Substitute House Bill No. 6771
          Substitute House Bill No. 6771

              PUBLIC ACT NO. 97-224


AN ACT CONCERNING A COLLEGE SAVINGS PROGRAM.


    Be  it  enacted  by  the  Senate  and House of
Representatives in General Assembly convened:
    Section  1. (NEW) As used in sections 1 to 10,
inclusive, of this act:
    (1)  "Depositor"  means  any  person  making a
deposit, payment, contribution, gift or  otherwise
to   the   trust   pursuant   to  a  participation
agreement;
    (2)  "Designated  beneficiary"  means  (A) any
individual   (i)   state    resident    originally
designated  in  the  participation agreement, (ii)
subsequently designated who is a family member  as
defined  in  Section  2032A(e)(2)  of the Internal
Revenue Code or (iii) receiving a scholarship from
interests  in  the  trust  purchased by a state or
local government or an organization  described  in
Section 501(c)(3) of the Internal Revenue Code and
qualified  under  Section  529  of  the   Internal
Revenue   Code   or   (B)   any  other  designated
beneficiary  qualifying  under  said  Section  529
enrolled in the trust;
    (3)  "Eligible  educational institution" means
an  institution  of  higher  education  qualifying
under  Section 529 of the Internal Revenue Code as
an eligible educational institution;
    (4)   "Internal   Revenue   Code"   means  the
Internal Revenue Code of 1986, or  any  subsequent
corresponding  internal revenue code of the United
States, as from time to time amended;
    (5)     "Participation    agreements"    means
agreements between the trust  and  depositors  for
participation  in  a savings plan for a designated
beneficiary;
    (6)   "Qualified  higher  education  expenses"
means tuition, fees, books, supplies and equipment
required  for  the  enrolment  or  attendance of a
designated beneficiary at an eligible  educational
institution,  including undergraduate and graduate
schools and any other  higher  education  expenses
that  may  be  permitted  by  Section  529  of the
Internal Revenue Code; and
    (7)   "Trust"  means  the  Connecticut  Higher
Education Trust.
    Sec.  2.  (NEW)  (a)  There is established the
Connecticut Higher Education Trust to promote  and
enhance  the  affordability  and  accessibility of
higher education for residents of the  state.  The
trust  shall  constitute an instrumentality of the
state and  shall  perform  essential  governmental
functions,  as  provided  in  sections  1  to  10,
inclusive, of this act. The  trust  shall  receive
and    hold   all   payments   and   deposits   or
contributions intended for the trust, as  well  as
gifts,  bequests,  endowments or federal, state or
local grants  and  any  other  public  or  private
source  of  funds and all earnings until disbursed
in accordance with sections 1 to 10, inclusive, of
this act.
    (b)  The amounts on deposit in the trust shall
not constitute property of the state and the trust
shall   not  be  construed  to  be  a  department,
institution or agency of  the  state.  Amounts  on
deposit  in the trust shall not be commingled with
state funds and the state shall have no  claim  to
or  against,  or  interest  in,  such  funds.  Any
contract entered into by or any obligation of  the
trust shall not constitute a debt or obligation of
the state and the state shall have  no  obligation
to  any designated beneficiary or any other person
on account of the trust and all amounts  obligated
to  be  paid  from  the  trust shall be limited to
amounts available for such obligation  on  deposit
in  the trust. The amounts on deposit in the trust
may only  be  disbursed  in  accordance  with  the
provisions of sections 1 to 10, inclusive, of this
act. The trust shall continue in existence as long
as  it  holds  any deposits or has any obligations
and until its existence is terminated by  law  and
upon termination any unclaimed assets shall return
to the state.  Property  of  the  trust  shall  be
governed by section 3-61a of the general statutes.
    (c)  The  Treasurer  shall  be responsible for
the    receipt,    maintenance,    administration,
investing  and  disbursements  of amounts from the
trust. The trust shall not receive deposits in any
form  other  than cash. No depositor or designated
beneficiary  may  direct  the  investment  of  any
contributions  or  amounts held in the trust other
than the specific fund options provided for by the
trust.
    Sec.  3. (NEW) The Treasurer, on behalf of the
trust and for purposes of the trust, may:
    (1)  Receive and invest moneys in the trust in
any  instruments,   obligations,   securities   or
property in accordance with section 4 of this act;
    (2)  Establish  consistent   terms   for  each
participation agreement, bulk  deposit,  coupon or
instalment payments, including,  but  not  limited
to, (A) the  method  of  payment into the trust by
payroll deduction, transfer  from bank accounts or
otherwise,  (B)  the  termination,  withdrawal  or
transfer of payments  under  the  trust, including
transfers to or  from  a qualified tuition program
established by another  state  pursuant to Section
529 of the  Internal  Revenue  Code, (C) penalties
for distributions not  used  or made in accordance
with Section 529(b)(3)  of  the  Internal  Revenue
Code,  (D)  changing   of   the  identity  of  the
designated beneficiary and (E) any charges or fees
in  connection  with  the  administration  of  the
trust;
    (3)   Enter   into  one  or  more  contractual
agreements,   including   contracts   for   legal,
actuarial,    accounting,   custodial,   advisory,
management, administrative, advertising, marketing
and  consulting services for the trust and pay for
such services from the gains and earnings  of  the
trust;
    (4)  Procure  insurance in connection with the
trust's property, assets, activities, or  deposits
or contributions to the trust;
    (5)   Apply  for,  accept  and  expend  gifts,
grants,  or  donations  from  public  or   private
sources  to  enable  the  trust  to  carry out its
objectives;
    (6)   Adopt  regulations  in  accordance  with
chapter 54 of the general statutes for purposes of
sections 1 to 10, inclusive, of this act;
    (7) Sue and be sued;
    (8)  Establish  one  or  more funds within the
trust and  maintain  separate  accounts  for  each
designated beneficiary; and
    (9)  Take  any other action necessary to carry
out the purposes of sections 1 to  10,  inclusive,
of  this  act and incidental to the duties imposed
on the Treasurer pursuant to said sections.
    Sec.  4.  (NEW)  Notwithstanding sections 3-13
to 3-13h, inclusive, of the general statutes,  the
Treasurer  shall  invest the amounts on deposit in
the trust in a manner reasonable  and  appropriate
to achieve the objectives of the trust, exercising
the discretion and care of  a  prudent  person  in
similar circumstances with similar objectives. The
Treasurer shall give due consideration to rate  of
return, risk, term or maturity, diversification of
the total portfolio within the  trust,  liquidity,
the  projected disbursements and expenditures, and
the expected payments, deposits, contributions and
gifts  to  be  received.  The  Treasurer shall not
require  the   trust   to   invest   directly   in
obligations   of   the   state  or  any  political
subdivision of the state or in any  investment  or
other  fund  administered  by  the  Treasurer. The
assets of the trust shall be continuously invested
and  reinvested  in  a  manner consistent with the
objectives  of  the  trust  until  disbursed   for
qualified   educational   expenses,   expended  on
expenses incurred by the operations of the  trust,
or   refunded   to  the  depositor  or  designated
beneficiary on  the  conditions  provided  in  the
participation agreement.
    Sec.  5.  (NEW) Participation in the trust and
the offering and solicitation  of  the  trust  are
exempt  from  sections  36b-16  and  36b-22 of the
general  statutes.  The  Treasurer  shall   obtain
written  advice  of counsel or written advice from
the Securities Exchange Commission, or both,  that
the trust and the offering of participation in the
trust are not subject to federal securities laws.
    Sec. 6. (NEW)  On or before October fifteenth,
annually, the Treasurer  shall  submit a financial
report, pursuant to  section  3-37  of the general
statutes, to the Governor on the operations of the
trust  including  the   receipts,   disbursements,
assets,   investments,   and    liabilities    and
administrative costs of  the  trust  for the prior
fiscal year. The  Treasurer shall also submit such
report to the  Connecticut  Higher Education Trust
Advisory Committee established pursuant to section
3-22e  of the  general  statutes,  as  amended  by
section  11 of  this  act,  and  make  the  report
available  to  each   depositor   and   designated
beneficiary.
    Sec.  7.  (NEW)  The property of the trust and
the earnings on the trust shall be exempt from all
taxation   by   the   state   and   all  political
subdivisions of the state.
    Sec.   8.   (NEW)   The   state   pledges   to
depositors, designated beneficiaries and with  any
party  who  enters  into contracts with the trust,
pursuant to the provisions of sections  1  to  10,
inclusive,  of  this  act, that the state will not
limit or alter  the  rights  under  said  sections
vested  in  the  trust  or contract with the trust
until  such  obligations   are   fully   met   and
discharged  and such contracts are fully performed
on  the  part  of  the  trust,  provided   nothing
contained  in  this  section  shall  preclude such
limitation or alteration if adequate provision  is
made  by law for the protection of such depositors
and  designated  beneficiaries  pursuant  to   the
obligations  of  the  trust or parties who entered
into such contracts with the trust. The trust,  on
behalf  of  the state, may include this pledge and
undertaking  for  the   state   in   participation
agreements   and   such   other   obligations   or
contracts.
    Sec.  9.  (NEW)  Nothing  in sections 1 to 10,
inclusive, of this act  or  in  any  participation
agreement   shall  constitute  nor  be  deemed  to
constitute  an  agreement,  pledge,  promise,   or
guarantee  of  admission or continued enrolment of
any designated beneficiary or any other person  to
any  eligible educational institution in the state
or any other institution of higher education.
    Sec.  10.  (NEW)  The Treasurer shall take any
action necessary to ensure that the trust complies
with  all  applicable  requirements of federal and
state laws, rules and regulations  to  the  extent
necessary  for the trust to constitute a qualified
state tuition program and is exempt from  taxation
under Section 529 of the Internal Revenue Code.
    Sec.   11.   Section   3-22e  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    (a)  There  is  established  a [Family College
Savings Plan] CONNECTICUT HIGHER  EDUCATION  TRUST
Advisory  Committee  which  shall  consist  of the
State  Treasurer,  the  Commissioner   of   Higher
Education,  the  Secretary of the Office of Policy
and Management and the cochairpersons and  ranking
members  of  the  joint standing committees of the
General  Assembly  having  cognizance  of  matters
relating  to  education  and  finance, revenue and
bonding,  or  their  designees,  and  one  student
financial aid officer AND ONE FINANCE OFFICER at a
public institution  of  higher  education  in  the
state, EACH APPOINTED BY THE BOARD OF GOVERNORS OF
HIGHER EDUCATION, and one  student  financial  aid
officer  AND ONE FINANCE OFFICER at an independent
institution of higher education in the state, each
appointed  by  the  [Board  of Governors of Higher
Education] CONNECTICUT CONFERENCE  OF  INDEPENDENT
COLLEGES.  THE  ADVISORY  COMMITTEE  SHALL MEET AT
LEAST ANNUALLY. THE STATE TREASURER SHALL  CONVENE
THE MEETINGS OF THE COMMITTEE.
    (b)  Within  six months [following the initial
issue and sale of college savings  bonds  pursuant
to  sections  3-22a  to 3-22d, inclusive] FROM THE
DATE OF  THE  TRUST'S  ANNUAL  REPORT,  the  State
Treasurer  and  the  Board  of Governors of Higher
Education shall jointly report, IN ACCORDANCE WITH
SECTION 11-4a, to the joint standing committees of
the General Assembly having cognizance of  matters
relating  to  education  and  finance, revenue and
bonding on an evaluation of  the  [family  college
savings  plan]  CONNECTICUT HIGHER EDUCATION TRUST
and recommendations, if any, for  improvements  in
the [plan] PROGRAM.
    Sec.  12.  This  act shall take effect July 1,
1997.

Approved June 24, 1997