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