Bill Text: IL HB4798 | 2013-2014 | 98th General Assembly | Introduced

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Bill Title: Amends the State Treasurer Act. Makes a technical change in a Section concerning a college savings pool.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2014-12-03 - Session Sine Die [HB4798 Detail]

Download: Illinois-2013-HB4798-Introduced.html

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98TH GENERAL ASSEMBLY State of Illinois 2013 and 2014 HB4798 Introduced , by Rep. Jim Durkin SYNOPSIS AS INTRODUCED:
15 ILCS 505/16.5
Amends the State Treasurer Act. Makes a technical change in a Section concerning a college savings pool.
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A BILL FOR
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AN ACT concerning State government.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The State Treasurer Act is amended by changing
Section 16.5 as follows:
(15 ILCS 505/16.5)
Sec. 16.5. College Savings Pool. The The State Treasurer
may establish and administer a College Savings Pool to
supplement and enhance the investment opportunities otherwise
available to persons seeking to finance the costs of higher
education. The State Treasurer, in administering the College
Savings Pool, may receive moneys paid into the pool by a
participant and may serve as the fiscal agent of that
participant for the purpose of holding and investing those
moneys.
"Participant", as used in this Section, means any person
who has authority to withdraw funds, change the designated
beneficiary, or otherwise exercise control over an account.
"Donor", as used in this Section, means any person who makes
investments in the pool. "Designated beneficiary", as used in
this Section, means any person on whose behalf an account is
established in the College Savings Pool by a participant. Both
in-state and out-of-state persons may be participants, donors,

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and designated beneficiaries in the College Savings Pool. The
College Savings Pool must be available to any individual with a
valid social security number or taxpayer identification number
for the benefit of any individual with a valid social security
number or taxpayer identification number, unless a contract in
effect on August 1, 2011 (the effective date of Public Act
97-233) does not allow for taxpayer identification numbers, in
which case taxpayer identification numbers must be allowed upon
the expiration of the contract.
New accounts in the College Savings Pool may be processed
through participating financial institutions. "Participating
financial institution", as used in this Section, means any
financial institution insured by the Federal Deposit Insurance
Corporation and lawfully doing business in the State of
Illinois and any credit union approved by the State Treasurer
and lawfully doing business in the State of Illinois that
agrees to process new accounts in the College Savings Pool.
Participating financial institutions may charge a processing
fee to participants to open an account in the pool that shall
not exceed $30 until the year 2001. Beginning in 2001 and every
year thereafter, the maximum fee limit shall be adjusted by the
Treasurer based on the Consumer Price Index for the North
Central Region as published by the United States Department of
Labor, Bureau of Labor Statistics for the immediately preceding
calendar year. Every contribution received by a financial
institution for investment in the College Savings Pool shall be

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

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each account for which the current age of the beneficiary is at
least 12 years of age. The Treasurer shall develop, publish,
and implement an investment policy covering the investment of
the moneys in the College Savings Pool. The policy shall be
published each year as part of the audit of the College Savings
Pool by the Auditor General, which shall be distributed to all
participants. The Treasurer shall notify all participants in
writing, and the Treasurer shall publish in a newspaper of
general circulation in both Chicago and Springfield, any
changes to the previously published investment policy at least
30 calendar days before implementing the policy. Any investment
policy adopted by the Treasurer shall be reviewed and updated
if necessary within 90 days following the date that the State
Treasurer takes office.
Participants shall be required to use moneys distributed
from the College Savings Pool for qualified expenses at
eligible educational institutions. "Qualified expenses", as
used in this Section, means the following: (i) tuition, fees,
and the costs of books, supplies, and equipment required for
enrollment or attendance at an eligible educational
institution and (ii) certain room and board expenses incurred
while attending an eligible educational institution at least
half-time. "Eligible educational institutions", as used in
this Section, means public and private colleges, junior
colleges, graduate schools, and certain vocational
institutions that are described in Section 481 of the Higher

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Education Act of 1965 (20 U.S.C. 1088) and that are eligible to
participate in Department of Education student aid programs. A
student shall be considered to be enrolled at least half-time
if the student is enrolled for at least half the full-time
academic work load for the course of study the student is
pursuing as determined under the standards of the institution
at which the student is enrolled. Distributions made from the
pool for qualified expenses shall be made directly to the
eligible educational institution, directly to a vendor, or in
the form of a check payable to both the beneficiary and the
institution or vendor. Any moneys that are distributed in any
other manner or that are used for expenses other than qualified
expenses at an eligible educational institution shall be
subject to a penalty of 10% of the earnings unless the
beneficiary dies, becomes disabled, or receives a scholarship
that equals or exceeds the distribution. Penalties shall be
withheld at the time the distribution is made.
The Treasurer shall limit the contributions that may be
made on behalf of a designated beneficiary based on the
limitations established by the Internal Revenue Service. The
contributions made on behalf of a beneficiary who is also a
beneficiary under the Illinois Prepaid Tuition Program shall be
further restricted to ensure that the contributions in both
programs combined do not exceed the limit established for the
College Savings Pool. The Treasurer shall provide the Illinois
Student Assistance Commission each year at a time designated by

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the Commission, an electronic report of all participant
accounts in the Treasurer's College Savings Pool, listing total
contributions and disbursements from each individual account
during the previous calendar year. As soon thereafter as is
possible following receipt of the Treasurer's report, the
Illinois Student Assistance Commission shall, in turn, provide
the Treasurer with an electronic report listing those College
Savings Pool participants who also participate in the State's
prepaid tuition program, administered by the Commission. The
Commission shall be responsible for filing any combined tax
reports regarding State qualified savings programs required by
the United States Internal Revenue Service. The Treasurer shall
work with the Illinois Student Assistance Commission to
coordinate the marketing of the College Savings Pool and the
Illinois Prepaid Tuition Program when considered beneficial by
the Treasurer and the Director of the Illinois Student
Assistance Commission. The Treasurer's office shall not
publicize or otherwise market the College Savings Pool or
accept any moneys into the College Savings Pool prior to March
1, 2000. The Treasurer shall provide a separate accounting for
each designated beneficiary to each participant, the Illinois
Student Assistance Commission, and the participating financial
institution at which the account was processed. No interest in
the program may be pledged as security for a loan. Moneys held
in an account invested in the Illinois College Savings Pool
shall be exempt from all claims of the creditors of the

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participant, donor, or designated beneficiary of that account,
except for the non-exempt College Savings Pool transfers to or
from the account as defined under subsection (j) of Section
12-1001 of the Code of Civil Procedure (735 ILCS 5/12-1001(j)).
The assets of the College Savings Pool and its income and
operation shall be exempt from all taxation by the State of
Illinois and any of its subdivisions. The accrued earnings on
investments in the Pool once disbursed on behalf of a
designated beneficiary shall be similarly exempt from all
taxation by the State of Illinois and its subdivisions, so long
as they are used for qualified expenses. Contributions to a
College Savings Pool account during the taxable year may be
deducted from adjusted gross income as provided in Section 203
of the Illinois Income Tax Act. The provisions of this
paragraph are exempt from Section 250 of the Illinois Income
Tax Act.
The Treasurer shall adopt rules he or she considers
necessary for the efficient administration of the College
Savings Pool. The rules shall provide whatever additional
parameters and restrictions are necessary to ensure that the
College Savings Pool meets all of the requirements for a
qualified state tuition program under Section 529 of the
Internal Revenue Code (26 U.S.C. 529). The rules shall provide
for the administration expenses of the pool to be paid from its
earnings and for the investment earnings in excess of the
expenses and all moneys collected as penalties to be credited

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or paid monthly to the several participants in the pool in a
manner which equitably reflects the differing amounts of their
respective investments in the pool and the differing periods of
time for which those amounts were in the custody of the pool.
Also, the rules shall require the maintenance of records that
enable the Treasurer's office to produce a report for each
account in the pool at least annually that documents the
account balance and investment earnings. Notice of any proposed
amendments to the rules and regulations shall be provided to
all participants prior to adoption. Amendments to rules and
regulations shall apply only to contributions made after the
adoption of the amendment.
Upon creating the College Savings Pool, the State Treasurer
shall give bond with 2 or more sufficient sureties, payable to
and for the benefit of the participants in the College Savings
Pool, in the penal sum of $1,000,000, conditioned upon the
faithful discharge of his or her duties in relation to the
College Savings Pool.
(Source: P.A. 97-233, eff. 8-1-11; 97-537, eff. 8-23-11;
97-813, eff. 7-13-12.)