NO. 58. AN ACT RELATING TO THE COMMISSION ON HIGHER EDUCATION FUNDING AND THE HIGHER EDUCATION ENDOWMENT TRUST FUND.
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. 16 V.S.A. § 2885(c) and (d) are amended to read:
(c) In August of each year, beginning in the year 2000, the state treasurer shall withdraw *[
five percent of the assets which were in the fund on the previous June 30, and shall divide the amount]* and divide an amount equal to five percent of the assets equally among the University of Vermont, the Vermont state colleges and the Vermont student assistance corporation. In this subsection, "assets" means the average of the fund’s market values at the end of each quarter for the most recent 12 quarters, or all quarters of operation, whichever is less. Therefore, up to five percent of the fund assets are hereby annually appropriated pursuant to this section, provided that the amount appropriated shall not exceed an amount which would bring the fund balance below the initial appropriation made in fiscal year 2000 plus any additional contributions to the principal. The University of Vermont and the Vermont state colleges shall use the funds to provide nonloan financial aid to Vermont students attending their institutions; the Vermont student assistance corporation shall use the funds to provide nonloan financial aid to Vermont students attending a Vermont postsecondary institution.
(d) In August of each year, beginning in the year 2000, the commission on higher education funding may authorize the state treasurer to make an amount equal to up to two percent of the assets *[
which were in the fund on the previous June 30]* available to Vermont public institutions for the purpose of creating or increasing a permanent endowment. In this subsection, "assets" means the average of the fund’s market values at the end of each quarter for the most recent 12 quarters, or all quarters of operation, whichever is less. Therefore, up to two percent of the fund assets are hereby annually appropriated pursuant to this section, provided that the amount appropriated shall not exceed an amount which would bring the fund balance below the initial appropriation made in fiscal year 2000 plus any additional contributions to the principal. One-half of the amount appropriated shall be available to the University of Vermont and one-half shall be available to the Vermont state colleges. The University of Vermont or Vermont state colleges may withdraw funds upon *[ receipt of]* certification by the withdrawing institution to the commissioner of finance and management that it has received private donations which are double the amount *[ withdrawn and upon a finding by the commission that the funds will be used to create or increase a permanent endowment]* it plans to withdraw.
Sec. 2. 16 V.S.A. § 2886(b) and (c) are amended to read:
(b) The commission shall consist of 14 members as follows:
(1) The president of the University of Vermont;
(2) The president of the Vermont student assistance corporation;
(3) The chancellor of the Vermont State Colleges;
(4) A sitting president of a Vermont state college, appointed by the chancellor in consultation with the governor, for a term of two years;
(5) The president of the association of Vermont independent colleges and one sitting president of an independent college, selected by the association in consultation with the governor, for a term of three years;
(6) A representative of the Vermont low income advocacy council, chosen by the council for a term of one year;
(7) Two members at large appointed by the governor, for a term of three years each;
(8) Four legislative members, who shall be entitled to per diem expenses from the legislative appropriation, as follows:
(A) Two members from the house appointed by the speaker of the house, each to serve until the end of the biennium in which she or he is appointed. However, if the member leaves the legislature during that term, the speaker shall appoint another member for the remainder of the biennium;
(B) Two members of the senate appointed by the committee on committees, each to serve until the end of the biennium in which she or he is appointed. However, if the member leaves the legislature during that term, the committee on committees shall appoint another member for the remainder of the biennium;
(9) The secretary of administration.
(c) The executive, legislative and higher education staff shall provide support to the commission as appropriate to accomplish its tasks. Primary administrative support shall be provided by the legislative council.
Sec. 3. [DELETED]
Sec. 4. 16 V.S.A. chapter 87, subchapter 7 is amended to read:
Subchapter 7. Vermont Higher Education *[
Savings]* Investment Plan
§ 2875. LEGISLATIVE FINDINGS AND INTENT
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(e) The implementation and effectuation of the Vermont higher education *[
savings]* investment plan as provided by this subchapter furthers this public purpose.
§ 2876. DEFINITIONS
As used in this subchapter, except where the context clearly requires another interpretation:
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(2) "Benefits" means the payment of qualified *[
post-secondary]* postsecondary education costs on behalf of a beneficiary by the corporation’s *[ savings]* investment plan during the beneficiary’s attendance at an institution of *[ post-secondary]* postsecondary education.
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(7) "Vermont higher education *[
savings]* investment plan" or "*[ savings]* investment plan" means the program created pursuant to this subchapter.
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§ 2877. VERMONT HIGHER EDUCATION *[
SAVINGS]* INVESTMENT PLAN CREATED
(a) There is created a program of the state to be known as the Vermont higher education *[
savings]* investment plan to be administered by the Vermont student assistance corporation as an instrumentality of the state.
(b) In order to establish and administer the *[
savings]* investment plan, the corporation, in addition to its other powers and authority, shall have the power and authority to:
(1) Develop and implement educational programs and related informational materials for participants and their families. Special efforts shall be made to contact families with young children and to reach individuals whose access to higher education opportunities has been limited;
(2) Enter into agreements with any institution of *[
post-secondary]* postsecondary education, the state or any federal or other agency or entity as required for the operation of the *[ savings]* investment plan pursuant to this subchapter;
(3) Accept any grants, gifts, legislative appropriations, and other moneys from the state, any unit of federal, state, or local government or any other person, firm, partnership, or corporation for deposit to the account of the *[
savings]* investment plan;
(4) Invest the funds received from participants in appropriate investment vehicles, including education loans made by the corporation;
(5) Enter into participation agreements with participants;
(6) Develop and use two or more types of participation agreements to provide a range of *[
savings plan]* investment structures;
(7) Make payments to institutions of *[
post-secondary]* postsecondary education on behalf of beneficiaries pursuant to participation agreements;
(8) Make refunds to participants upon the termination of participation agreements pursuant to the provisions, limitations, and restrictions set forth in this subchapter and the rules and regulations adopted by the corporation;
(9) Make provision for the payment of costs of administration and operation of the *[
savings]* investment plan subject to the limitations on charges on participation agreements established in subdivision 2878(5) of this title;
(10) Adopt rules and regulations to implement this subchapter in conformance with the Internal Revenue Code and other applicable law; and
(11) Effectuate and carry out all of the powers granted by this subchapter, and have all other powers necessary to carry out and effectuate the purposes, objectives and provisions of this subchapter pertaining to the *[
savings]* investment plan program, including the power to:
(A) Carry out studies and projections in order to advise participants regarding present and estimated future *[
post-secondary]* postsecondary education costs and levels of financial participation in the plan required in order to enable participants to achieve their educational funding objectives; and
(B) Procure insurance, guarantees or other protections against any loss in connection with the assets or activities of the *[
savings]* investment plan.
§ 2878. PARTICIPATION AGREEMENTS FOR *[
SAVINGS]* INVESTMENT PLAN
The corporation shall have the authority to enter into *[
savings]* investment plan participation agreements with participants on behalf of beneficiaries pursuant to the provisions of this subchapter, including the following terms and agreements:
(1) A participation agreement shall stipulate the terms and conditions of the *[
savings]* investment plan in which the participant makes deposits;
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§ 2878a. PARTICIPATION AGREEMENTS FOR *[
SAVINGS]* INVESTMENT PLAN; INDIVIDUAL DEVELOPMENT *[ SAVINGS]* INVESTMENT ACCOUNTS
The corporation may participate in the individual development *[
savings]* investment program established under section 1123 of Title 33, in accordance with the rules of the agency of human services adopted thereunder, in connection with an individual or family who, at the time of depositing funds into an account created pursuant to a Vermont higher education *[ savings]* investment plan, receives public assistance or is otherwise an eligible saver under section 1123 of Title 33.
§ 2879. INVESTMENT AND PAYMENTS
All money paid by a participant in connection with participation agreements shall be deposited as received and shall be promptly invested by the corporation. Deposits and earnings thereon accumulated on behalf of participants in the *[
savings]* investment plan may be used, as provided in the participation agreement, for payments to any institution of *[ post-secondary]* postsecondary education.
§ 2879a. CANCELLATION OF PARTICIPATION AGREEMENTS
(a) Any participant may cancel a participation agreement at will, and any return of funds from the participant’s account shall be subject to terms and conditions established by the corporation, provided that any penalties levied as a result comply with the Internal Revenue Code’s provisions relating to *[
savings]* investment plans.
(b) The corporation may provide by rule that no termination penalty shall apply in certain circumstances.
§ 2879b. EFFECT OF PAYMENTS IN COMPUTATION AND DETERMINATION OF FINANCIAL AID NEED
Amounts available for the payment of *[
post-secondary]* postsecondary education costs pursuant to the *[ savings]* investment plan shall be considered family assets of the beneficiary in determining need and eligibility for student aid as determined by applicable law.
§ 2879c. TAX EXEMPTION
The assets of the Vermont higher education *[
savings]* investment plan held by the corporation and the assets of any similar plan qualified under Section 529 of the Internal Revenue Code and any income therefrom shall be exempt from all taxation by the state or any of its political subdivisions. Income earned or received from the fund by any participant or beneficiary shall not be subject to state income tax and shall be eligible for any benefits provided in accordance with the *[ savings]* investment plan provisions of the Internal Revenue Code. The exemption from taxation under this section shall apply only to assets and income maintained, accrued, or expended pursuant to the requirements of the Vermont higher education *[ savings]* investment plan, the provisions of this subchapter, and the applicable provisions of the Internal Revenue Code. No exemption shall apply to assets and income expended for any other purposes.
§ 2879d. PROPERTY RIGHTS TO ASSETS IN THE PLAN
The assets of the Vermont higher education *[
savings]* investment plan shall at all times be preserved, invested and expended solely and only for the purposes set forth in this chapter and in accordance with the participation agreements, and no property rights therein shall exist in favor of the state.
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Sec. 5. INTENT
Nothing in this act shall be construed to bring the Vermont Higher Education Investment Plan out of compliance with Section 529 of the Internal Revenue Code of 1986, as amended, and the plan shall continue to be a qualified higher education savings plan under Section 529 of the Code.
Sec. 6. 16 V.S.A. § 2823(f) is added to read:
(f) The corporation is authorized to borrow money and issue its debt obligations to further the governmental and public purposes set forth in this chapter, including the purchase, construction, renovation, reconstruction, rehabilitation, improvement, furnishing and equipping of office or other business space to be owned or leased by the corporation for use by the corporation to further the governmental and public purposes set forth in this chapter. Notwithstanding subsection 2868(i) of this chapter, notes, bonds or other obligations issued under this section may be direct and general obligations of the corporation, and may be otherwise secured as the corporation shall determine, including by a mortgage. No debt obligation issued under this subsection may be effective without the approval in writing of the governor. Such obligations shall not be deemed to constitute a debt or liability or obligation of the state of Vermont or of any political subdivision of it, nor shall they be deemed to constitute a pledge of the faith and credit of the state or of any political subdivision thereof. Each obligation issued by the corporation under this section shall contain on its face a statement to the effect that neither the faith and credit nor the taxing power of the state of Vermont or any political subdivision of it is pledged to the payment of the principal or the interest on these obligations.
Sec. 7. EFFECTIVE DATES
(a) Secs. 1 - 2 of this act shall take effect on July 1, 2001.
(b) The remaining sections shall take effect on passage.
Approved: June 16, 2001