Bill Text: IL HB5615 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the State Treasurer Act. Provides that the State Treasurer may establish and administer the Education Scholarship Account as a qualified tuition program under Section 529 of the Internal Revenue Code. Provides that distributions from an account in the Education Scholarship Account may be used for the designated beneficiary's qualified expenses; defines "qualified expenses". Provides who may open an account under the Program. Provides that the Treasurer and the State Board of Education shall each cooperate in providing each other with account information, as necessary, to prevent contributions in excess of those necessary to provide for the qualified expenses of the designated beneficiary. Sets forth provisions concerning funds for the Program. Sets forth provisions concerning investment policies for the Account. Provides that the Treasurer shall work with the State Board of Education to coordinate the marketing of the Education Scholarship Account. Sets forth other provisions concerning administering the Education Scholarship Account Program. Provides for rulemaking.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2024-02-09 - Referred to Rules Committee [HB5615 Detail]

Download: Illinois-2023-HB5615-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB5615 Introduced 2/9/2024, by Rep. Tim Ozinga SYNOPSIS AS INTRODUCED:
15 ILCS 505/16.11 new
Amends the State Treasurer Act. Provides that the State Treasurer may establish and administer the Education Scholarship Account as a qualified tuition program under Section 529 of the Internal Revenue Code. Provides that distributions from an account in the Education Scholarship Account may be used for the designated beneficiary's qualified expenses; defines "qualified expenses". Provides who may open an account under the Program. Provides that the Treasurer and the State Board of Education shall each cooperate in providing each other with account information, as necessary, to prevent contributions in excess of those necessary to provide for the qualified expenses of the designated beneficiary. Sets forth provisions concerning funds for the Program. Sets forth provisions concerning investment policies for the Account. Provides that the Treasurer shall work with the State Board of Education to coordinate the marketing of the Education Scholarship Account. Sets forth other provisions concerning administering the Education Scholarship Account Program. Provides for rulemaking.
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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 1. The State Treasurer Act is amended by adding
Section 16.11 as follows:
(15 ILCS 505/16.11 new)
Sec. 16.11. Education Scholarship Account Program.
(a) As used in this Section:
"Account owner" means any person or entity who has opened
an account or to whom ownership of an account has been
transferred, as allowed by the Internal Revenue Code, and who
has authority to withdraw funds, direct withdrawal of funds,
change the designated beneficiary, or otherwise exercise
control over an account in the Education Scholarship Account.
"Donor" means any person or entity who makes contributions
to an account in the Education Scholarship Account.
"Designated beneficiary" means any individual designated
as the beneficiary of an account in the Education Scholarship
Account by an account owner. A designated beneficiary must
have a valid social security number or taxpayer identification
number. In the case of an account established as part of a
scholarship program permitted under Section 529 of the
Internal Revenue Code, the designated beneficiary is any

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individual receiving benefits accumulated in the account as a
scholarship.
"Member of the family" has the same meaning ascribed to
that term under Section 529 of the Internal Revenue Code.
"Nonqualified withdrawal" means a distribution from an
account other than a distribution that: (i) is used for the
qualified expenses of the designated beneficiary; (ii) results
from the beneficiary's death or disability; (iii) is a
rollover to another account in the Education Scholarship
Account; or (iv) is a rollover to an ABLE account, as defined
in Section 16.6 of this Act, or any distribution that, within
60 days after such distribution, is transferred to an ABLE
account of the designated beneficiary or a member of the
family of the designated beneficiary to the extent that the
distribution, when added to all other contributions made to
the ABLE account for the taxable year, does not exceed the
limitation under Section 529A(b) of the Internal Revenue Code.
"Qualified expenses" means all of the following:
(1) Tuition and fees at a qualified school, public
school, or other participating entity.
(2) Fees for:
(A) national norm referenced or criterion
referenced examinations;
(B) Advanced Placement examinations, Cambridge
International courses, International Baccalaureate
courses, or College-Level Examination Program

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examinations; or
(C) statewide assessments associated with industry
recognized credentials.
(3) Educational services for a student with a
disability.
(4) Payments associated with the use of
paraprofessional or educational aides.
(5) Services contracted for and provided by a school
district, charter school, or other school, including:
(A) individual classes;
(B) extracurricular activities or programs; or
(C) additional programs, resources, or staffing
defined in the student's education plan.
(6) Occupational therapy for a student with a
disability, provided in accordance with a student's
individualized education program or Section 504 plan under
the federal Rehabilitation Act of 1973.
(7) Fees for transportation paid to a fee-for-service
transportation provider for a student to travel to and
from an approved special education service provider.
(8) Tuition and fees to attend training programs and
camps that have a focus on:
(A) vocational skills;
(B) academic skills;
(C) life skills;
(D) independence; or

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(E) soft job skills that are character traits and
interpersonal skills that characterize a person's
relationships with other people.
(9) Additional services and therapies prescribed by a
student's treating physician in accordance with generally
accepted standards of care to improve outcomes for the
student in addition to any services currently being
provided by the school, insurance, or the Medicaid
program.
(10) Expenses to enroll in and attend sequences,
courses, apprenticeships, and programs of study or career
coaching and navigation services, postsecondary education
and training, transportation and equipment, certification
and credentialing examinations, and any other expenses
approved by the State Treasurer.
(11) Fees for the management of the account.
(b) The State Treasurer may establish and administer the
Education Scholarship Account as a qualified tuition program
under Section 529 of the Internal Revenue Code. The Account
may consist of one or more college savings programs. The State
Treasurer, in administering the Education Scholarship Account,
may: (1) receive, hold, and invest moneys paid into the
Account; and (2) perform any other action he or she deems
necessary to administer the Account, including any other
actions necessary to ensure that the Account operates as a
qualified tuition program in accordance with Section 529 of

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the Internal Revenue Code.
(c) The State Treasurer may delegate duties related to the
Education Scholarship Account to one or more contractors. The
contributions deposited in the Account, and any earnings
thereon, shall not constitute property of the State or be
commingled with State funds and the State shall have no claim
to or against, or interest in, such funds, provided that the
fees collected by the State Treasurer in accordance with this
Act, scholarship programs administered by the State Treasurer,
and seed funds deposited by the State Treasurer under Section
16.8 of the Act are State funds.
(d) The State Treasurer shall provide a separate
accounting for each designated beneficiary. The separate
accounting shall be provided to the account owner of the
account for the designated beneficiary at least annually and
shall show the account balance, the investment in the account,
the investment earnings, and the distributions from the
account.
(e) The State Treasurer may permit persons, including
trustees of trusts and custodians under a Uniform Transfers to
Minors Act or Uniform Gifts to Minors Act account, and certain
legal entities to be account owners as part of a scholarship
program, provided that: (1) an individual, trustee, or
custodian must have a valid social security number or taxpayer
identification number, be at least 18 years of age, and have a
valid United States street address; and (2) a legal entity

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must have a valid taxpayer identification number and a valid
United States street address. In-state and out-of-state
persons, trustees, custodians, and legal entities may be
account owners and donors, and both in-state and out-of-state
individuals may be designated beneficiaries in the Education
Scholarship Account.
(f) Any fees, costs, and expenses, including investment
fees and expenses and payments to third parties, related to
the Education Scholarship Account, shall be paid from the
assets of the Education Scholarship Account. The State
Treasurer shall establish fees to be imposed on accounts to
cover such fees, costs, and expenses, to the extent not paid
directly out of the investments of the Education Scholarship
Account, and to maintain an adequate reserve fund in line with
industry standards for government operated funds. The
Treasurer must use his or her best efforts to keep these fees
as low as possible and consistent with administration of high
quality competitive programs.
(g) To enhance the safety and liquidity of the Education
Scholarship Account, to ensure the diversification of the
investment portfolio of the Education Scholarship Account, 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.
(h) The Treasurer shall develop, publish, and implement an

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investment policy covering the investment of the moneys in
each of the programs in the Education Scholarship Account. The
policy shall be published each year as part of the audit of the
Education Scholarship Account by the Auditor General, which
shall be distributed to all account owners in such program.
The Treasurer shall notify all account owners in such program
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.
(i) An account owner may, directly or indirectly, direct
the investment of his or her account only as provided in
Section 529(b)(4) of the Internal Revenue Code. Donors and
designated beneficiaries, in those capacities, may not,
directly or indirectly, direct the investment of an account.
(j) Distributions from an account in the Education
Scholarship Account may be used for the designated
beneficiary's qualified expenses, and if not used in that
manner, may be considered a nonqualified withdrawal. Funds
contained in a Education Scholarship Account account may be
rolled over into an eligible ABLE account, as defined in
Section 16.6 of this Act, or another qualified tuition
program, to the extent permitted by Section 529 of the

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Internal Revenue Code.
Distributions made from the Education Scholarship Account
may be made directly to an educational institution, directly
to a vendor, in the form of a check payable to both the
designated beneficiary and the institution or vendor, directly
to the designated beneficiary or account owner, or in any
other manner that is permissible under Section 529 of the
Internal Revenue Code.
(k) Contributions to the Education Scholarship Account
shall be as follows:
(1) Contributions to an account in the Education
Scholarship Account may be made only in cash.
(2) The Treasurer shall limit the contributions that
may be made to the Education Scholarship Account on behalf
of a designated beneficiary, as required under Section 529
of the Internal Revenue Code, to prevent contributions for
the benefit of a designated beneficiary in excess of those
necessary to provide for the qualified expenses of the
designated beneficiary. The Account shall not permit any
additional contributions to an account as soon as the sum
of the aggregate balance in all accounts in the Account
for the designated beneficiary reaches the specified
balance limit established from time to time by the
Treasurer.
(l) The Treasurer and the State Board of Education shall
each cooperate in providing each other with account

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information, as necessary, to prevent contributions in excess
of those necessary to provide for the qualified expenses of
the designated beneficiary, as described in subsection (j).
The Treasurer shall work with the State Board of Education
to coordinate the marketing of the Education Scholarship
Account and the Illinois Prepaid Tuition Program when
considered beneficial by the Treasurer and the State
Superintendent of Education.
(m) No interest in the program, or any portion thereof,
may be used as security for a loan. Moneys held in an account
invested in the Education Scholarship Account shall be exempt
from all claims of the creditors of the account owner, donor,
or designated beneficiary of that account, except for the
non-exempt Education Scholarship Account transfers to or from
the account as defined under subsection (j) of Section 12-1001
of the Code of Civil Procedure.
(n) The assets of the Education Scholarship Account 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 Account 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 Education Scholarship Account account
during the taxable year may be deducted from adjusted gross
income as provided in Section 203 of the Illinois Income Tax

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