Today's Law As Amended

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AB-853 Student financial aid: Golden State Scholarshare Trust Act. (2019-2020)

As Amends the Law Today
As Amends the Law on Nov 18, 2019


 Section 69981 of the Education Code is amended to read:

 (a) There is hereby created an instrumentality of the State of California to be known as the Golden State Scholarshare College Savings Trust.
(b) The purposes, powers, and duties of the Scholarshare trust are vested in, and shall be exercised by, the board.
(c) The board, in the capacity of trustee, shall have the power and authority to do all of the following:
(1) Sue and be sued.
(2) Make and enter into contracts necessary for the administration of the Scholarshare trust.
(3) Adopt a corporate seal and change and amend it from time to time.
(4) Cause moneys in the program fund to be held and invested and reinvested.
(5) Enter into agreements with any institution of higher education or any federal or other state agency or other entity as required for the effectuation of its rights and duties.
(6) Accept any grants, gifts, appropriation, and other moneys from any unit of federal, state, or local government or any other person, firm, partnership, or corporation for deposit to the administrative fund or the program fund. Except as otherwise provided in Section 69982, the board may not accept any contribution by any nonpublic entity, person, firm, partnership, or corporation that is not designated for a specified beneficiary, unless the contribution is deposited in the CalSAVE account pursuant to subdivision (d).
(7) Enter into participation agreements with participants, as set forth in Section 69983.
(8) Make payments to institutions of higher education or other third parties pursuant to participation agreements on behalf of beneficiaries.
(9) Make refunds to participants upon the cancellation of participation agreements pursuant to the provisions, limitations, and restrictions set forth in this article.
(10) Appoint an executive director, who shall serve at the pleasure of the board, and determine the duties of the executive director and other staff as necessary and set their compensation. The board may authorize the executive director to enter into contracts on behalf of the board or conduct any business necessary for the efficient operation of the board.
(11) Make provisions for the payment of costs of administration and operation of the Scholarshare trust.
(12) Carry out the duties and obligations of the Scholarshare trust pursuant to this article and have any and all other powers as may be reasonably necessary for the effectuation of the purposes, objectives, and provisions of this article.
(d) (1) There is established within the Scholarshare trust the California Scholarshare Advancement Vehicle for Education (CalSAVE) program to fund scholarships for beneficiaries to be determined by the board that may include, but are not limited to, foster youth, youth in at-promise at-risk  categories, individuals with demonstrated economic need, former and active members of the California National Guard, individuals seeking undergraduate or postbaccalaureate courses in disciplines in which the state faces shortages, including nursing and teaching, and other categories to be determined by the board.
(2) The CalSAVE account is created within the program fund and is continuously appropriated, without regard to fiscal years, to the board for the purposes of the CalSAVE program. The board shall create subaccounts within the CalSAVE account for each category of beneficiary determined pursuant to paragraph (1). The CalSAVE account shall be funded by contributions from federal or local governments, or any other person, firm, partnership, or corporation, and from the administrative fund established pursuant to Section 69984. A Any  person contributing to the CalSAVE account may designate that the that  person’s contribution be deposited into any subaccount within the CalSAVE account, or may contribute without any designation. The board shall apportion any undesignated funds among the subaccounts, taking into consideration factors, including, but not limited to, the number of eligible applications received seeking funding from a particular subaccount.
(e) The board shall adopt regulations as it deems necessary to implement this article consistent with the federal Internal Revenue Code and regulations issued pursuant to that code to ensure that this program meets all criteria for federal tax-deferral or tax-exempt benefits, or both.

SEC. 2.

 Section 69986 of the Education Code is amended to read:

 For all purposes of California law, all of the following apply:
(a) The participant shall retain ownership of all contributions made under any participation agreement up to the date of utilization for payment of higher education costs for the beneficiary, and all interest derived from the investment of the payments made by the participant shall be deemed to be held in Scholarshare trust for the benefit of the beneficiary. Neither the contributions, nor any interest derived therefrom, may be pledged as collateral for any loan.
(b) If the participation agreement is canceled prior to payment of higher education expenses for the beneficiary, the participant shall retain ownership of all contributions made under the participation agreement and reversionary right to receive interest on all the contributions at the rate of interest at which the contributions were invested.
(c) Notwithstanding subdivision (b), if there has been a decrease in the value of the funds in a participant’s account at the time of cancellation of the participation agreement, the participant shall not have ownership rights to any amount above the market value of the funds in the account at the time of cancellation.
(d) The board shall develop adequate measures to prevent contributions on behalf of a designated beneficiary in excess of the maximum contribution limits provided for in this article.
(e) If the beneficiary graduates from an institution of higher education and has no intention of further attendance at an institution of higher education, and a balance remains in the participant’s account, then the Scholarshare trust shall pay the balance to the participant.
(f) The board shall develop a method to make payment of qualified higher education expenses directly to higher education institutions or to other third parties for the benefit of designated beneficiaries and to control for fraud under any direct reimbursement method of payment that it may adopt. The institution of higher education or another third party shall obtain ownership of the payments made for the higher education expenses paid to the institution or to that third party at the time each payment is made to the institution or to that third party.
(g) The board may also develop a method to make payment of qualified higher education expenses directly to beneficiaries in a manner that is consistent with applicable federal requirements and restrictions.
(h) Any amounts paid pursuant to the Scholarshare trust that are not listed in this section shall be owned by the Scholarshare trust.
(i) A participant may transfer ownership rights to another eligible participant, including, but not necessarily limited to, a gift of the ownership rights to an eligible minor beneficiary pursuant to this article. The transfer shall be effected and the property distributed in accordance with administrative regulations adopted by the board or the terms of the participation agreement.
(j) Custodians for a minor under the California Uniform Transfers to Minors Act (Part 9 (commencing with Section 3900) of Division 4 of the Probate Code) or similar provisions adopted by another state may enter into participation agreements in accordance with regulations adopted by the board.