2007 Legislation
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HOUSE BILL NO. 232 – College saving prog bd/mgr/contract


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Bill Status

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.
      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

Bill Text

  ]]]]              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
  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:
 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.
  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 / Fiscal Impact

                       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.

Name: Ron Crane, Idaho State Treasurer's Office 
Phone: 334-3200
Liza Carberry, Investment Manager 332-2997

STATEMENT OF PURPOSE/FISCAL NOTE                         H 232