Report Title:

Education; "Bright Futures" Special Fund

 

Description:

Establishes the bright futures special fund to provide grants and low-interest loans of up to $5,000 each for children from low-income families, to be paid directly for pre-school or higher education purposes. Interest earned from the rainy day and hurricane relief funds is to be deposited into the fund.

 

HOUSE OF REPRESENTATIVES

H.B. NO.

940

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to education.

 

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

SECTION 1. The legislature finds that there are a number of needy families in Hawaii who would benefit from being able to send their young children to pre-schools, or their older children to college, but simply cannot afford to do either because of the high cost of living in Hawaii.

Accordingly, the purpose of this Act is to establish a "bright futures" special fund, to be administered by the department of education, to provide grants and low-interest loans of up to $5,000 per pupil to allow children of these low-income families to attend pre-school or an institution of higher education, as appropriate.

Moneys in the fund would include interest and investment income from the emergency and budget reserve ("rainy day") fund, which is funded primarily from proceeds from tobacco settlement money, and the Hawaii hurricane relief fund. The corpus of the rainy day and hurricane relief funds would continue to be used for the purposes for which they were originally established.

SECTION 2. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§302A- Bright futures special fund. (a) There is established in the state treasury the bright futures special fund to be administered by the department of education. The proceeds of the fund shall be used by the department for the issuance of grants and low-interest loans in amounts not exceeding $5,000 per pupil, for children of low-income families to attend either pre-school or for higher education purposes; provided that moneys shall be paid out of the fund directly to the pre-school or institution of higher education.

(b) The department shall adopt rules pursuant to chapter 91 to implement this section, including the establishment of criteria for recipients of grants and low-income loans issued pursuant to this section, a definition of "low-income families", eligible pre-schools and institutions of higher education, and related matters.

(c) There shall be deposited into the bright futures special fund:

(1) All moneys received and collected by the department of education from the Hawaii hurricane relief fund pursuant to section 431P-5(b)(12) and the emergency budget and reserve fund pursuant to section 328L-3(b), that are not otherwise pledged, obligated, or required by law to be placed in those funds or expended for any other purpose;

(2) Appropriations made by the legislature to the special fund;

(3) All interest earned from moneys in the special fund; and

(4) Any contributions, grants, endowments, donations, or gifts in cash or otherwise from any source, including the State, corporations, or other businesses, foundations, government, individuals, and other interested parties;

provided that any appropriations made by the State shall not supplant or diminish the funding of existing department of education programs that are funded in whole or in part by the State; and provided further that the moneys shall be made available for the purposes of this fund when the total amount of moneys in the fund reaches $         in the aggregate.

(d) The department of education shall submit a report to the legislature detailing all funds received and all moneys disbursed out of the fund prior to the convening of each regular session."

SECTION 3. Section 328L-3, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) All interest and investment income earned from moneys in the emergency and budget reserve fund shall be [credited to the general fund.] deposited into the bright futures special fund established pursuant to section 302A- ."

SECTION 4. Section 431P-5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) In addition to the general powers under subsection (a), the fund shall have the specific power to:

(1) Adopt and administer a plan of operation in accordance with section 431P-7, and a manual of rules and rates to provide persons having an insurable interest in eligible property with insurance coverage provided by the fund;

(2) Authorize the provision of hurricane coverage by the fund for real property and tangible personal property located in or on real property and establish limits of liability for specific coverages within the range of authorized coverage;

(3) Adopt actuarially sound rates based on reasonable assumptions relative to expectations of hurricane frequency and severity for all coverage provided under policies or endorsements issued by the fund. Rates adopted shall be subject to approval by the commissioner pursuant to article 14 of chapter 431. Rates adopted shall provide for classification of risks and shall include past and prospective losses and expense experience in this State;

(4) Adopt procedures, guidelines, and surcharges applicable to policies of hurricane property insurance issued in connection with an underlying property policy issued by an unauthorized insurer;

(5) Adopt any form of insurance policy necessary for providing policies of hurricane property insurance by the fund, with the approval of the commissioner;

(6) Issue policies of hurricane property insurance and pay claims for coverage over the mandatory deductible or other deductible provided in the plan of operation or any manual of rules and rates adopted under the plan of operation;

(7) Require every licensed property and casualty insurer transacting direct property insurance business in this State to act as a servicing facility, and by contract with that insurer authorize the insurer to inspect eligible properties, service policies and policyholders of hurricane property insurance, provide claim services, and perform any other duties as authorized by the fund for applicants to the fund and those insured by it;

(8) (A) Assess all licensed property and casualty insurers the amounts which, together with the other assets of the fund, are sufficient to meet all necessary obligations of the fund. The assessment shall be made on the insurer's gross direct written premiums for property and casualty insurance in this State for the preceding calendar year. The rate of assessment in a year in which a covered event has not occurred shall be 3.75 per cent and shall not include the insurer's gross direct written premiums for motor vehicle insurance in this State; provided that following a covered event, the rate of assessment may be increased to an amount not to exceed five per cent and may include the insurer's gross direct written premiums for motor vehicle insurance in this State. This increase shall remain in effect until such time as all claims and other obligations, including but not limited to bonds and notes, arising out of a covered event shall have been fully discharged. An insurer authorized to provide comparable coverage under section 431P-10(b) and which is providing hurricane property insurance in the State shall be assessed an amount that excludes gross direct written premiums for property insurance in this State. The assessment for a year in which a covered event has not occurred shall be collected quarterly during each calendar year;

(B) In the event of a loss from a covered event the fund, in addition to the assessment in subparagraph (A), shall assess those insurers which acted as servicing facilities during the twelve months ending at the start of the month preceding the month in which the covered event occurs. The total assessment shall be a fixed percentage of the total coverage provided by the fund under its policies of hurricane property insurance during the month preceding the month in which the covered event occurs. The percentage to be used in calculating the total assessment shall be as follows:

(i) For calendar year 1998, a percentage as fixed by the board in the plan of operation, but in no event shall the total assessment exceed $500,000,000;

(ii) For calendar year 1999, 1.125 per cent;

(iii) For calendar year 2000, 1.25 per cent; and

(iv) For calendar year 2001, and each calendar year thereafter, 1.5 per cent.

A separate total assessment shall be made for each covered event. The total assessment shall be allocated to each servicing facility based on the proportion of the total amount of the fund's gross direct written premiums for policies of hurricane property insurance serviced by each servicing facility to the total amount of the fund's gross direct written premiums for policies of hurricane property insurance, in each case, during the twelve months ending at the start of the month preceding the month in which the covered event occurs. Assessments made under this subparagraph and those under subparagraph (A) in a year in which a covered event has occurred are due from each insurer based on assessment procedures established by the fund to meet its obligations to policyholders in a timely manner; and

(C) The fund may exempt or defer, in whole or in part, the assessment of any insurer if the assessment would cause the insurer's financial statement to reflect amounts of capital or surplus less than the minimum amounts required for a certificate of authority in this State;

(9) Develop a program of incentives to encourage insurers to provide policies of hurricane property insurance in the event the commissioner authorizes the provision of comparable insurance pursuant to section 431P-10(b) which may include but are not limited to exemption of the insurer's gross direct written premium for property insurance from the assessment pursuant to paragraph (8)(A);

(10) Develop a credit based on the difference between premiums written in 1993 and the premiums written in 1992 by each property insurer against the assessment for gross direct written premiums written in 1993;

(11) Develop procedures regarding policies written by unauthorized insurers comparable to the assessments, surcharges, and other contributions made by insurers authorized to do business in this State;

(12) Accumulate reserves or funds[, including the investment income thereon,] to be used for paying expenses, making or repaying loans or other obligations of the fund, providing loss mitigation incentives, and paying valid claims for covered events insured by the fund; provided that all investment income and interest derived from accumulated reserves or funds in the Hawaii hurricane relief fund shall be deposited into the bright futures special fund established pursuant to section 302A-   ;

(13) Collect and maintain statistical and other data as may be required by the commissioner;

(14) Exempt mortgage transactions from payments of the special mortgage recording fee and provide for maximum limits on or uniform reduction of the special mortgage recording fee, pursuant to rules adopted by the board;

(15) Impose fines for each incident of nonpayment of amounts due to the fund under this chapter; provided that the fines shall not exceed twenty-five per cent of the amount then due;

(16) Create loss mitigation incentives, including but not limited to premium credits, premium rebates, loans, or cash payments;

(17) Enter into claims financing transactions, including but not limited to reinsurance transactions, debt transactions, and other transactions incorporating elements of reinsurance, insurance, debt or equity;

(18) Establish business and corporate entities or organizations pursuant to the purposes of this chapter; and

(19) Perform any and all acts reasonably necessary to carry out the purposes of this chapter."

SECTION 5. It is the intent of this Act not to jeopardize the receipt of any federal aid nor to impair the obligation of the State or any agency thereof to the holders of any bond issued by the State or by any such agency, and to the extent, and only to the extent, necessary to effectuate this intent, the governor may modify the strict provisions of this Act, but shall promptly report any such modification with reasons therefor to the legislature at its next session thereafter for review by the legislature.

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2001.

INTRODUCED BY:

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