H.B. 200

1

EDUCATIONAL SAVINGS PLAN
2 TRUST AMENDMENTS
3 1997 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Keele Johnson
6 AN ACT RELATING TO POSTSECONDARY EDUCATION; MODIFYING THE
7 DEFINITION OF HIGHER EDUCATION COSTS IN RELATION TO THE UTAH
8 EDUCATIONAL SAVINGS PLAN TRUST; MODIFYING PROVISIONS ON THE
9 PAYMENT OF OPERATION COSTS ASSOCIATED WITH ADMINISTERING THE
10 TRUST; AND CLARIFYING THE METHOD BY WHICH INTEREST FROM THE TRUST'S
11 ENDOWMENT FUND ACCRUES TO AND IS PAID OUT FOR BENEFICIARIES.
12 This act affects sections of Utah Code Annotated 1953 as follows:
13 AMENDS:
14 53B-8a-102, as enacted by Chapter 4, Laws of Utah 1996, Second Special Session
15 53B-8a-107, as enacted by Chapter 4, Laws of Utah 1996, Second Special Session
16 Be it enacted by the Legislature of the state of Utah:
17 Section 1. Section 53B-8a-102 is amended to read:
18 53B-8a-102. Definitions.
19 As used in this chapter:
20 (1) "Administrative fund" means the moneys used to administer the Utah Educational
21 Savings Plan Trust.
22 (2) "Beneficiary" means the individual designated by a participation agreement to benefit
23 from payments for higher education costs at an institution of higher education.
24 (3) "Benefits" means the payment of higher education costs on behalf of a beneficiary by
25 the trust during the beneficiary's attendance at an institution of higher education.
26 (4) "Board" means the board of directors of the Utah Educational Savings Plan Trust
27 which is the state Board of Regents acting in its capacity as the Utah Higher Education Assistance

1 Authority under Title 53B, Chapter 12.
2 (5) "Endowment fund" means the endowment fund established under Section 53B-8a-107
3 which is held as a separate fund within the trust.
4 (6) "Higher education costs" means the certified costs of tuition, fees, [and room and board
5 for attendance at an institution of higher education, and other direct education costs as defined by
6 the board] books, supplies, and equipment required for the enrollment or attendance of a
7 designated beneficiary at an institution of higher education.
8 (7) "Institution of higher education" means a two-year or four-year public or regionally
9 accredited private nonprofit college or university or a Utah applied technology center, with regard
10 to students enrolled in postsecondary training or education programs.
11 (8) "Participant" means an individual, firm, corporation, or its legal representative who has
12 entered into a participation agreement under this chapter for the advance payment of higher
13 education costs on behalf of a beneficiary.
14 (9) "Participation agreement" means an agreement between a participant and the trust
15 entered into under this chapter.
16 (10) "Program administrator" means the administrator of the trust appointed by the board
17 to administer and manage the trust.
18 (11) "Program fund" means the program fund created under Section 53B-8a-107, which
19 is held as a separate fund within the trust.
20 (12) "Tuition and fees" means the quarterly or semester charges imposed to attend an
21 institution of higher education and required as a condition of enrollment.
22 (13) "Utah Educational Savings Plan Trust" or "trust" means the trust created under
23 Section 53B-8a-103.
24 (14) "Vested participation agreement" means a participation agreement which has been
25 in full force and effect during eight continuous years of residency of the beneficiary in the state
26 while participating in the trust.
27 Section 2. Section 53B-8a-107 is amended to read:
28 53B-8a-107. Program, endowment, and administrative funds -- Investment and
29 payments from funds.
30 (1) (a) The board shall segregate moneys received by the trust into three funds, the
31 program fund, the endowment fund, and the administrative fund.

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1 (b) No more than [2% of moneys received into the program fund and] two percentage
2 points of the interest earned annually in the endowment fund may be transferred to the
3 administrative fund for the purpose of paying operating costs associated with administering the
4 trust and as required under Sections 53B-8a-103 through 53B-8a-105.
5 (c) No more than .5 percentage points of the interest earned annually in the program fund
6 may be transferred to the administrative fund to pay operating costs associated with administering
7 the trust and as required under Sections 53B-8a-103 through 53B-8a-105.
8 (d) All moneys paid by participants in connection with participation agreements shall be
9 deposited as received into separate accounts within the program fund which shall be promptly
10 invested and accounted for separately.
11 [(d)] (e) All moneys received by the trust from the proceeds of gifts and other endowments
12 for the purposes of the trust shall be deposited as received into the endowment fund, which shall
13 be promptly invested and accounted for separately.
14 [(e)] (f) The program fund and the endowment fund shall be separately administered.
15 [(f)] (g) Any gifts, grants, or donations made by any governmental unit or any person,
16 firm, partnership, or corporation to the trust for deposit to the endowment fund shall be a grant,
17 gift, or donation to the state for the accomplishment of a valid public eleemosynary, charitable, and
18 educational purpose and shall not be included in the income of the donor for Utah tax purposes.
19 (2) (a) Each beneficiary under a participation agreement shall receive [a pro rata] an
20 interest in a portion, as determined by policy, of the investment income derived by the endowment
21 fund in any year during which funds are invested in the program fund on behalf of the beneficiary,
22 to be payable each year in which moneys are paid under the participation agreement to institutions
23 of higher education for higher education costs, not to exceed the cost of attendance at the
24 institution.
25 (b) The [amount received] interest in the investment income derived by the endowment
26 fund that accrues to a beneficiary in any year shall be in the ratio that the principal amount paid
27 by the participant under the participation agreement and investment income earned to date under
28 the agreement bears to the principal amount of all moneys, funds, and securities then held in the
29 program fund[, but not to exceed the amount which, in combination with the current payment due
30 from the program fund, equals the beneficiary's higher education costs for the current period of
31 enrollment] during the year.

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1 (c) At the time any payments or disbursements for higher education costs are due from the
2 trust to any institution of higher education under a participation agreement, the trust shall add to
3 that payment from endowment fund income a pro rata portion of the amount calculated pursuant
4 to Subsection (b), which shall be transferred directly to the institution of higher education
5 simultaneously with the payment made from the program fund and shall be used for payment of
6 the higher education costs of the beneficiary, but not to exceed the amount which, in combination
7 with the current payment due from the program fund, equals the beneficiary's higher education
8 costs for the current period of enrollment.
9 (d) Endowment fund earnings not accruing to a beneficiary under a participation
10 agreement or not transferred to the administrative fund shall be reinvested in the endowment fund.
11 [(d)] (e) Moneys accrued by participants in the program fund of the trust may be used for
12 payments to any institution of higher education.
13 [(e)] (f) No rights to any moneys derived from the endowment fund shall exist if moneys
14 payable under the participation agreement are paid to an education institution which is not an
15 institution of higher education as defined in Section 53B-8a-102.




Legislative Review Note
as of 12-10-96 1:25 PM

A limited legal review of this bill raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel

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