Code Section Group

Education Code - EDC

TITLE 3. POSTSECONDARY EDUCATION [66000 - 101060]

  ( Title 3 enacted by Stats. 1976, Ch. 1010. )

DIVISION 5. GENERAL PROVISIONS [66000 - 70110]

  ( Division 5 enacted by Stats. 1976, Ch. 1010. )

PART 42. STUDENT FINANCIAL AID PROGRAM [69400 - 70115.2]

  ( Part 42 enacted by Stats. 1976, Ch. 1010. )

CHAPTER 2. Student Financial Aid Programs [69500 - 70039]

  ( Chapter 2 enacted by Stats. 1976, Ch. 1010. )

ARTICLE 19.5. California Kids Investment and Development Savings Program [69996 - 69996.6]
  ( Article 19.5 added by Stats. 2019, Ch. 53, Sec. 16. )

69996.
  

This article shall be known, and may be cited, as the California Kids Investment and Development Savings Program or KIDS Program.

(Added by Stats. 2019, Ch. 53, Sec. 16. (SB 77) Effective July 1, 2019.)

69996.1.
  

The California Kids Investment and Development Savings Program is hereby established. The board shall administer the program for the purposes of expanding access to higher education through savings.

(Added by Stats. 2019, Ch. 53, Sec. 16. (SB 77) Effective July 1, 2019.)

69996.2.
  

For the purposes of this article, the following terms have the following meanings:

(a) “Account” means a Scholarshare 529 account established pursuant to this article under Article 19 (commencing with Section 69980).

(b) “Beneficiary” has the same meaning as “designated beneficiary,” as provided in Section 529(e)(1) of the Internal Revenue Code.

(c) “Board” means the Scholarshare Investment Board established pursuant to Section 69984.

(d) “Fund” means the California Kids Investment and Development Savings Program Fund established pursuant to subdivision (a) of Section 69996.6.

(e) “Institution of higher education” has the same meaning as “eligible educational institution,” as provided in Section 529(e)(5) of the Internal Revenue Code.

(f) “Internal Revenue Code” means the Internal Revenue Code of 1986, as it is amended from time to time, if, as determined by the board, the amendment is consistent with the purposes of this article.

(g) “Low-income households” means households with a total annual adjusted gross income less than seventy-five thousand dollars ($75,000) or households identified by the board by other means as low-income for purposes of the program.

(h) “Participant” means a parent or legal guardian of an eligible child, or a parent or legal guardian of a child described in subdivision (d) of Section 69996.3, or any private individual or entity who contributes moneys to the program.

(i) “Program” means the California Kids Investment and Development Savings Program established pursuant to this article.

(j) “Qualified higher education expenses” means the expenses of attendance at an institution of higher education, as provided in Section 529(e)(3) of the Internal Revenue Code. Notwithstanding Section 529(c)(7) of the Internal Revenue Code, “qualified higher education expenses” shall not include any tuition expenses in connection with enrollment or attendance at an elementary or secondary public, private, or religious school.

(k) “Seed deposit” means an initial contribution into an account for a child born on or after July 1, 2020.

(Added by Stats. 2019, Ch. 53, Sec. 16. (SB 77) Effective July 1, 2019.)

69996.3.
  

(a) Each eligible child born on or after July 1, 2020, who is a California resident at the time of birth and is a member of a low-income household, is eligible for the program.

(b) No later than 90 days after a child described in subdivision (a) is born, the State Department of Public Health shall provide the board with identifiable birth data for the child in a file format as defined by the board. The birth data shall include, but not necessarily be limited to, the child’s name and birth date and the name and contact information of each parent or guardian of the child, preferably the parent or guardian’s street or email address. The birth data is confidential and shall not be disclosed except as necessary for the program. No more than 90 days after receiving the birth data from the department, the board shall notify each parent or guardian of each eligible child about the program. The notification shall include information on all of the following:

(1) How the parent or guardian may opt out of the program.

(2) The subaccount opened with for the child pursuant to subdivision (f).

(3) How the parent or guardian may establish a separate account pursuant to Article 19 (commencing with Section 69980) and contribution matching opportunities provided pursuant to that article.

(c) The board shall make a child’s designated balance in a subaccount available to the child’s parent or legal guardian through a secured internet link.

(d) The board may periodically inform a child’s parent or legal guardian of account earnings designated for the child, information on how the parent or guardian may establish a separate account pursuant to Article 19 (commencing with Section 69980), and information on contribution matching opportunities provided pursuant to that article.

(e) The board shall translate notifications and information provided pursuant to subdivisions (b) to (d), inclusive, into languages pursuant to Section 7299.3 of the Government Code.

(f) Upon appropriation by the Legislature, the board shall establish one or more accounts and shall make a seed deposit from the fund into a subaccount established within an account in an amount determined by the board. Each seed deposit shall be designated for a particular child for whom the board receives birth data pursuant to subdivision (b), if no parent or legal guardian has opted that child out of the program. Moneys in a subaccount designated for a child, including any investment earnings attributed to the amount of the child’s seed deposit since the date of the deposit as calculated by the board, shall be used for the purpose of providing awards for qualified higher education expenses associated with the attendance of the child at an eligible institution of higher education. Each seed deposit shall be at least twenty-five dollars ($25). The board may provide additional seed funding designated for a child into a subaccount if the parent or guardian of the child engages with the subaccount by verifying receipt of information provided pursuant to paragraph (2) of subdivision (b), establishing a separate account pursuant to Article 19 (commencing with Section 69980), or engaging with the subaccount by other means approved by the board.

(g) Upon receiving documentation of a child’s enrollment as a student at an institution of higher education, the board shall make a payment to that institution in the amount of the seed deposit designated for the child pursuant to subdivision (f), plus any investment earnings attributed to that amount since the date of that deposit as calculated by the board, for qualified higher education expenses associated with the child’s attendance at that institution.

(h) Subject to available money in the fund, the board may provide additional incentives from the fund for children participating in the program.

(i) (1) Subject to available funding, a parent or legal guardian, residing in California, of a child who meets the criteria in paragraph (2) may apply to the board to enroll the child into the program. Subject to available funding, the enrollee shall be eligible for any incentives described in subdivision (h), as applicable, but is not eligible for a seed deposit.

(2) The child resides in a low-income household and is a current California resident under 10 years of age who was either of the following:

(A) Born a California resident before July 1, 2020.

(B) Not a California resident at the time of birth.

(j) (1) If a beneficiary does not use any portion, or all, of the funds intended for the beneficiary in an account for a qualified higher education expense for any reason, including death or disability of the beneficiary, before the beneficiary turns 26 years of age, all contributions made for the beneficiary into the account and any earnings from those funds shall be forfeited and deposited into the fund for the program.

(2) Notwithstanding paragraph (1), subject to available funding, the board may establish an appeal process to allow a beneficiary to use moneys designated for the beneficiary in an account after the beneficiary turns 26 years of age.

(3) All contributions made into an account for a child who has opted out of the program pursuant to subdivision (b), including any investment earnings attributed to the amount of the child’s seed deposit since the date of the deposit as calculated by the board, shall be forfeited and deposited into the fund for the program in a timely manner.

(k) The board shall encourage each parent and legal guardian of a beneficiary, including each parent and legal guardian of a child who applies to enroll the child into the program as a beneficiary pursuant to subdivision (i), to establish a separate account pursuant to Article 19 (commencing with Section 69980). The board shall provide assistance on how to establish the separate account.

(l) The board may use up to 5% of state appropriations provided for purposes of the program for administrative costs.

(Added by Stats. 2019, Ch. 53, Sec. 16. (SB 77) Effective July 1, 2019.)

69996.4.
  

The board shall have the power and authority to do all of the following:

(a) Sue and be sued.

(b) Make and enter into contracts necessary for the implementation and administration of the program.

(c) Cause moneys in the fund to be held and invested and reinvested.

(d) Enter into agreements with any institution of higher education or any federal or state agency or other entity as required for the effectuation of its rights and duties.

(e) Accept any grants, gifts, appropriations, and other moneys from any unit of federal, state, or local government or any other person, firm, partnership, or corporation for deposit to the fund.

(f) Make payments to institutions of higher education on behalf of beneficiaries.

(g) Make provisions for the payment of costs of administration and operation of the program.

(h) Carry out the duties and obligations of the program pursuant to this article and have all other powers as may be necessary for the effectuation of the purposes, objectives, and provisions of this article.

(i) Carry out studies and projections to advise participants regarding present and estimated future higher education expenses.

(j) Contract for goods and services and engage personnel, including consultants, actuaries, managers, counsel, and auditors, as necessary for the purpose of rendering professional, managerial, and technical assistance and advice.

(k) Participate in any federal, state, or local governmental program for the benefit of the program.

(l) Procure insurance against any loss in connection with the property, assets, or activities of the program.

(m) Administer the funds of the program.

(n) Adopt regulations for the implementation and administration of the program.

(Added by Stats. 2019, Ch. 53, Sec. 16. (SB 77) Effective July 1, 2019.)

69996.5.
  

The board may consider marketing the program to California residents. The board may include in its marketing efforts information designed to educate California residents about the benefits of saving for higher education and information to help them decide the combination of savings strategies that may be appropriate for them.

(Added by Stats. 2019, Ch. 53, Sec. 16. (SB 77) Effective July 1, 2019.)

69996.6.
  

(a) The California Kids Investment and Development Savings Program Fund is hereby established in the State Treasury. Notwithstanding Section 13340 of the Government Code, moneys in the fund shall be continuously appropriated, without regard to fiscal years, to the board for the program. The fund shall be the initial repository of all appropriations, gifts, or other financial assets received by the board in connection with operation of the program.

(b) (1) Subject to available funding, the program shall be implemented before January 1, 2021. The board may establish an implementation timeline for the program based on available funding. If the board does not secure adequate funds to implement the program before January 1, 2021, program implementation may be delayed while the board makes good faith efforts to secure necessary funding. The board may accept gifts, grants, awards, matching contributions, interest income, and appropriations from individuals, businesses, state and local governmental entities, and third-party sources for the program on terms the board deems advisable.

(2) Before the program is implemented and throughout the program’s operation, the board may authorize a county, city, nonprofit organization, or any other entity operating a local child savings account program to provide input to the program established pursuant to this article. The input may include, but is not limited to, information on any of the following:

(A) Infrastructure and systems development.

(B) Outreach and coordination with local child savings account programs.

(C) Program incentives to promote equity.

(D) Administrative fees and caps.

(E) Contribution strategies.

(F) Program accessibility, including language, identification, and banking access.

(c) On or before January 1, 2022, the board shall report to the Department of Finance and the Legislature, pursuant to Section 9795 of the Government Code, information pertaining to the first year of the program’s implementation. The report shall include all of the following:

(1) Detailed program expenditure information.

(2) The number of subaccounts opened and state and nonstate contributions made to subaccounts.

(3) Information about how parents were notified pursuant to paragraph (2) of subdivision (b) of Section 69996.3.

(4) Number of parents or legal guardians who engage with subaccounts by verifying receipt of information provided to them pursuant to paragraph (2) of subdivision (b), establishing separate accounts pursuant to Article 19 (commencing with Section 69980), or engaging with subaccounts by other means approved by the board.

(5) A description of the board’s efforts and success in soliciting philanthropic or nonstate money to support the program.

(6) A description of the board’s marketing of the program.

(7) Recommendations for improving the program.

(Added by Stats. 2019, Ch. 53, Sec. 16. (SB 77) Effective July 1, 2019.)

EDCEducation Code - EDC19.5