for the course of study the student is pursuing as determined
19under the standards of the institution at which the student is
20enrolled. Distributions made from the pool for qualified
21expenses shall be made directly to the eligible educational
22institution, directly to a vendor, or in the form of a check
23payable to both the beneficiary and the institution or vendor.
24Any moneys that are distributed in any other manner or that are
25used for expenses other than qualified expenses at an eligible
26educational institution shall be subject to a penalty of 10% of

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1the earnings unless the beneficiary dies, becomes a person with
2a disability, or receives a scholarship that equals or exceeds
3the distribution. Penalties shall be withheld at the time the
4distribution is made.
5 The Treasurer shall limit the contributions that may be
6made on behalf of a designated beneficiary based on the
7limitations established by the Internal Revenue Service. The
8contributions made on behalf of a beneficiary who is also a
9beneficiary under the Illinois Prepaid Tuition Program shall be
10further restricted to ensure that the contributions in both
11programs combined do not exceed the limit established for the
12College Savings Pool. The Treasurer shall provide the Illinois
13Student Assistance Commission each year at a time designated by
14the Commission, an electronic report of all participant
15accounts in the Treasurer's College Savings Pool, listing total
16contributions and disbursements from each individual account
17during the previous calendar year. As soon thereafter as is
18possible following receipt of the Treasurer's report, the
19Illinois Student Assistance Commission shall, in turn, provide
20the Treasurer with an electronic report listing those College
21Savings Pool participants who also participate in the State's
22prepaid tuition program, administered by the Commission. The
23Commission shall be responsible for filing any combined tax
24reports regarding State qualified savings programs required by
25the United States Internal Revenue Service. The Treasurer shall
26work with the Illinois Student Assistance Commission to

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1coordinate the marketing of the College Savings Pool and the
2Illinois Prepaid Tuition Program when considered beneficial by
3the Treasurer and the Director of the Illinois Student
4Assistance Commission. The Treasurer's office shall not
5publicize or otherwise market the College Savings Pool or
6accept any moneys into the College Savings Pool prior to March
71, 2000. The Treasurer shall provide a separate accounting for
8each designated beneficiary to each participant, the Illinois
9Student Assistance Commission, and the participating financial
10institution at which the account was processed. No interest in
11the program may be pledged as security for a loan. Moneys held
12in an account invested in the Illinois College Savings Pool
13shall be exempt from all claims of the creditors of the
14participant, donor, or designated beneficiary of that account,
15except for the non-exempt College Savings Pool transfers to or
16from the account as defined under subsection (j) of Section
1712-1001 of the Code of Civil Procedure (735 ILCS 5/12-1001(j)).
18 The assets of the College Savings Pool and its income and
19operation shall be exempt from all taxation by the State of
20Illinois and any of its subdivisions. The accrued earnings on
21investments in the Pool once disbursed on behalf of a
22designated beneficiary shall be similarly exempt from all
23taxation by the State of Illinois and its subdivisions, so long
24as they are used for qualified expenses. Contributions to a
25College Savings Pool account during the taxable year may be
26deducted from adjusted gross income as provided in Section 203

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1of the Illinois Income Tax Act. The provisions of this
2paragraph are exempt from Section 250 of the Illinois Income
3Tax Act.
4 The Treasurer shall adopt rules he or she considers
5necessary for the efficient administration of the College
6Savings Pool. The rules shall provide whatever additional
7parameters and restrictions are necessary to ensure that the
8College Savings Pool meets all of the requirements for a
9qualified state tuition program under Section 529 of the
10Internal Revenue Code (26 U.S.C. 529). The rules shall provide
11for the administration expenses of the pool to be paid from its
12earnings and for the investment earnings in excess of the
13expenses and all moneys collected as penalties to be credited
14or paid monthly to the several participants in the pool in a
15manner which equitably reflects the differing amounts of their
16respective investments in the pool and the differing periods of
17time for which those amounts were in the custody of the pool.
18Also, the rules shall require the maintenance of records that
19enable the Treasurer's office to produce a report for each
20account in the pool at least annually that documents the
21account balance and investment earnings. Notice of any proposed
22amendments to the rules and regulations shall be provided to
23all participants prior to adoption. Amendments to rules and
24regulations shall apply only to contributions made after the
25adoption of the amendment.
26 Upon creating the College Savings Pool, the State Treasurer

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1shall give bond with 2 or more sufficient sureties, payable to
2and for the benefit of the participants in the College Savings
3Pool, in the penal sum of $1,000,000, conditioned upon the
4faithful discharge of his or her duties in relation to the
5College Savings Pool.
6(Source: P.A. 99-143, eff. 7-27-15.)
7 Section 99. Effective date. This Act takes effect upon
8becoming law.