Senator Evan J. Vickers proposes the following substitute bill:


1     
HIGHER EDUCATION STUDENT ASSISTANCE

2     
AMENDMENTS

3     
2022 GENERAL SESSION

4     
STATE OF UTAH

5     
Chief Sponsor: Evan J. Vickers

6     
House Sponsor: Val L. Peterson

7     

8     LONG TITLE
9     General Description:
10          This bill amends and enacts provisions related to the Utah Higher Education Assistance
11     Authority.
12     Highlighted Provisions:
13          This bill:
14          ▸     defines terms;
15          ▸     creates the Higher Education Student Success Endowment (endowment) consisting
16     of funds from the proceeds from the divestment of the Utah Higher Education
17     Assistance Authority's (authority) loan portfolio, among other revenue sources;
18          ▸     directs the state treasurer to manage the endowment;
19          ▸     authorizes the Utah Board of Higher Education (board) to expend money from the
20     endowment to advance higher education system priorities;
21          ▸     enacts board duties in relation to the endowment;
22          ▸     directs the board to prepare recommendations for discontinuing the authority; and
23          ▸     makes conforming changes.
24     Money Appropriated in this Bill:
25          None

26     Other Special Clauses:
27          This bill provides a special effective date.
28     Utah Code Sections Affected:
29     AMENDS:
30          51-7-2, as last amended by Laws of Utah 2021, Chapter 33
31          53B-12-101, as last amended by Laws of Utah 2016, Chapter 296
32     ENACTS:
33          53B-7-801, Utah Code Annotated 1953
34          53B-7-802, Utah Code Annotated 1953
35          53B-7-803, Utah Code Annotated 1953
36          53B-12-109, Utah Code Annotated 1953
37     

38     Be it enacted by the Legislature of the state of Utah:
39          Section 1. Section 51-7-2 is amended to read:
40          51-7-2. Exemptions from chapter.
41          The following funds are exempt from this chapter:
42          (1) funds invested in accordance with the participating employees' designation or
43     direction pursuant to a public employees' deferred compensation plan established and operated
44     in compliance with Section 457 of the Internal Revenue Code of 1986, as amended;
45          (2) funds of the Utah State Retirement Board;
46          (3) funds of the Utah Housing Corporation;
47          (4) endowment funds of higher education institutions, including funds of the Higher
48     Education Student Success Endowment, created in Section 53B-7-801;
49          (5) permanent and other land grant trust funds established pursuant to the Utah
50     Enabling Act and the Utah Constitution;
51          (6) the State Post-Retirement Benefits Trust Fund;
52          (7) the funds of the Utah Educational Savings Plan;
53          (8) funds of the permanent state trust fund created by and operated under Utah
54     Constitution, Article XXII, Section 4;
55          (9) the funds in the Navajo Trust Fund;
56          (10) the funds in the Radioactive Waste Perpetual Care and Maintenance Account;

57          (11) the funds in the Employers' Reinsurance Fund;
58          (12) the funds in the Uninsured Employers' Fund;
59          (13) the Utah State Developmental Center Long-Term Sustainability Fund, created in
60     Section 62A-5-206.7; and
61          (14) the funds in the Risk Management Fund created in Section 63A-4-201.
62          Section 2. Section 53B-7-801 is enacted to read:
63     
Part 8. Higher Education Student Success Endowment

64          53B-7-801. Definitions.
65          As used in this part:
66          (1) "Authority" means the Utah Higher Education Assistance Authority.
67          (2) "Endowment" means the Higher Education Student Success Endowment created in
68     Section 53B-7-802.
69          Section 3. Section 53B-7-802 is enacted to read:
70          53B-7-802. Higher Education Student Success Endowment.
71          (1) There is created the Higher Education Student Success Endowment.
72          (2) The endowment consists of:
73          (a) the proceeds from divestment of the authority's loan portfolio in accordance with
74     Section 53B-12-109;
75          (b) appropriations made to the endowment by the Legislature, if any;
76          (c) income from the investment of the endowment; and
77          (d) other revenues received from other sources.
78          (3) The board shall account for the receipt and expenditures of endowment money in
79     accordance with the policies and guidance of the Division of Finance.
80          (4) (a) (i) The state treasurer shall invest the endowment money with the primary goal
81     of providing for stability, income, and growth of the principal.
82          (ii) The state treasurer may deduct any administrative costs incurred in managing
83     endowment assets from earnings before distributing the earnings.
84          (b) Nothing in this section requires a specific outcome in investing.
85          (c) The state treasurer may employ professional asset managers to assist in the
86     investment of assets of the endowment.
87          (d) The state treasurer may only provide compensation to asset managers from earnings

88     generated by the endowment's investments.
89          (e) The state treasurer shall invest and manage the endowment assets as a prudent
90     investor would, by:
91          (i) considering the purposes, terms, distribution requirements, and other circumstances
92     of the endowment; and
93          (ii) exercising reasonable care, skill, and caution in order to meet the standard of care
94     of a prudent investor.
95          (f) In determining whether or not the state treasurer has met the standard of care of a
96     prudent investor, the judge or finder of fact shall:
97          (i) consider the state treasurer's actions in light of the facts and circumstances existing
98     at the time of the investment decision or action, and not by hindsight; and
99          (ii) evaluate the state treasurer's investment and management decisions respecting
100     individual assets not in isolation, but in context of an endowment portfolio as a whole as a part
101     of an overall investment strategy that has risk and return objectives reasonably suited to the
102     endowment.
103          (5) (a) The endowment shall earn interest.
104          (b) The state treasurer shall deposit the interest or other revenue earned from
105     investment of the endowment into the endowment.
106          (6) The board:
107          (a) may expend money from the endowment for programs that:
108          (i) advance the system priorities as established in Subsection 53B-1-402(2)(a); and
109          (ii) support current and prospective students enrolled at an institution, as described in
110     Section 53B-2-101; and
111          (b) may not expend money from the endowment for a capital expenditure, including
112     the construction or lease of a capital facility or operation and maintenance of a capital facility.
113          (7) The board shall ensure that:
114          (a) money deposited into the endowment is irrevocable and is expended only for
115     programs that advance the system priorities as established in Subsection 53B-1-402(2)(a); and
116          (b) creditors of the board of directors may not seize, attach, or otherwise obtain assets
117     of the endowment.
118          Section 4. Section 53B-7-803 is enacted to read:

119          53B-7-803. Board duties.
120          (1) The board shall:
121          (a) act as trustee of the endowment and exercise the state's fiduciary responsibilities;
122          (b) meet at least twice a year to conduct business on behalf of the endowment;
123          (c) review and approve all endowment policies, projections, rules, criteria, procedures,
124     forms, standards, and performance goals;
125          (d) review and approve the budget and expenditures for the endowment in accordance
126     with Section 53B-7-802;
127          (e) review financial records for the endowment, including endowment receipts,
128     expenditures, and investments; and
129          (f) take any other action necessary to perform the board's fiduciary obligations.
130          (2) The board shall annually submit a budget and expenditures to the Higher Education
131     Appropriations Subcommittee no later than November 1.
132          Section 5. Section 53B-12-101 is amended to read:
133          53B-12-101. Utah Higher Education Assistance Authority designated -- Powers.
134          The board is the Utah Higher Education Assistance Authority and, in this capacity,
135     may, subject to Section 53B-12-109, do the following:
136          (1) guarantee 100% of the principal of and interest on a loan to or for the benefit of a
137     person attending or accepted to attend an eligible postsecondary educational institution to assist
138     that person in meeting any educational expenses incurred in an academic year;
139          (2) take, hold, and administer real or personal property and money, including interest
140     and income, either absolutely or in trust, for any purpose under this chapter;
141          (3) acquire property for the purposes indicated in Subsection (2) by purchase or lease
142     and by the acceptance of gifts, grants, bequests, devises, or loans;
143          (4) enter into or contract with an eligible lending institution, or with a public or private
144     postsecondary educational institution to provide for the administration by the institution of any
145     loan or loan guarantee made by it, including application and repayment provisions;
146          (5) participate in federal programs guaranteeing, reinsuring, or otherwise supporting
147     loans to eligible borrowers for postsecondary educational purposes and agree to, and comply
148     with, the conditions and regulations applicable to those programs;
149          (6) adopt, amend, or repeal rules, in accordance with Title 63G, Chapter 3, Utah

150     Administrative Rulemaking Act, to govern the activities authorized by this chapter;
151          (7) receive state appropriations for the fund established under Section 53B-12-104 to
152     match deposits and to accept contributions received by it for this purpose;
153          (8) receive funds from the federal government to assist in implementing federally
154     supported programs administered under this chapter;
155          (9) engage, appoint, or contract for the services of officers, agents, employees, and
156     private consultants to render and perform professional and technical duties and provide
157     assistance and advice in carrying out the purposes of this chapter, to describe their duties, and
158     to fix the amount and source of their compensation; and
159          (10) receive employment information from the Workforce Research and Analysis
160     Division in accordance with Section 35A-4-312 for the purpose of collecting defaulted student
161     loans made under this chapter. The information obtained under this Subsection (10) shall be
162     limited to the employer's name, address, and telephone number for borrowers who have
163     defaulted on a student loan held by the Utah Higher Education Assistance Authority.
164          Section 6. Section 53B-12-109 is enacted to read:
165          53B-12-109. Dissolution of authority -- Higher Education Scholarship
166     Endowment.
167          (1) As used in this section:
168          (a) "Authority" means the Utah Higher Education Assistance Authority.
169          (b) "Board" means the board of directors appointed in accordance with Section
170     53B-12-102.
171          (2) The board of directors shall, no later than November 1, 2022, prepare a written
172     analysis and recommendations describing:
173          (a) the most efficient way to discontinue any authority loan servicing and
174     administration;
175          (b) a complete accounting of remaining authority assets, real property, outstanding
176     bonds, and other obligations;
177          (c) recommendations for reorganizing the board of directors for purposes of
178     administering the Utah Educational Savings Plan created in Section 53B-8a-103;
179          (d) actions the authority will take to discontinue participation in federal programs
180     guaranteeing, reinsuring, or otherwise supporting loans for postsecondary educational

181     purposes; and
182          (e) efforts the board of directors is taking and will take toward the dissolution of the
183     authority.
184          (3) The board shall divest the authority's loan portfolio and deposit the proceeds into
185     the Higher Education Student Success Endowment, created in Section 53B-7-802.
186          Section 7. Effective date.
187          If approved by two-thirds of all the members elected to each house, this bill takes effect
188     upon approval by the governor, or the day following the constitutional time limit of Utah
189     Constitution, Article VII, Section 8, without the governor's signature, or in the case of a veto,
190     the date of veto override.