REPORT TITLE:
State Post-Secondary

DESCRIPTION:
Establishes a college tuition savings program to be administered
by the state post-secondary education commission for resident and
nonresident students at any accredited post-secondary educational
institution.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           1465
NINETEENTH LEGISLATURE, 1998                               
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO THE STATE POST-SECONDARY EDUCATION COMMISSION.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Chapter 305H, Hawaii Revised Statutes, is
 
 2 amended by adding a new part to be appropriately designated and
 
 3 to read as follows:
 
 4           "PART   .  COLLEGE TUITION SAVINGS PROGRAM
 
 5      �305H-A  College tuition savings plan.(a)  The director of
 
 6 finance shall issue requests for proposals to evaluate and
 
 7 determine the vehicle for investments of the savings plan and its
 
 8 administration.  The commission shall consider and, if
 
 9 appropriate, give preference to proposals best meeting the
 
10 following criteria:
 
11      (1)  Ability to administer financial programs with
 
12           individual account maintenance and reporting;
 
13      (2)  Ability to develop and administer an investment program
 
14           of a nature similar to the objectives of the college
 
15           tuition savings plan; and
 
16      (3)  Ability to augment the college tuition savings plan
 
17           with other programs or informational services
 
18           considered beneficial by the commission.
 
19 The final selection of the vehicle for investments and its
 

 
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 1 administration shall be made by the commission.
 
 2      (b)  The savings plan shall require an initial application
 
 3 fee which shall be used for administrative costs of the savings
 
 4 plan.  The commission shall determine and make recommendations
 
 5 regarding the use of personnel in the department of budget and
 
 6 finance with costs for such administrative support to be funded
 
 7 from the savings plan.  The savings plan shall be on a "cash
 
 8 only" basis, and shall include provisions for automatic
 
 9 deductions.
 
10      �305H-B  Residency.  Both resident and nonresident students
 
11 shall be eligible to participate in and benefit from the savings
 
12 plan.
 
13      �305H-C  Use of tuition savings.  Funds may be used for any
 
14 educational expenses for postsecondary, undergraduate, or
 
15 graduate education at an educational institution accredited by an
 
16 accrediting association or agency recognized by the secretary of
 
17 education.
 
18      �305H-D  Deferred use.  Participants in the savings program
 
19 may defer use of the funds in the plan until such time as those
 
20 funds are needed, so long as the participant notifies the
 
21 commission and the director of finance of such deferral in such
 
22 manner as determined by the commission.
 
23      �305H-E  Withdrawal, refund, or transfer of funds.(a)  Any
 

 
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                                     S.B. NO.           1465
                                                        
                                                        

 
 1 person who withdraws funds from the savings plan early or does
 
 2 not use such funds to attend an eligible educational institution
 
 3 shall be subject to taxation by the state on the interest and
 
 4 dividends accrued from the savings plan, except:
 
 5      (1)  If the person for which the savings plan was intended
 
 6           has died or become permanently disabled; or
 
 7      (2)  If the savings plan is transferred to another qualified
 
 8           beneficiary as defined by the Internal Revenue Service.
 
 9      (b)  Refunds shall be disbursed to the designated
 
10 beneficiary of the savings plan.
 
11      �305H-F  Liability exemption.  Neither the State nor the
 
12 educational institution shall be liable for any shortage of funds
 
13 in the event that the accruals from the savings plan are
 
14 insufficient to meet the tuition requirements of such institution
 
15 chosen by the student for which the plan was intended.
 
16      �305H-G  Funds exempt from interest and dividends tax.
 
17 Except as otherwise indicated in this chapter, interest and
 
18 dividend from funds invested in the savings plan shall be exempt
 
19 from taxation under chapter 235."
 
20      SECTION 2.  In codifying the new sections added by section 1
 
21 of this Act, the revisor of statutes shall substitute appropriate
 
22 section numbers for the letters used in the new sections
 
23 designated in this Act.
 

 
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                                     S.B. NO.           1465
                                                        
                                                        

 
 1      SECTION 3.  This Act shall take effect upon its approval.
 
 2 
 
 3                              INTRODUCED BY:______________________