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H0232..........................................................by EDUCATION
COLLEGE SAVINGS PROGRAM - Amends existing law to provide that the maximum
term of agreement between the Idaho College Savings Program Board and a
contracted manager of the program shall not exceed ten years.
02/22 House intro - 1st rdg - to printing
02/23 Rpt prt - to Educ
02/28 Rpt out - rec d/p - to 2nd rdg
03/01 2nd rdg - to 3rd rdg
03/02 3rd rdg - PASSED - 67-0-3
AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
Block, Bock, Bolz, Brackett, Chadderdon, Chavez, Chew, Clark,
Collins, Crane, Durst, Edmunson, Eskridge, Hagedorn, Hart, Harwood,
Henbest, Henderson, Jaquet, Killen, King, Kren, Labrador, Lake,
LeFavour, Luker, Marriott, Mathews, McGeachin, Mortimer, Moyle,
Nielsen, Nonini, Pasley-Stuart, Patrick, Pence, Raybould, Ring,
Ringo, Roberts, Ruchti, Rusche, Sayler, Schaefer, Shepherd(2),
Shepherd(8), Shirley, Shively, Smith(30), Smith(24), Snodgrass,
Stevenson, Thayn, Trail, Vander Woude, Wills, Wood(27), Wood(35), Mr.
Speaker
NAYS -- None
Absent and excused -- Boe, Bradford, Loertscher
Floor Sponsor - Nonini
Title apvd - to Senate
03/05 Senate intro - 1st rdg - to Educ
03/08 Rpt out - rec d/p - to 2nd rdg
03/09 2nd rdg - to 3rd rdg
03/15 3rd rdg - PASSED - 34-0-1
AYES -- Andreason, Bair, Bilyeu, Broadsword, Burkett, Cameron,
Coiner, Corder, Darrington, Davis, Fulcher, Gannon, Geddes, Goedde,
Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst, Little,
Lodge, Malepeai, McGee, McKague, McKenzie, Pearce, Richardson,
Schroeder, Siddoway, Stegner, Stennett, Werk
NAYS -- None
Absent and excused -- Bastian
Floor Sponsor - Pearce
Title apvd - to House
03/16 To enrol - Rpt enrol - Sp signed
03/19 Pres signed - To Governor
03/23 Governor signed
Session Law Chapter 170
Effective: 07/01/07
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature First Regular Session - 2007
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 232
BY EDUCATION COMMITTEE
1 AN ACT
2 RELATING TO THE COLLEGE SAVINGS PROGRAM; AMENDING SECTION 33-5403, IDAHO CODE,
3 TO PROVIDE THE MAXIMUM TERM OF AGREEMENT BETWEEN THE IDAHO COLLEGE SAVINGS
4 PROGRAM BOARD AND A CONTRACTED MANAGER OF THE PROGRAM SHALL NOT EXCEED TEN
5 YEARS.
6 Be It Enacted by the Legislature of the State of Idaho:
7 SECTION 1. That Section 33-5403, Idaho Code, be, and the same is hereby
8 amended to read as follows:
9 33-5403. USE OF CONTRACTOR AS ACCOUNT DEPOSITORY AND MANAGER. (1) The
10 board shall implement the program through the use of one (1) or more financial
11 institutions to act as the depositories and managers. Under the program, per-
12 sons may establish accounts through the program at the depository.
13 (2) The board shall solicit proposals from financial institutions to act
14 as the depositories and managers of the program. Financial institutions that
15 submit proposals must describe the financial instruments that will be held in
16 accounts.
17 (3) The board shall select as program depositories and managers the
18 financial institution or institutions from among bidding financial institu-
19 tions that demonstrate the most advantageous combination, both to potential
20 program participants and this state, of the following factors:
21 (a) Financial stability and integrity;
22 (b) The safety of the investment instruments being offered, taking into
23 account any insurance provided with respect to these instruments;
24 (c) The ability of the investment instruments to track estimated costs of
25 higher education as calculated by the board and provided by the financial
26 institution to the account holder;
27 (d) The ability of the financial institutions, directly or through a sub-
28 contract, to satisfy recordkeeping and reporting requirements;
29 (e) The financial institution's plan for promoting the program and the
30 investment it is willing to make to promote the program;
31 (f) The fees, if any, proposed to be charged to persons for maintaining
32 accounts;
33 (g) The minimum initial deposit and minimum contributions that the finan-
34 cial institution will require and the willingness of the financial insti-
35 tution to accept contributions through payroll deduction plans and other
36 deposit plans;
37 (h) Any other benefits to this state or its residents included in the
38 proposal, including an account opening fee payable to the board by the
39 account owner and an additional fee from the financial institution for
40 statewide program marketing by the board.
41 (4) The board shall enter into a contract with a financial institution
42 or, except as provided in subsection (5) of this section, contracts with
43 financial institutions, to serve as program managers and depositories.
2
1 (5) The board may select more than one (1) financial institution and
2 investment for the program if both of the following conditions exist:
3 (a) The United States internal revenue service has provided guidance that
4 giving a contributor a choice of two (2) investment instruments under a
5 state plan will not cause the plan to fail to qualify for favorable tax
6 treatment under section 529 of the Internal Revenue Code;
7 (b) The board concludes that the choice of instrument vehicles is in the
8 best interest of college savers and will not interfere with the promotion
9 of the program.
10 (6) A program manager shall:
11 (a) Take all action required to keep the program in compliance with the
12 requirements of this chapter and all action not contrary to this chapter
13 or its contract to manage the program so that it is treated as a qualified
14 state tuition plan under section 529 of the Internal Revenue Code;
15 (b) Keep adequate records of each account, keep each account segregated
16 from each other account and provide the board with the information neces-
17 sary to prepare statements required by section 33-5404, Idaho Code, or
18 file these statements on behalf of the board;
19 (c) Compile and total information contained in statements required to be
20 prepared under section 33-5404, Idaho Code, and provide these compilations
21 to the board;
22 (d) If there is more than one (1) program manager, provide the board with
23 this information to assist the board to determine compliance with section
24 33-5404, Idaho Code;
25 (e) Provide representatives of the board, including other contractors or
26 other state agencies, access to the books and records of the program man-
27 ager to the extent needed to determine compliance with the contract;
28 (f) Hold all accounts in trust for the benefit of this state and the
29 account owner.
30 (7) Any contract executed between the board and a financial institution
31 pursuant to this section shall be for a term not to exceed five ten (510)
32 years.
33 (8) If a contract executed between the board and a financial institution
34 pursuant to this section is not renewed, all of the following conditions apply
35 at the end of the term of the nonrenewed contract:
36 (a) Accounts previously established and held in investment instruments at
37 the financial institution shall not be terminated;
38 (b) Additional contributions may be made to the accounts;
39 (c) No new accounts may be placed with that financial institution.
40 (9) The board may terminate a contract with a financial institution at
41 any time for good cause on the recommendation of the board. If a contract is
42 terminated pursuant to this subsection, the board shall take custody of
43 accounts held at that financial institution and shall seek to promptly trans-
44 fer the accounts to another financial institution that is selected as a pro-
45 gram manager and into investment instruments as similar to the original
46 investments as is possible.
STATEMENT OF PURPOSE
RS 16911
This legislation extends the length of term for the contractual
agreement between the Idaho College Savings Plan board and the
administrator of the program from five (5) to ten (10) years.
Vendors who are seeking this contract need a longer term to be
able to recover their investment and yet remain competitive. The
result of this bill will be an increase in the number of vendors
who bid on the contract, and it will also allow the board to
negotiate more favorable terms with interested vendors.
FISCAL NOTE
No fiscal impact.
Contact
Name: Ron Crane, Idaho State Treasurer's Office
Phone: 334-3200
Liza Carberry, Investment Manager 332-2997
STATEMENT OF PURPOSE/FISCAL NOTE H 232