1.1                          A bill for an act 
  1.2             relating to education; appropriating money for 
  1.3             education and related purposes to the higher education 
  1.4             services office, board of trustees of the Minnesota 
  1.5             state colleges and universities, board of regents of 
  1.6             the University of Minnesota, and the Mayo Medical 
  1.7             Foundation, with certain conditions; establishing an 
  1.8             account in the state enterprise fund; authorizing 
  1.9             appropriations from the medical education endowment 
  1.10            fund; modifying state appropriations for certain 
  1.11            enrollments; extending expiration deadline for certain 
  1.12            advisory groups; adjusting assigned family 
  1.13            responsibility; modifying grant provisions; 
  1.14            establishing a grant program; authorizing acquisition 
  1.15            of certain facilities by the board of trustees; 
  1.16            providing for refund of tuition for certain students; 
  1.17            making various clarifying and technical changes; 
  1.18            deleting obsolete references; establishing a 
  1.19            developmental education demonstration project; 
  1.20            establishing a commission on University of Minnesota 
  1.21            excellence; requiring reports; amending Minnesota 
  1.22            Statutes 2000, sections 13.322, subdivision 3; 16A.87; 
  1.23            62J.694, subdivisions 1, 2, by adding a subdivision; 
  1.24            135A.031, subdivision 2; 136A.031, by adding a 
  1.25            subdivision; 136A.101, subdivisions 5a, 8; 136A.121, 
  1.26            subdivisions 6, 9; 136A.125, subdivisions 2, 4; 
  1.27            136A.241; 136A.242; 136A.243, subdivisions 1, 2, 3, 4, 
  1.28            9, by adding a subdivision; 136A.244, subdivisions 1, 
  1.29            4; 136A.245, subdivisions 2, 4, by adding 
  1.30            subdivisions; 136F.13, subdivision 1; 136F.60, 
  1.31            subdivision 2; 137.10; 169.966; 299A.45, subdivisions 
  1.32            1, 4; 354.094, subdivision 2; 354.69; 356.24, 
  1.33            subdivision 1; Laws 1986, chapter 398, article 1, 
  1.34            section 18, as amended; proposing coding for new law 
  1.35            in Minnesota Statutes, chapters 16A; 136A; 136F; 
  1.36            repealing Minnesota Statutes 2000, sections 135A.06, 
  1.37            subdivision 1; 136F.13, subdivision 2; Laws 1994, 
  1.38            chapter 643, section 66. 
  1.39  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.40                             ARTICLE 1 
  1.41                           APPROPRIATIONS 
  1.42  Section 1.  [HIGHER EDUCATION APPROPRIATIONS.] 
  2.1      The sums in the columns marked "APPROPRIATIONS" are 
  2.2   appropriated from the general fund, or other named fund, to the 
  2.3   agencies and for the purposes specified in this article.  The 
  2.4   listing of an amount under the figure "2002" or "2003" in this 
  2.5   article indicates that the amount is appropriated to be 
  2.6   available for the fiscal year ending June 30, 2002, or June 30, 
  2.7   2003, respectively.  "The first year" is fiscal year 2002.  "The 
  2.8   second year" is fiscal year 2003.  "The biennium" is fiscal 
  2.9   years 2002 and 2003. 
  2.10                          SUMMARY BY FUND 
  2.11                            2002          2003           TOTAL
  2.12  General            $1,380,039,000 $1,464,114,000 $2,844,153,000
  2.13  Health Care
  2.14  Access                  2,537,000      2,537,000      5,074,000
  2.15                   SUMMARY BY AGENCY - ALL FUNDS
  2.16                            2002          2003           TOTAL
  2.17  Higher Education Services Office
  2.18                        148,699,000    157,650,000    306,349,000
  2.19  Board of Trustees of the Minnesota
  2.20  State Colleges and Universities
  2.21                        601,583,000    639,984,000  1,241,567,000
  2.22  Board of Regents of the University
  2.23  of Minnesota
  2.24                        630,657,000    667,380,000  1,298,037,000
  2.25  Mayo Medical Foundation
  2.26                          1,637,000      1,637,000      3,274,000
  2.27                                            APPROPRIATIONS 
  2.28                                         Available for the Year 
  2.29                                             Ending June 30 
  2.30                                            2002         2003 
  2.31  Sec. 2.  HIGHER EDUCATION
  2.32  SERVICES OFFICE
  2.33  Subdivision 1. Total
  2.34  Appropriation                     $  148,699,000 $  157,650,000 
  2.35  The amounts that may be spent from this 
  2.36  appropriation for each purpose are 
  2.37  specified in the following subdivisions.
  2.38  Notwithstanding Minnesota Statutes, 
  2.39  section 136A.1211, savings in the state 
  2.40  grant program in fiscal years 2002 and 
  2.41  2003 resulting from any increases in 
  2.42  the maximum federal grant from $3,300 
  2.43  up to $3,750 must be used as provided 
  2.44  in this section. 
  3.1   Subd. 2.  State Grants               113,668,000    122,598,000 
  3.2   If the appropriation in this 
  3.3   subdivision for either year is 
  3.4   insufficient, the appropriation for the 
  3.5   other year is available for it.  
  3.6   The legislature intends that the higher 
  3.7   education services office make full 
  3.8   grant awards in each year of the 
  3.9   biennium.  
  3.10  For the biennium, the private 
  3.11  institution tuition maximum shall be 
  3.12  $8,764 in the first year and $8,983 in 
  3.13  the second year for four-year 
  3.14  institutions and $6,744 in the first 
  3.15  year and $6,913 in the second year for 
  3.16  two-year institutions. 
  3.17  This appropriation contains money to 
  3.18  set the living and miscellaneous 
  3.19  expense allowance at $5,405 in each 
  3.20  year. 
  3.21  This appropriation contains money to 
  3.22  match scholarship grants made under the 
  3.23  President's Student Service Scholarship 
  3.24  program of the Corporation for National 
  3.25  Service to students attending Minnesota 
  3.26  high schools and who will attend a 
  3.27  Minnesota post-secondary institution.  
  3.28  Not more than one matching grant of 
  3.29  $500 may be made for each high school 
  3.30  per year.  
  3.31  Notwithstanding Minnesota Statutes, 
  3.32  section 136A.1211, savings in the state 
  3.33  grant program in fiscal years 2002 and 
  3.34  2003 resulting from any increase in the 
  3.35  maximum federal grant over $3,750 or 
  3.36  from any other source must be used to 
  3.37  provide additional decreases in the 
  3.38  family responsibility for independent 
  3.39  students up to an additional ten 
  3.40  percent from the decrease in this bill 
  3.41  and to increase funding for work study 
  3.42  programs. 
  3.43  Subd. 3.  Interstate Tuition
  3.44  Reciprocity                            5,250,000      5,250,000 
  3.45  If the appropriation in this 
  3.46  subdivision for either year is 
  3.47  insufficient, the appropriation for the 
  3.48  other year is available to meet 
  3.49  reciprocity contract obligations. 
  3.50  The higher education services office 
  3.51  must negotiate the reciprocity 
  3.52  agreements for remission of nonresident 
  3.53  tuition under Minnesota Statutes, 
  3.54  section 136A.08.  The agreements must 
  3.55  be negotiated under this subdivision 
  3.56  with the goal of reducing and 
  3.57  minimizing the obligation of 
  3.58  participating states to make general 
  3.59  fund transfers for the tuition 
  3.60  reciprocity program while maintaining 
  3.61  access for Minnesota students.  
  3.62  Negotiations must include consideration 
  4.1   of new methods of collaboration with 
  4.2   education institutions in reciprocity 
  4.3   states to improve student access at 
  4.4   lower costs, including on-line 
  4.5   learning.  The chancellor of the 
  4.6   Minnesota state colleges and 
  4.7   universities and the president of the 
  4.8   University of Minnesota or their 
  4.9   designees may participate in any 
  4.10  negotiations on the tuition reciprocity 
  4.11  agreement.  The higher education 
  4.12  services office must present progress 
  4.13  on negotiations under this subdivision 
  4.14  to the higher education finance 
  4.15  committees of the 2002 legislature. 
  4.16  Subd. 4.  State Work Study
  4.17      12,444,000     12,444,000
  4.18  Subd. 5.  Minitex and MnLINK
  4.19       5,868,000      5,868,000
  4.20  Subd. 6.  Learning Network of Minnesota
  4.21       6,079,000      6,079,000
  4.22  Subd. 7.  Income Contingent Loans
  4.23  The higher education services office 
  4.24  shall administer an income-contingent 
  4.25  loan repayment program to assist 
  4.26  graduates of Minnesota schools in 
  4.27  medicine, dentistry, pharmacy, 
  4.28  chiropractic medicine, public health, 
  4.29  and veterinary medicine, and Minnesota 
  4.30  residents graduating from optometry and 
  4.31  osteopathy programs.  Applicant data 
  4.32  collected by the office for this 
  4.33  program may be disclosed to a consumer 
  4.34  credit reporting agency under the same 
  4.35  conditions as those that apply to the 
  4.36  supplemental loan program under 
  4.37  Minnesota Statutes, section 136A.162.  
  4.38  No new applicants may be accepted after 
  4.39  June 30, 1995.  
  4.40  Subd. 8.  Minnesota College Savings Plan
  4.41       1,520,000      1,520,000 
  4.42  Subd. 9.  Agency Administration
  4.43       3,870,000      3,891,000 
  4.44  This appropriation includes base 
  4.45  funding to foster post-secondary 
  4.46  attendance by providing outreach 
  4.47  services to historically underserved 
  4.48  groups of Minnesota elementary and 
  4.49  secondary students.  The office may 
  4.50  retain the entire appropriation or 
  4.51  contract with other agencies or 
  4.52  nonprofit organizations for specific 
  4.53  services in this effort. 
  4.54  This appropriation contains money for 
  4.55  grants to increase campus-community 
  4.56  collaboration and service learning 
  4.57  statewide.  For every $1 in state 
  5.1   funding, grant recipients must 
  5.2   contribute $2 in campus or 
  5.3   community-based support.  Up to five 
  5.4   percent of the allocation for this 
  5.5   program may be used to develop and 
  5.6   implement a performance-based 
  5.7   accountability system to assess program 
  5.8   outcomes. 
  5.9   This appropriation includes an increase 
  5.10  in the dues for the Midwest Higher 
  5.11  Education Compact. 
  5.12  Any appropriations remaining after 
  5.13  final benefits are paid to youthworks 
  5.14  grantees may be used for college early 
  5.15  intervention programs.  
  5.16  Subd. 10.  Balances Forward 
  5.17  A balance in the first year under this 
  5.18  section does not cancel, but is 
  5.19  available for the second year. 
  5.20  Subd. 11.  Transfers 
  5.21  The higher education services office 
  5.22  may transfer unencumbered balances from 
  5.23  the appropriations in this section to 
  5.24  the state grant appropriation, the 
  5.25  interstate tuition reciprocity 
  5.26  appropriation, the child care 
  5.27  appropriation, and the state work study 
  5.28  appropriation. 
  5.29  Subd. 12.  Reporting
  5.30  The higher education services office 
  5.31  shall collect data monthly from 
  5.32  institutions disbursing state financial 
  5.33  aid.  The data collected shall include, 
  5.34  but is not limited to, expenditures by 
  5.35  type to date and unexpended balances. 
  5.36  The higher education services office 
  5.37  shall evaluate and report on state 
  5.38  financial aid expenditures and 
  5.39  unexpended balances to the chairs of 
  5.40  the higher education finance committees 
  5.41  of the senate and house of 
  5.42  representatives and the commissioner of 
  5.43  finance on February 1, May 1, September 
  5.44  1, and December 1 each year. 
  5.45  Sec. 3.  BOARD OF TRUSTEES OF THE
  5.46  MINNESOTA STATE COLLEGES AND UNIVERSITIES
  5.47  Subdivision 1.  Total
  5.48  Appropriation                        601,583,000    639,984,000 
  5.49  The amounts that may be spent from this 
  5.50  appropriation for each purpose are 
  5.51  specified in the following subdivisions.
  5.52  The legislature intends that state 
  5.53  appropriations be used to strengthen 
  5.54  and support education of students.  To 
  5.55  this end, all money appropriated in 
  5.56  this section, except that in direct 
  5.57  support of system office activities, 
  5.58  shall be allocated by the board 
  6.1   directly to the colleges and 
  6.2   universities. 
  6.3   Subd. 2.  Estimated Expenditures and Appropriations 
  6.4   The legislature estimates that 
  6.5   instructional expenditures will be 
  6.6   $795,927,000 in the first year and 
  6.7   $847,873,000 in the second year. 
  6.8   The legislature estimates that 
  6.9   noninstructional expenditures will be 
  6.10  $70,964,000 in the first year and 
  6.11  $74,736,000 in the second year. 
  6.12  The Northeast Higher Education District 
  6.13  shall be the fiscal agent for the 
  6.14  Arrowhead University Center. 
  6.15  This appropriation includes money for a 
  6.16  grant to Minnesota state university, 
  6.17  Mankato, for the Talented Youth 
  6.18  Mathematics Program and to expand the 
  6.19  program in the second year to an 
  6.20  additional region. 
  6.21  During the biennium, neither the board 
  6.22  nor campuses shall plan or develop 
  6.23  doctoral level programs or degrees 
  6.24  until after they have received the 
  6.25  recommendation of the house and senate 
  6.26  committees on education, finance, and 
  6.27  ways and means. 
  6.28  By January 1, 2002, the board must 
  6.29  implement the Minnesota transfer 
  6.30  curriculum at all state colleges and 
  6.31  universities.  
  6.32  Once a course has met the criteria 
  6.33  necessary for inclusion in the 
  6.34  Minnesota transfer curriculum in any 
  6.35  area of emphasis, the course must be 
  6.36  accepted for full credit in that area 
  6.37  of emphasis at all Minnesota state 
  6.38  colleges and universities. 
  6.39  By July 1, 2002, the board must publish 
  6.40  an internet-based student manual that 
  6.41  identifies and describes how general 
  6.42  education courses at two-year MnSCU 
  6.43  institutions transfer to state 
  6.44  universities within the Minnesota state 
  6.45  colleges and universities system. 
  6.46  In each year, the board of trustees 
  6.47  shall increase the percentage of the 
  6.48  total general fund expenditures for 
  6.49  direct instruction and academic 
  6.50  support, as reported in the federal 
  6.51  Integrated Postsecondary Education Data 
  6.52  System (IPEDS).  By February 15 of each 
  6.53  year, the board of trustees shall 
  6.54  report to the higher education finance 
  6.55  committees of the legislature the 
  6.56  percentage of total general fund 
  6.57  expenditures spent on direct 
  6.58  instruction and on academic support 
  6.59  during the previous fiscal year by 
  6.60  institution and for the system as a 
  6.61  whole. 
  7.1   During the biennium, technical and 
  7.2   consolidated colleges shall make use of 
  7.3   instructional advisory committees 
  7.4   consisting of employers, students, and 
  7.5   instructors.  The instructional 
  7.6   advisory committee shall be consulted 
  7.7   when a technical program is proposed to 
  7.8   be created, modified, or eliminated.  
  7.9   If a decision is made to eliminate a 
  7.10  program, a college shall adequately 
  7.11  notify students and make plans to 
  7.12  assist students affected by the closure.
  7.13  The board may waive tuition for 
  7.14  eligible Southwest Asia veterans, as 
  7.15  provided in Minnesota Statutes, section 
  7.16  136F.28. 
  7.17  Subd. 3.  Accountability 
  7.18  (a) By February 1 of each even-numbered 
  7.19  year, the board must submit a report to 
  7.20  the chairs of the appropriate education 
  7.21  committees of the legislature 
  7.22  describing the following:  
  7.23  (1) how it allocated the state 
  7.24  appropriations made to the system in 
  7.25  the omnibus higher education funding 
  7.26  bill in the odd-numbered year; 
  7.27  (2) the tuition rates and fees set by 
  7.28  the board; and 
  7.29  (3) the amount of state money used to 
  7.30  leverage money from other funding 
  7.31  sources and the level of support from 
  7.32  those sources. 
  7.33  (b) By February 15, 2002, and each 
  7.34  odd-numbered year thereafter, the board 
  7.35  of trustees of the Minnesota state 
  7.36  colleges and universities must submit a 
  7.37  report to the commissioner of finance 
  7.38  and the chairs of the higher education 
  7.39  finance committees delineating: 
  7.40  (1) the five undergraduate degree 
  7.41  programs determined to be of highest 
  7.42  priority to the system, and the revenue 
  7.43  necessary to advance each program to be 
  7.44  a center of excellence; 
  7.45  (2) the reallocation of money and 
  7.46  curricular and staffing changes, by 
  7.47  campus and program, made to advance the 
  7.48  system's priorities; 
  7.49  (3) baseline data, and the methodology 
  7.50  used to measure the number of first 
  7.51  generation students admitted 
  7.52  systemwide, together with a plan to 
  7.53  increase both the recruitment and 
  7.54  retention through graduation of these 
  7.55  students; 
  7.56  (4) progress towards increasing the 
  7.57  percentage of students at four-year 
  7.58  institutions graduating within four, 
  7.59  five, and six years and the percentage 
  7.60  of students at two-year institutions 
  8.1   completing a program or transferring to 
  8.2   a four-year institution, as reported in 
  8.3   IPEDS.  Data should be provided for 
  8.4   each institution by race, ethnicity, 
  8.5   and gender.  Data provided should 
  8.6   include information on successful 
  8.7   retention strategies and the money 
  8.8   allocated to enhance student retention; 
  8.9   and 
  8.10  (5) progress towards increasing the 
  8.11  revenue generated from contracts with 
  8.12  employers for customized training. 
  8.13  Subd. 4.  Base Appropriations  
  8.14  For fiscal years 2002 and 2003, there 
  8.15  is a one-time reduction of $13,500,000 
  8.16  in the base appropriation for the 
  8.17  Minnesota state colleges and 
  8.18  universities. 
  8.19  Subd. 5.  Reserves 
  8.20  The board must distribute $5,000,000 of 
  8.21  the balance held in central office 
  8.22  reserves at the end of fiscal year 2001 
  8.23  to campuses in fiscal year 2002 through 
  8.24  a leveraged equipment purchase 
  8.25  program.  Participating campuses must 
  8.26  match the money distributed through the 
  8.27  leveraged equipment purchase program at 
  8.28  least dollar for dollar with nonstate 
  8.29  funds. 
  8.30  By December 1, 2002, the board of 
  8.31  trustees must adopt policies to clarify 
  8.32  the purposes of the central reserve and 
  8.33  under what general conditions it will 
  8.34  be used. 
  8.35  Subd. 6.  Central Office Services 
  8.36  The board of trustees of the Minnesota 
  8.37  state colleges and universities, in 
  8.38  cooperation with the council of 
  8.39  presidents, must develop a plan to 
  8.40  increase autonomy for campuses and 
  8.41  accountability at the system level.  
  8.42  The plan must include the provision of 
  8.43  central office services in ways that 
  8.44  better reflect campus needs.  The plan 
  8.45  must consider the following: 
  8.46  (1) core central office services funded 
  8.47  through a nominal fee paid by all 
  8.48  campuses; 
  8.49  (2) an option for campuses to contract 
  8.50  for services from the central office; 
  8.51  (3) the streamlined delivery of 
  8.52  services to eliminate duplication at 
  8.53  the campus and central office; 
  8.54  (4) the impact of alternative service 
  8.55  delivery methods on various types of 
  8.56  campuses; and 
  8.57  (5) making central office services more 
  8.58  market-sensitive. 
  9.1   The board must present a plan to 
  9.2   restructure central office services to 
  9.3   the chairs of the higher education 
  9.4   finance committees of the legislature 
  9.5   by February 15, 2003. 
  9.6   Sec. 4.  BOARD OF REGENTS OF THE 
  9.7   UNIVERSITY OF MINNESOTA 
  9.8   Subdivision 1.  Total
  9.9   Appropriation                        630,657,000    667,380,000 
  9.10  The amounts that may be spent from this 
  9.11  appropriation for each purpose are 
  9.12  specified in the following subdivisions.
  9.13  Subd. 2  Operations and
  9.14  Maintenance                          554,211,000    590,934,000 
  9.15  Estimated Expenditures 
  9.16  and Appropriations 
  9.17  The legislature estimates that 
  9.18  instructional expenditures will be 
  9.19  $485,793,000 in the first year and 
  9.20  $522,184,000 in the second year. 
  9.21  The legislature estimates that 
  9.22  noninstructional expenditures will be 
  9.23  $230,349,000 in the first year and 
  9.24  $242,812,000 in the second year.  
  9.25  Subd. 3.  Health Care Access Fund       2,537,000     2,537,000
  9.26  This appropriation is from the health 
  9.27  care access fund for primary care 
  9.28  education initiatives. 
  9.29  Subd. 4.  Special
  9.30  Appropriation                         73,909,000     73,909,000
  9.31  The amounts expended for each program 
  9.32  in the four categories of special 
  9.33  appropriations shall be stated in the 
  9.34  2003 biennial budget document. 
  9.35  (a) Agriculture and Extension Service 
  9.36      58,838,000     58,838,000
  9.37  This appropriation is for the 
  9.38  Agricultural Experiment Station, 
  9.39  Minnesota Extension Service. 
  9.40  The university must continue to provide 
  9.41  support for the rapid agricultural 
  9.42  response fund, and sustainable and 
  9.43  organic agriculture initiatives 
  9.44  including, but not limited to, the 
  9.45  alternative swine systems program. 
  9.46  Any salary increases granted by the 
  9.47  University to personnel paid from the 
  9.48  Minnesota Extension appropriation must 
  9.49  not result in a reduction of the county 
  9.50  responsibility for the salary payments. 
  9.51  During the biennium, the University 
  9.52  shall maintain an advisory council 
  9.53  system for each experiment station.  
  9.54  The advisory councils must be broadly 
 10.1   representative of the range in size and 
 10.2   income distribution of farms and 
 10.3   agribusinesses and must not 
 10.4   disproportionately represent those from 
 10.5   the upper half of the size and income 
 10.6   distributions.  
 10.7   The board of regents of the University 
 10.8   of Minnesota is requested to review and 
 10.9   analyze the programmatic mission, 
 10.10  scope, and cost-effectiveness of the 
 10.11  Minnesota Extension Service with the 
 10.12  goal of assuring that the Minnesota 
 10.13  Extension Service offers programs and 
 10.14  services effectively and efficiently 
 10.15  and within the scope of its current 
 10.16  defined mission.  The board is 
 10.17  requested to report, by February 15, 
 10.18  2002, to the governor and the chairs of 
 10.19  the higher education finance committees 
 10.20  of the legislature with recommendations 
 10.21  for priorities in the extension service.
 10.22  (b) Health Sciences 
 10.23       5,846,000      5,846,000
 10.24  This appropriation is for the rural 
 10.25  physicians associates program, the 
 10.26  Veterinary Diagnostic Laboratory, 
 10.27  health sciences research, dental care, 
 10.28  and the Biomedical Engineering Center. 
 10.29  (c) Institute of Technology  
 10.30       1,645,000      1,645,000
 10.31  This appropriation is for the 
 10.32  Geological Survey and the Talented 
 10.33  Youth Mathematics Program. 
 10.34  (d) System Specials 
 10.35       7,580,000      7,580,000
 10.36  This appropriation is for general 
 10.37  research, student loans matching money, 
 10.38  industrial relations education, Natural 
 10.39  Resources Research Institute, Center 
 10.40  for Urban and Regional Affairs, Bell 
 10.41  Museum of Natural History, and the 
 10.42  Humphrey exhibit. 
 10.43  This appropriation contains money for 
 10.44  an increase in each year for the 
 10.45  Natural Resources Research Institute. 
 10.46  Subd. 5.  Accountability 
 10.47  (a) By February 1 of each even-numbered 
 10.48  year, the board must submit a report to 
 10.49  the chairs of the appropriate education 
 10.50  committees of the legislature 
 10.51  describing the following:  
 10.52  (1) how it allocated the state 
 10.53  appropriations made to the system in 
 10.54  the omnibus higher education funding 
 10.55  bill in the odd-numbered year; 
 10.56  (2) the tuition rates and fees set by 
 11.1   the board; and 
 11.2   (3) the amount of state money used to 
 11.3   leverage money from other funding 
 11.4   sources and the level of support from 
 11.5   those sources. 
 11.6   (b) By February 15, 2002, and each 
 11.7   odd-numbered year thereafter, the board 
 11.8   of regents of the University of 
 11.9   Minnesota must submit a report to the 
 11.10  commissioner of finance and the chairs 
 11.11  of the higher education finance 
 11.12  committees delineating: 
 11.13  (1) the five undergraduate degree 
 11.14  programs determined to be of highest 
 11.15  priority to the system, and the revenue 
 11.16  necessary to advance each program to be 
 11.17  a center of excellence; 
 11.18  (2) the reallocation of money and 
 11.19  curricular and staffing changes, by 
 11.20  campus and program, made to advance the 
 11.21  system's priorities; 
 11.22  (3) baseline data, and the methodology 
 11.23  used to measure, the number of first 
 11.24  generation students admitted 
 11.25  systemwide, together with a plan to 
 11.26  increase both the recruitment and 
 11.27  retention through graduation of these 
 11.28  students; 
 11.29  (4) progress towards increasing the 
 11.30  percentage of students graduating 
 11.31  within four, five, and six years as 
 11.32  reported in IPEDS.  Data should be 
 11.33  provided for each institution by race, 
 11.34  ethnicity, and gender.  Data provided 
 11.35  should include information on 
 11.36  successful retention strategies and the 
 11.37  money allocated to enhance student 
 11.38  retention; 
 11.39  (5) progress towards increasing the 
 11.40  revenue received, from all sources, to 
 11.41  support research activities.  Data 
 11.42  provided should include information on 
 11.43  the increase in funding from each 
 11.44  source; and 
 11.45  (6) progress of the academic health 
 11.46  center in meeting the goals and 
 11.47  outcomes in paragraph (c) including how 
 11.48  money appropriated from the medical 
 11.49  endowment fund contributed to meeting 
 11.50  specific workforce training and health 
 11.51  education goals for the academic health 
 11.52  center. 
 11.53  (c) The Academic Health Center, in 
 11.54  cooperation with the department of 
 11.55  health, shall: 
 11.56  (1) develop new strategies for health 
 11.57  care delivery and professional training 
 11.58  in this state that takes into account 
 11.59  the changing racial and ethnic 
 11.60  composition of this state; 
 12.1   (2) develop new strategies to meet the 
 12.2   health care workforce needs in the 
 12.3   state; and 
 12.4   (3) base these strategies on analysis 
 12.5   of the population's health status and 
 12.6   opportunities for its improvement. 
 12.7   Sec. 5.  MAYO MEDICAL FOUNDATION 
 12.8   Subdivision 1.  Total
 12.9   Appropriation                           1,637,000       1,637,000
 12.10  The amounts that may be spent from this 
 12.11  appropriation for each purpose are 
 12.12  specified in the following subdivisions.
 12.13  Subd. 2.  Medical School
 12.14         605,000        605,000
 12.15  The state of Minnesota must pay a 
 12.16  capitation of $14,405 each year for 
 12.17  each student who is a resident of 
 12.18  Minnesota.  The appropriation may be 
 12.19  transferred between years of the 
 12.20  biennium to accommodate enrollment 
 12.21  fluctuations. 
 12.22  The legislature intends that during the 
 12.23  biennium the Mayo foundation use the 
 12.24  capitation money to increase the number 
 12.25  of doctors practicing in rural areas in 
 12.26  need of doctors.  
 12.27  Subd. 3.  Family Practice and
 12.28  Graduate Residency Program
 12.29         625,000        625,000
 12.30  The state of Minnesota must pay a 
 12.31  capitation of $22,313 for 26 residents 
 12.32  each year and $44,627 for one resident 
 12.33  each year. 
 12.34  Subd. 4.  St. Cloud Hospital-Mayo 
 12.35  Family Practice Residency Program 
 12.36         407,000        407,000
 12.37  This appropriation is to the Mayo 
 12.38  foundation to support 12 resident 
 12.39  physicians each year in the St. Cloud 
 12.40  Hospital-Mayo Family Practice Residency 
 12.41  program.  The program shall prepare 
 12.42  doctors to practice primary care 
 12.43  medicine in the rural areas of the 
 12.44  state.  It is intended that this 
 12.45  program will improve health care in 
 12.46  rural communities, provide affordable 
 12.47  access to appropriate medical care, and 
 12.48  manage the treatment of patients in a 
 12.49  more cost-effective manner. 
 12.50  Sec. 6.  POST-SECONDARY SYSTEMS 
 12.51  Subdivision 1.  Post-Secondary Planning Report
 12.52  By February 15 of each year the board 
 12.53  of trustees of the Minnesota state 
 12.54  colleges and universities must and the 
 13.1   board of regents of the University of 
 13.2   Minnesota is requested to report to the 
 13.3   legislature on progress under the 
 13.4   master academic plan for the 
 13.5   metropolitan area.  The report must 
 13.6   include a discussion of coordination 
 13.7   and duplication of program offerings, 
 13.8   developmental and remedial education, 
 13.9   credit transfers within and between the 
 13.10  post-secondary systems, and planning 
 13.11  and delivery of coordinated programs.  
 13.12  In order to better achieve the goal of 
 13.13  a more integrated, effective, and 
 13.14  seamless post-secondary education 
 13.15  system in Minnesota, the report must 
 13.16  also identify statewide efforts at 
 13.17  integration and cooperation between the 
 13.18  post-secondary systems. 
 13.19                             ARTICLE 2 
 13.20                         RELATED PROVISIONS 
 13.21     Section 1.  [16A.532] [MINNESOTA STATE COLLEGES AND 
 13.22  UNIVERSITIES ENTERPRISE ACCOUNT.] 
 13.23     There is created in the state enterprise fund a Minnesota 
 13.24  state colleges and universities account.  The commissioner must 
 13.25  report to committees of the legislature having jurisdiction over 
 13.26  the account on activity in this account at the same time fund 
 13.27  balance statements are issued for the general fund.  The amounts 
 13.28  in this account earn investment income as provided in section 
 13.29  136F.71, subdivision 3. 
 13.30     Sec. 2.  Minnesota Statutes 2000, section 16A.87, is 
 13.31  amended to read: 
 13.32     16A.87 [TOBACCO SETTLEMENT FUND.] 
 13.33     Subdivision 1.  [ESTABLISHMENT; PURPOSE.] The tobacco 
 13.34  settlement fund is established as a clearing account in the 
 13.35  state treasury.  
 13.36     Subd. 2.  [DEPOSIT OF MONEY.] The commissioner shall credit 
 13.37  to the tobacco settlement fund the tobacco settlement payments 
 13.38  received by the state on September 5, 1998, January 4, 1999, 
 13.39  January 3, 2000, and January 2, 2001, January 2, 2002, and 
 13.40  January 2, 2003, as a result of the settlement of the lawsuit 
 13.41  styled as State v. Philip Morris Inc., No. C1-94-8565 (Minnesota 
 13.42  District Court, Second Judicial District). 
 13.43     Subd. 3.  [APPROPRIATION.] (a) Of the amounts credited to 
 13.44  the fund prior to January 2, 2002, 61 percent is appropriated 
 14.1   for transfer to the tobacco use prevention and local public 
 14.2   health endowment fund created in section 144.395 and 39 percent 
 14.3   is appropriated for transfer to the medical education endowment 
 14.4   fund created in section 62J.694. 
 14.5      (b) The entire amount credited to the fund from the payment 
 14.6   made on January 2, 2002, and January 2, 2003, is appropriated 
 14.7   for transfer to the academic health center account under section 
 14.8   62J.694, subdivision 1, paragraph (b), in the medical education 
 14.9   endowment fund created under section 62J.694, subdivision 1. 
 14.10     Subd. 4.  [SUNSET.] The tobacco settlement fund expires 
 14.11  June 30, 2015 2004. 
 14.12     Sec. 3.  Minnesota Statutes 2000, section 62J.694, 
 14.13  subdivision 1, is amended to read: 
 14.14     Subdivision 1.  [CREATION.] (a) The medical education 
 14.15  endowment fund is created in the state treasury.  The state 
 14.16  board of investment shall invest the fund under section 11A.24.  
 14.17  All earnings of the fund must be credited to the fund.  The 
 14.18  principal of the fund must be maintained inviolate, except that 
 14.19  the principal may be used to make expenditures from the fund for 
 14.20  the purposes specified in this section when the market value of 
 14.21  the fund falls below 105 percent of the cumulative total of the 
 14.22  tobacco settlement payments received by the state and credited 
 14.23  to the tobacco settlement fund under section 16A.87, subdivision 
 14.24  2.  For purposes of this section, "principal" means an amount 
 14.25  equal to the cumulative total of the tobacco settlement payments 
 14.26  received by the state and credited to the tobacco settlement 
 14.27  fund under section 16A.87, subdivision 2.  
 14.28     (b) The academic health center account is created as a 
 14.29  separate account in the medical education endowment fund.  The 
 14.30  account is invested under paragraph (a).  All earnings of the 
 14.31  account must be credited to the account.  The principal of the 
 14.32  account must be maintained inviolate, except that the principal 
 14.33  may be used to make expenditures from the account for the 
 14.34  purposes specified in subdivision 2a when the value of the 
 14.35  account falls below an amount equal to deposits made to the 
 14.36  account under section 16A.87, subdivision 3, paragraph (b). 
 15.1      Sec. 4.  Minnesota Statutes 2000, section 62J.694, 
 15.2   subdivision 2, is amended to read: 
 15.3      Subd. 2.  [EXPENDITURES.] (a) Up to five percent of the 
 15.4   fair market value of the fund excluding the value of the 
 15.5   academic health center account, is annually appropriated for 
 15.6   medical education activities in the state of Minnesota.  The 
 15.7   appropriations are to be transferred quarterly for the purposes 
 15.8   identified in the following paragraphs.  
 15.9      (b) For fiscal year 2000, 70 percent of the appropriation 
 15.10  in paragraph (a) is for transfer to the board of regents for the 
 15.11  instructional costs of health professional programs at the 
 15.12  academic health center and affiliated teaching institutions, and 
 15.13  30 percent of the appropriation is for transfer to the 
 15.14  commissioner of health to be distributed for medical education 
 15.15  under section 62J.692.  
 15.16     (c) For fiscal year 2001, 49 percent of the appropriation 
 15.17  in paragraph (a) is for transfer to the board of regents for the 
 15.18  instructional costs of health professional programs at the 
 15.19  academic health center and affiliated teaching institutions, and 
 15.20  51 percent is for transfer to the commissioner of health to be 
 15.21  distributed for medical education under section 62J.692. 
 15.22     (d) For fiscal year 2002, and each year thereafter, 42 
 15.23  percent of the appropriation in paragraph (a) may be is 
 15.24  appropriated by another law for the instructional costs of 
 15.25  health professional programs at publicly funded the University 
 15.26  of Minnesota academic health centers and affiliated teaching 
 15.27  institutions center, and 58 percent is for transfer to the 
 15.28  commissioner of health to be distributed for medical education 
 15.29  under section 62J.692. 
 15.30     (e) A maximum of $150,000 of each annual appropriation to 
 15.31  the commissioner of health in paragraph (d) may be used by the 
 15.32  commissioner for administrative expenses associated with 
 15.33  implementing section 62J.692. 
 15.34     Sec. 5.  Minnesota Statutes 2000, section 62J.694, is 
 15.35  amended by adding a subdivision to read: 
 15.36     Subd. 2a.  [EXPENDITURE; ACADEMIC HEALTH CENTER 
 16.1   ACCOUNT.] Beginning in January 2002, up to five percent of the 
 16.2   fair market value of the academic health center account is 
 16.3   annually appropriated to the board of regents for the costs of 
 16.4   the academic health center.  Appropriations are to be 
 16.5   transferred quarterly and may only be used for instructional 
 16.6   costs of health professional programs at the academic health 
 16.7   center and for interdisciplinary academic initiatives within the 
 16.8   academic health center. 
 16.9      Sec. 6.  Minnesota Statutes 2000, section 135A.031, 
 16.10  subdivision 2, is amended to read: 
 16.11     Subd. 2.  [APPROPRIATIONS FOR CERTAIN ENROLLMENTS.] The 
 16.12  state share of the estimated expenditures for instruction shall 
 16.13  vary for some categories of students, as designated in this 
 16.14  subdivision. 
 16.15     (a) The state must provide at least 67 percent of the 
 16.16  estimated expenditures for: 
 16.17     (1) students who resided in the state for at least one 
 16.18  calendar year prior to applying for admission or dependent 
 16.19  students whose parent or legal guardian resides in Minnesota at 
 16.20  the time the student applies; 
 16.21     (2) Minnesota residents who can demonstrate that they were 
 16.22  temporarily absent from the state without establishing residency 
 16.23  elsewhere; 
 16.24     (3) residents of other states or provinces who are 
 16.25  attending a Minnesota institution under a tuition reciprocity 
 16.26  agreement; and 
 16.27     (4) students who have been in Minnesota as migrant 
 16.28  farmworkers, as defined in the Code of Federal Regulations, 
 16.29  title 20, section 633.104, over a period of at least two years 
 16.30  immediately before admission or readmission to a Minnesota 
 16.31  public post-secondary institution, or students who are 
 16.32  dependents of such migrant farmworkers; and 
 16.33     (5) persons who:  (i) were employed full time and were 
 16.34  relocated to the state by the person's current employer, or (ii) 
 16.35  moved to the state for employment purposes and, before moving 
 16.36  and before applying for admission to a public post-secondary 
 17.1   institution, accepted a job in the state, or students who are 
 17.2   spouses or dependents of such persons. 
 17.3      (b) The definition of full year equivalent for purposes of 
 17.4   the formula calculations in this chapter is twice the normal 
 17.5   value for the following enrollments: 
 17.6      (1) students who are concurrently enrolled in a public 
 17.7   secondary school and for whom the institution is receiving any 
 17.8   compensation under the Post-Secondary Enrollment Options Act; 
 17.9   and 
 17.10     (2) students enrolled under the student exchange program of 
 17.11  the Midwest Compact. 
 17.12     (c) The state may not provide any of the estimated 
 17.13  expenditures for undergraduate students (1) who do not meet the 
 17.14  residency criteria under paragraph (a), or (2) who have 
 17.15  completed, without receiving a baccalaureate degree, 48 or more 
 17.16  quarter credits or the equivalent, applicable toward the degree, 
 17.17  beyond the number required for a baccalaureate in their major. 
 17.18  Credits for courses in which a student received a grade of "F" 
 17.19  or "W" shall be counted toward this maximum, as if the credits 
 17.20  had been earned. 
 17.21     Sec. 7.  Minnesota Statutes 2000, section 136A.031, is 
 17.22  amended by adding a subdivision to read: 
 17.23     Subd. 5.  [EXPIRATION.] Notwithstanding section 15.059, 
 17.24  subdivision 5a, the advisory groups established in this section 
 17.25  expire on June 30, 2003. 
 17.26     Sec. 8.  Minnesota Statutes 2000, section 136A.101, 
 17.27  subdivision 5a, is amended to read: 
 17.28     Subd. 5a.  [ASSIGNED FAMILY RESPONSIBILITY.] "Assigned 
 17.29  family responsibility" means the amount of a family contribution 
 17.30  to a student's cost of attendance, as determined by a federal 
 17.31  need analysis, except that, beginning for the 1998-1999 academic 
 17.32  year, up to $25,000 in savings and other assets shall be 
 17.33  subtracted from the federal calculation of net worth before 
 17.34  determining the contribution.  For dependent students, the 
 17.35  assigned family responsibility is the parental contribution.  
 17.36  For independent students with dependents other than a spouse, 
 18.1   the assigned family responsibility is the student contribution. 
 18.2   For independent students without dependents other than a spouse, 
 18.3   the assigned family responsibility is 80 percent of the student 
 18.4   contribution.  Beginning in fiscal year 2002, the assigned 
 18.5   family responsibility for all independent students is reduced an 
 18.6   additional ten percent.  
 18.7      Sec. 9.  Minnesota Statutes 2000, section 136A.101, 
 18.8   subdivision 8, is amended to read: 
 18.9      Subd. 8.  [RESIDENT STUDENT.] "Resident student" means a 
 18.10  student who meets one of the following conditions:  
 18.11     (1) an independent a student who has resided in Minnesota 
 18.12  for purposes other than post-secondary education for at least 12 
 18.13  months without being enrolled at a post-secondary educational 
 18.14  institution for more than five credits in any term; 
 18.15     (2) a dependent student whose parent or legal guardian 
 18.16  resides in Minnesota at the time the student applies; 
 18.17     (3) a student who graduated from a Minnesota high school, 
 18.18  if the student was a resident of Minnesota during the student's 
 18.19  period of attendance at the Minnesota high school; or 
 18.20     (4) a student who, after residing in the state for a 
 18.21  minimum of one year, earned a high school equivalency 
 18.22  certificate in Minnesota. 
 18.23     Sec. 10.  Minnesota Statutes 2000, section 136A.121, 
 18.24  subdivision 6, is amended to read: 
 18.25     Subd. 6.  [COST OF ATTENDANCE.] (a) The recognized cost of 
 18.26  attendance consists of allowances specified in law for room and 
 18.27  board living and miscellaneous expenses, and 
 18.28     (1) for public institutions, the actual tuition and fees 
 18.29  charged by the institution; or 
 18.30     (2) for private institutions, an allowance for tuition and 
 18.31  fees equal to the lesser of the actual tuition and fees charged 
 18.32  by the institution, or the private institution tuition and fee 
 18.33  maximums established in law. 
 18.34     (b) For the purpose of paragraph (a), clause (2), the 
 18.35  private institution tuition and fee maximum for two- and 
 18.36  four-year, private, residential, liberal arts, degree-granting 
 19.1   colleges and universities must be the same. 
 19.2      (c) For a student attending registering for less than full 
 19.3   time, the office shall prorate the recognized cost of attendance 
 19.4   living and miscellaneous expense allowance to the actual number 
 19.5   of credits for which the student is enrolled. 
 19.6      The recognized cost of attendance for a student who is 
 19.7   confined to a Minnesota correctional institution shall consist 
 19.8   of the tuition and fee component in paragraph (a), clause (1) or 
 19.9   (2), with no allowance for living and miscellaneous expenses. 
 19.10     Sec. 11.  Minnesota Statutes 2000, section 136A.121, 
 19.11  subdivision 9, is amended to read: 
 19.12     Subd. 9.  [AWARDS.] An undergraduate student who meets the 
 19.13  office's requirements is eligible to apply for and receive a 
 19.14  grant in any year of undergraduate study unless the student has 
 19.15  obtained a baccalaureate degree or previously has been enrolled 
 19.16  full time or the equivalent for eight ten semesters or 12 
 19.17  quarters the equivalent, excluding courses taken from a 
 19.18  Minnesota school or post-secondary institution which is not 
 19.19  participating in the state grant program and from which a 
 19.20  student transferred no credit. 
 19.21     Sec. 12.  [136A.124] [ADVANCED PLACEMENT AND INTERNATIONAL 
 19.22  BACCALAUREATE GRANT.] 
 19.23     Subdivision 1.  [ESTABLISHMENT.] Appropriations for this 
 19.24  section must be used by the office for grants to encourage 
 19.25  Minnesota students participating in advanced placement and 
 19.26  international baccalaureate programs to attend a college or 
 19.27  university in Minnesota.  For enrollment beginning in the fall 
 19.28  of 2002, the grants must be awarded to students who apply for 
 19.29  the grant, are eligible under subdivision 2, and who enroll in 
 19.30  an eligible institution as defined in subdivision 2 during the 
 19.31  year following high school graduation.  An institution, on 
 19.32  behalf of the student, must request payment of the grant from 
 19.33  the higher education services office.  The grant may be used 
 19.34  only for the costs of the actual tuition, required fees, and 
 19.35  books in nonsectarian courses or programs.  A grant under this 
 19.36  section may be made for a maximum of two years.  
 20.1      Subd. 2.  [ELIGIBILITY.] A grant must be awarded to a 
 20.2   student scoring an average of three or higher on five or more 
 20.3   advanced placement examinations on full-year courses or an 
 20.4   average of four or higher on five or more international 
 20.5   baccalaureate examinations on full-year courses.  The annual 
 20.6   amount of each grant must be based on the student's scores on 
 20.7   the examinations and the funds available under this section. 
 20.8      A grant under this subdivision must not affect a 
 20.9   recipient's eligibility for a state grant under section 136A.121.
 20.10     Subd. 3.  [ALLOCATION OF FUNDS.] The office, in 
 20.11  consultation with representatives of the advanced placement and 
 20.12  international baccalaureate programs selected by the advanced 
 20.13  placement advisory council, international baccalaureate of 
 20.14  Minnesota (IBMN), and the department of children, families, and 
 20.15  learning must allocate the available funds fairly between the 
 20.16  advanced placement and international baccalaureate programs. 
 20.17     Subd. 4.  [ELIGIBLE INSTITUTION.] An "eligible institution" 
 20.18  under this section is a public or private four-year 
 20.19  degree-granting college or university or a two-year public 
 20.20  college in Minnesota that has a credit and placement policy for 
 20.21  either advanced placement or international baccalaureate 
 20.22  scholarship recipients, or both.  Each eligible institution must 
 20.23  annually certify its policies to the office.  The office must 
 20.24  provide each Minnesota secondary school with a copy of the 
 20.25  post-secondary advanced placement and international 
 20.26  baccalaureate policies of eligible institutions. 
 20.27     Sec. 13.  Minnesota Statutes 2000, section 136A.125, 
 20.28  subdivision 2, is amended to read: 
 20.29     Subd. 2.  [ELIGIBLE STUDENTS.] An applicant is eligible for 
 20.30  a child care grant if the applicant: 
 20.31     (1) is a resident of the state of Minnesota; 
 20.32     (2) has a child 12 years of age or younger, or 14 years of 
 20.33  age or younger who is handicapped as defined in section 125A.02, 
 20.34  and who is receiving or will receive care on a regular basis 
 20.35  from a licensed or legal, nonlicensed caregiver; 
 20.36     (3) is income eligible as determined by the office's 
 21.1   policies and rules, but is not a recipient of assistance from 
 21.2   the Minnesota family investment program; 
 21.3      (4) has not earned a baccalaureate degree and has been 
 21.4   enrolled full time less than eight ten semesters, 12 quarters, 
 21.5   or the equivalent; 
 21.6      (5) is pursuing a nonsectarian program or course of study 
 21.7   that applies to an undergraduate degree, diploma, or 
 21.8   certificate; 
 21.9      (6) is enrolled at least half time in an eligible 
 21.10  institution; and 
 21.11     (7) is in good academic standing and making satisfactory 
 21.12  academic progress. 
 21.13     Sec. 14.  Minnesota Statutes 2000, section 136A.125, 
 21.14  subdivision 4, is amended to read: 
 21.15     Subd. 4.  [AMOUNT AND LENGTH OF GRANTS.] The amount of a 
 21.16  child care grant must be based on: 
 21.17     (1) the income of the applicant and the applicant's spouse, 
 21.18  if any; 
 21.19     (2) the number in the applicant's family, as defined by the 
 21.20  office; and 
 21.21     (3) the number of eligible children in the applicant's 
 21.22  family.  
 21.23     The maximum award to the applicant shall be $2,000 $2,600 
 21.24  for each eligible child per academic year, except that the 
 21.25  campus financial aid officer may apply to the office for 
 21.26  approval to increase grants by up to ten percent to compensate 
 21.27  for higher market charges for infant care in a community.  The 
 21.28  office shall develop policies to determine community market 
 21.29  costs and review institutional requests for compensatory grant 
 21.30  increases to ensure need and equal treatment.  The office shall 
 21.31  prepare a chart to show the amount of a grant that will be 
 21.32  awarded per child based on the factors in this subdivision.  The 
 21.33  chart shall include a range of income and family size. 
 21.34     Sec. 15.  Minnesota Statutes 2000, section 136F.13, 
 21.35  subdivision 1, is amended to read: 
 21.36     Subdivision 1.  [OPERATION.] The state university board 
 22.1   shall operate an educational program for a state university 
 22.2   center as organized in the seven county metropolitan area.  The 
 22.3   center may operate in facilities acquired through the 
 22.4   commissioner of administration by gift or lease.  The faculty 
 22.5   and staff of the state university system shall provide 
 22.6   assistance in developing curricular and educational programs for 
 22.7   the university. 
 22.8      Sec. 16.  Minnesota Statutes 2000, section 136F.60, 
 22.9   subdivision 2, is amended to read: 
 22.10     Subd. 2.  [METHODS OF ACQUISITION AND REAL PROPERTY 
 22.11  TRANSACTIONS.] (a) If money has been appropriated to the board 
 22.12  to acquire lands or sites for public buildings or real estate, 
 22.13  the acquisition may be by gift, purchase, or condemnation 
 22.14  proceedings.  Condemnation proceedings must be under chapter 117.
 22.15     (b) The board may accept gifts to improve or acquire 
 22.16  facilities as provided in this paragraph: 
 22.17     (1) for remodeling existing facilities if the remodeling 
 22.18  does not materially increase the square footage of the facility; 
 22.19     (2) for the acquisition, construction, or remodeling costs 
 22.20  of facilities for which state capital appropriations have been 
 22.21  made and whose use will not be substantially changed; or 
 22.22     (3) for capital projects not authorized by the legislature 
 22.23  if the board first certifies that project revenues, other gifts 
 22.24  or grants, or other sources of capital funds are available for 
 22.25  project costs and that no tuition revenues or state or federal 
 22.26  appropriations are used for the capital or operating costs, 
 22.27  including all program costs, salaries, and benefits, of the 
 22.28  facility. 
 22.29     (c) The board may convey or lease real property under the 
 22.30  board's control, with or without monetary consideration, to 
 22.31  provide a facility for the primary benefit of a state college or 
 22.32  university or its students if the board certifies that project 
 22.33  revenues, other gifts or grants, or other sources of funds are 
 22.34  available for project costs and that no tuition revenues or 
 22.35  state or federal appropriations are used for the capital cost of 
 22.36  the facility.  Agreements under this paragraph must demonstrate 
 23.1   to the board's satisfaction the financial viability of the 
 23.2   proposed project, including all proposed financial and 
 23.3   contractual obligations, and operating costs, including all 
 23.4   program costs, salaries and benefits, and other costs reasonably 
 23.5   expected to be incurred or binding upon the college or 
 23.6   university.  Siting and design of the facility must be 
 23.7   consistent with the campus master plan and Minnesota state 
 23.8   colleges and universities building standards.  Agreements under 
 23.9   this paragraph to convey, or to lease for a term not to exceed 
 23.10  30 years, subject to section 16A.695, may be made following 
 23.11  requests for proposal or by direct negotiation.  Conveyances by 
 23.12  the board under this paragraph must be by quitclaim deed in a 
 23.13  form approved by the attorney general.  Land conveyed by the 
 23.14  board must revert to the state if it is no longer used for the 
 23.15  primary benefit of a state college or university or its students.
 23.16     (d) For purposes of this subdivision, "facility" includes 
 23.17  student unions, recreational centers and athletic centers, or 
 23.18  facilities for which state capital appropriations have been made 
 23.19  and the use of which will not be substantially changed.  
 23.20  "Facility" also includes self-supporting student housing. 
 23.21     (e) The board must report in a timely manner to the chairs 
 23.22  of the house and senate committees with jurisdiction over higher 
 23.23  education finance, capital investment, and ways and means any 
 23.24  capital project under paragraphs (b) or (c) with a cost of 
 23.25  $3,000,000 or more.  
 23.26     Sec. 17.  [136F.701] [REFUND OF TUITION.] 
 23.27     (a) Any student who is a resident of the state, has 
 23.28  enrolled in the state colleges and universities and paid tuition 
 23.29  for the course, and who, prior to the termination of the school 
 23.30  year for which the tuition was paid, enlisted or has been 
 23.31  inducted into the military service of the United States, either 
 23.32  voluntarily or pursuant to the present selective service law, is 
 23.33  entitled to the refund of all tuition paid for which credit 
 23.34  cannot properly be given.  
 23.35     (b) The administrative officers of the state colleges and 
 23.36  universities shall refund to the students any tuition so paid.  
 24.1   Any student making application for refund of any paid tuition 
 24.2   must furnish to the administrative officers of the state 
 24.3   colleges and universities a certificate from the proper officers 
 24.4   reciting the fact of the enlistment or the induction of the 
 24.5   student into the military service of the United States. 
 24.6      Sec. 18.  Minnesota Statutes 2000, section 137.10, is 
 24.7   amended to read: 
 24.8      137.10 [REFUND OF TUITION TO STUDENTS IN CERTAIN CASES.] 
 24.9      Any student who, being a resident of the state, has 
 24.10  enrolled to pursue any course in the University of Minnesota or 
 24.11  any state university and paid tuition for the course, and who, 
 24.12  prior to the termination of the school year for which the 
 24.13  tuition was paid, enlisted or has been inducted into the 
 24.14  military services of the United States, either voluntarily or 
 24.15  pursuant to the present selective service law, is entitled to 
 24.16  the refund of all tuition paid for which credit cannot properly 
 24.17  be given.  
 24.18     The administrative officers of the University of Minnesota 
 24.19  and of the universities or institutions shall refund to the 
 24.20  students any tuition so paid.  Any student making application 
 24.21  for refund of any paid tuition shall furnish to the 
 24.22  administrative officers of the University of Minnesota or of the 
 24.23  universities a certificate from the proper officers reciting the 
 24.24  fact of the enlistment or the induction of the student into the 
 24.25  military service of the United States. 
 24.26     Sec. 19.  Minnesota Statutes 2000, section 169.966, is 
 24.27  amended to read: 
 24.28     169.966 [STATE UNIVERSITY BOARD TO REGULATE TRAFFIC.] 
 24.29     Subdivision 1.  [AUTHORITY.] The state university board of 
 24.30  trustees of the Minnesota state colleges and universities may 
 24.31  from time to time make, adopt, and enforce such rules or 
 24.32  ordinances not inconsistent with this chapter, as it may find 
 24.33  expedient or necessary relating to the regulation of traffic and 
 24.34  parking upon parking facilities and private roads and roadways 
 24.35  situated on property owned, leased, occupied or operated by 
 24.36  state universities. 
 25.1      Subd. 1a.  [PARKING FACILITIES.] The state university board 
 25.2   of trustees may establish rents, charges or fees for the use of 
 25.3   parking facilities owned, leased, occupied, or operated by the 
 25.4   state university board.  The money collected by the board as 
 25.5   rents, charges or fees in accordance with this subdivision shall 
 25.6   be deposited in the university activity fund and is annually 
 25.7   appropriated to the state university board of trustees for state 
 25.8   university purposes and to maintain and operate parking lots and 
 25.9   parking facilities. 
 25.10     Subd. 2.  [PETTY MISDEMEANOR.] Any person violating such 
 25.11  rule or ordinance shall be guilty of a petty misdemeanor and 
 25.12  subject to the provisions of sections 169.891 and 169.90, 
 25.13  subdivision 1. 
 25.14     Subd. 3.  [PROSECUTION.] The prosecution may be before a 
 25.15  district court having jurisdiction over the place where the 
 25.16  violation occurs. 
 25.17     Subd. 4.  [ENFORCEMENT.] Every sheriff, constable, police 
 25.18  officer, or other peace officer shall see that all rules and 
 25.19  ordinances are obeyed and shall arrest and prosecute offenders. 
 25.20     Subd. 5.  [ENFORCEMENT POWERS.] The state university 
 25.21  board of trustees may appoint and employ, and fix the 
 25.22  compensation to be paid out of funds which may be available for 
 25.23  such purposes, persons who shall have and may exercise on 
 25.24  property owned, leased, or occupied by the state universities 
 25.25  the same powers of arrest for violation of rules or ordinances 
 25.26  adopted by the board as possessed by a sheriff, constable, 
 25.27  police officer, or peace officer. 
 25.28     Subd. 6.  [JUDICIAL NOTICE.] All persons shall take notice 
 25.29  of such rules and ordinances without pleading and proof of the 
 25.30  same. 
 25.31     Subd. 7.  [NOTICE, HEARING, FILING, AND EFFECT.] (a) 
 25.32  The state university board of trustees shall fix a date for a 
 25.33  public hearing on the adoption of any such proposed rule or 
 25.34  ordinance.  Notice of such hearing shall be published in a legal 
 25.35  newspaper in the county in which the property affected by the 
 25.36  rule or ordinance is located.  The publication shall be at least 
 26.1   15 days and not more than 45 days before the date of the hearing.
 26.2      (b) If, after the public hearing, the proposed rule or 
 26.3   ordinance shall be adopted by a majority of the members of the 
 26.4   board, the same shall be considered to have been enacted by the 
 26.5   board.  A copy of the same shall be signed by the president and 
 26.6   filed with the county recorder of each county where the rule or 
 26.7   ordinance shall be in effect, together with proof of 
 26.8   publication.  Upon such filing, the rule or ordinance, as the 
 26.9   case may be, shall thenceforth be in full force and effect. 
 26.10     Subd. 8.  [DELEGATION.] The state university board of 
 26.11  trustees may delegate its responsibilities under this section to 
 26.12  a state university president.  Actions of the president shall be 
 26.13  presumed to be those of the board.  The university president 
 26.14  shall file with the board president the results of any public 
 26.15  hearings and the subsequent adoption of any proposed rule or 
 26.16  ordinance enacted pursuant thereto.  
 26.17     Sec. 20.  Minnesota Statutes 2000, section 299A.45, 
 26.18  subdivision 1, is amended to read: 
 26.19     Subdivision 1.  [ELIGIBILITY.] Following certification 
 26.20  under section 299A.44 and compliance with this section and rules 
 26.21  of the commissioner of public safety and the higher education 
 26.22  services office, dependent children less than 23 years of age 
 26.23  and the surviving spouse of a public safety officer killed in 
 26.24  the line of duty on or after January 1, 1973, are eligible to 
 26.25  receive educational benefits under this section.  To qualify for 
 26.26  an award, they must be enrolled in undergraduate degree or 
 26.27  certificate programs after June 30, 1990, at an eligible 
 26.28  Minnesota institution as provided in section 136A.101, 
 26.29  subdivision 4.  Persons who have received a baccalaureate degree 
 26.30  or have been enrolled full time or the equivalent of eight ten 
 26.31  semesters or 12 quarters the equivalent, whichever occurs first, 
 26.32  are no longer eligible. 
 26.33     Sec. 21.  Minnesota Statutes 2000, section 299A.45, 
 26.34  subdivision 4, is amended to read: 
 26.35     Subd. 4.  [RENEWAL.] Each award must be given for one 
 26.36  academic year and is renewable for a maximum of six eight 
 27.1   semesters or nine quarters or their the equivalent.  An award 
 27.2   must not be given to a dependent child who is 23 years of age or 
 27.3   older on the first day of the academic year. 
 27.4      Sec. 22.  Minnesota Statutes 2000, section 354.094, 
 27.5   subdivision 2, is amended to read: 
 27.6      Subd. 2.  [MEMBERSHIP; RETENTION.] Notwithstanding section 
 27.7   354.49, subdivision 4, clause (3), a member on extended leave 
 27.8   whose employee and employer contributions are paid into the fund 
 27.9   pursuant to subdivision 1 shall retain membership in the 
 27.10  association for as long as the contributions are paid, under the 
 27.11  same terms and conditions as if the member had continued to 
 27.12  teach in the district, the community college system, or the 
 27.13  Minnesota state university colleges and universities system. 
 27.14     Sec. 23.  Minnesota Statutes 2000, section 354.69, is 
 27.15  amended to read: 
 27.16     354.69 [INFORMATION SUPPLIED BY DISTRICT.] 
 27.17     Each school district covered by the provisions of this 
 27.18  chapter and the community college Minnesota state colleges and 
 27.19  state university systems universities system shall furnish to 
 27.20  the teachers retirement association all information and reports 
 27.21  deemed necessary by the executive director to administer the 
 27.22  provisions of section 354.66. 
 27.23     Sec. 24.  Minnesota Statutes 2000, section 356.24, 
 27.24  subdivision 1, is amended to read: 
 27.25     Subdivision 1.  [RESTRICTION; EXCEPTIONS.] It is unlawful 
 27.26  for a school district or other governmental subdivision or state 
 27.27  agency to levy taxes for, or contribute public funds to a 
 27.28  supplemental pension or deferred compensation plan that is 
 27.29  established, maintained, and operated in addition to a primary 
 27.30  pension program for the benefit of the governmental subdivision 
 27.31  employees other than: 
 27.32     (1) to a supplemental pension plan that was established, 
 27.33  maintained, and operated before May 6, 1971; 
 27.34     (2) to a plan that provides solely for group health, 
 27.35  hospital, disability, or death benefits; 
 27.36     (3) to the individual retirement account plan established 
 28.1   by chapter 354B; 
 28.2      (4) to a plan that provides solely for severance pay under 
 28.3   section 465.72 to a retiring or terminating employee; 
 28.4      (5) for employees other than personnel employed by the 
 28.5   state university board or the community college board and 
 28.6   covered by the board of trustees of the Minnesota state colleges 
 28.7   and universities and covered under the higher education 
 28.8   supplemental retirement plan under chapter 354C, if provided for 
 28.9   in a personnel policy of the public employer or in the 
 28.10  collective bargaining agreement between the public employer and 
 28.11  the exclusive representative of public employees in an 
 28.12  appropriate unit, in an amount matching employee contributions 
 28.13  on a dollar for dollar basis, but not to exceed an employer 
 28.14  contribution of $2,000 a year per employee; 
 28.15     (i) to the state of Minnesota deferred compensation plan 
 28.16  under section 352.96; or 
 28.17     (ii) in payment of the applicable portion of the 
 28.18  contribution made to any investment eligible under section 
 28.19  403(b) of the Internal Revenue Code, if the employing unit has 
 28.20  complied with any applicable pension plan provisions of the 
 28.21  Internal Revenue Code with respect to the tax-sheltered annuity 
 28.22  program during the preceding calendar year; or 
 28.23     (6) for personnel employed by the state university board or 
 28.24  the community college board of trustees of the Minnesota state 
 28.25  colleges and universities and not covered by clause (5), to the 
 28.26  supplemental retirement plan under chapter 354C, if provided for 
 28.27  in a personnel policy or in the collective bargaining agreement 
 28.28  of the public employer with the exclusive representative of the 
 28.29  covered employees in an appropriate unit, in an amount matching 
 28.30  employee contributions on a dollar for dollar basis, but not to 
 28.31  exceed an employer contribution of $2,700 a year for each 
 28.32  employee. 
 28.33     Sec. 25.  Laws 1986, chapter 398, article 1, section 18, as 
 28.34  amended by Laws 1987, chapter 292, section 37; Laws 1989, 
 28.35  chapter 350, article 16, section 8; Laws 1990, chapter 525, 
 28.36  section 1; Laws 1991, chapter 208, section 2; Laws 1993, First 
 29.1   Special Session chapter 2, article 6, section 2; Laws 1995, 
 29.2   chapter 212, article 2, section 11; Laws 1997, chapter 183, 
 29.3   article 3, section 29; Laws 1998, chapter 395, section 7; Laws 
 29.4   1998, chapter 402, section 6; and Laws 1999, chapter 214, 
 29.5   article 2, section 19, is amended to read: 
 29.6      Sec. 18.  [REPEALER.] 
 29.7      Sections 1 to 17 and Minnesota Statutes, section 336.9-501, 
 29.8   subsections (6) and (7), and sections 583.284, 583.285, 583.286, 
 29.9   and 583.305, are repealed on July 1 June 30, 2001 2005. 
 29.10     Sec. 26.  [DEVELOPMENTAL EDUCATION DEMONSTRATION PROJECT.] 
 29.11     Subdivision 1.  [COLLEGE AND UNIVERSITY READINESS.] Prior 
 29.12  to July 1, 2001, the chancellor, in consultation with the 
 29.13  commissioner of children, families, and learning and selected 
 29.14  school boards, must designate at least one state college or 
 29.15  university and a minimum of four school districts to implement a 
 29.16  comprehensive demonstration project designed to increase the 
 29.17  number of high school graduates who are academically prepared to 
 29.18  enroll in college level courses. 
 29.19     Subd. 2.  [IMPLEMENTATION.] Beginning in the 2001-2002 
 29.20  academic year, the designated institution must administer 
 29.21  college readiness assessment tests in math, reading, and writing 
 29.22  to all students in the designated school districts, in the first 
 29.23  quarter of the student's junior year of high school.  The school 
 29.24  district must inform each student of any academic areas in which 
 29.25  the student needs additional preparation during high school to 
 29.26  ensure college readiness. 
 29.27     Subd. 3.  [STUDENT FOLLOW-UP.] The designated college or 
 29.28  university must monitor and report on the college enrollment and 
 29.29  college placement of all graduating students participating in 
 29.30  the demonstration project.  The report must identify any changes 
 29.31  in college readiness between initial and final assessment of 
 29.32  students involved in the demonstration project. 
 29.33     Subd. 4.  [REPORT AND RECOMMENDATIONS.] By December 15, 
 29.34  2003, the designated college or university must report to the 
 29.35  board of trustees, the commissioner of children, families, and 
 29.36  learning and the committees of the legislature having 
 30.1   jurisdiction over higher education on the effectiveness of the 
 30.2   college readiness demonstration project, including the estimated 
 30.3   cost of the demonstration project and recommendations for future 
 30.4   remediation efforts. 
 30.5      Sec. 27.  [LAWRENCE HALL REMODELING.] 
 30.6      The board of trustees of Minnesota state colleges and 
 30.7   universities may use funds from nonstate sources to remodel the 
 30.8   top floor of Lawrence Hall for student housing. 
 30.9      Sec. 28.  [COMMISSION ON UNIVERSITY OF MINNESOTA 
 30.10  EXCELLENCE.] 
 30.11     Subdivision 1.  [ESTABLISHMENT.] The commission on 
 30.12  University of Minnesota excellence is established to: 
 30.13     (1) review the university's current nationally ranked areas 
 30.14  of excellence; 
 30.15     (2) review major investment efforts in interdisciplinary 
 30.16  initiatives identified by the university in 1998, including 
 30.17  digital technology, design, new media, molecular and cellular 
 30.18  biology, medical science, and agriculture; 
 30.19     (3) evaluate and make recommendations on how the university 
 30.20  can develop additional centers of excellence that will achieve a 
 30.21  national ranking in the top ten within the next ten years and 
 30.22  identify centers of excellence which are best positioned and 
 30.23  have the best potential to achieve this goal; 
 30.24     (4) examine the university's mission, scope, and financing 
 30.25  of programs and propose possible ways in which the university 
 30.26  can refocus or refine its mission and offerings; and 
 30.27     (5) identify undergraduate degree programs in which quality 
 30.28  and productivity improvements could be achieved through 
 30.29  increased collaboration with public and private post-secondary 
 30.30  institutions in and outside of Minnesota.  
 30.31     Subd. 2.  [MEMBERSHIP; STAFF.] (a) The commission on 
 30.32  University of Minnesota excellence consists of 15 members.  Four 
 30.33  members must be appointed by the governor, including the chair 
 30.34  of the commission.  Four members must be appointed by the 
 30.35  speaker of the house of representatives.  Up to two members of 
 30.36  the house of representatives may be appointed.  Four members 
 31.1   must be appointed by the subcommittee on committees of the 
 31.2   senate committee on rules and administration.  Up to two 
 31.3   senators may be appointed.  Three members must be appointed by 
 31.4   the chair of the University of Minnesota board of regents and 
 31.5   may include current members of the board.  Appointments must be 
 31.6   made by September 1, 2001.  Members appointed to the commission 
 31.7   must be selected for their expertise in complex organizational 
 31.8   structure and should include leaders of business, industry, or 
 31.9   post-secondary institutions.  The president of the University of 
 31.10  Minnesota or the president's designee is an ex officio, 
 31.11  nonvoting member of the commission. 
 31.12     (b) Members of the commission serve without compensation or 
 31.13  expenses under Minnesota Statutes, section 15.0575, subdivision 
 31.14  3. 
 31.15     (c) The board of regents of the University of Minnesota is 
 31.16  requested to make University of Minnesota staff available to the 
 31.17  commission.  
 31.18     Subd. 3.  [CENTERS OF EXCELLENCE.] The commission must, at 
 31.19  a minimum, identify five additional centers of excellence at the 
 31.20  University of Minnesota in which to focus resources and policy 
 31.21  initiatives.  The goal for these centers is to have them develop 
 31.22  national stature and achieve a national ranking in the top ten 
 31.23  within ten years.  The additional centers of excellence must be 
 31.24  chosen from a group of potential centers of excellence that 
 31.25  includes the programs and departments in which the university is 
 31.26  currently considered a national or regional leader and from 
 31.27  existing or potential interdisciplinary initiatives at the 
 31.28  university. 
 31.29     Subd. 4.  [REPORT.] The commission must report to the 
 31.30  legislature by July 1, 2002, on areas of excellence, mission, 
 31.31  and focus of the University of Minnesota.  In preparing its 
 31.32  report on areas of excellence, the task force is encouraged to 
 31.33  consider operation and capital financing needs, Minnesota 
 31.34  economic needs, federal research priorities, and opportunities 
 31.35  for private financial support.  
 31.36     Subd. 5.  [EXPIRATION.] The commission on University of 
 32.1   Minnesota excellence expires on December 31, 2002. 
 32.2      Sec. 29.  [REPEALER.] 
 32.3      (a) Minnesota Statutes 2000, sections 135A.06, subdivision 
 32.4   1; and 136F.13, subdivision 2, are repealed. 
 32.5      (b) Laws 1994, chapter 643, section 66, is repealed. 
 32.6      Sec. 30.  [EFFECTIVE DATES.] 
 32.7      (a) Section 10 is effective July 1, 2002. 
 32.8      (b) Section 25 is effective the day following final 
 32.9   enactment. 
 32.10                             ARTICLE 3 
 32.11                   MINNESOTA COLLEGE SAVINGS PLAN 
 32.12     Section 1.  Minnesota Statutes 2000, section 13.322, 
 32.13  subdivision 3, is amended to read: 
 32.14     Subd. 3.  [HIGHER EDUCATION SERVICES OFFICE.] (a) 
 32.15  [GENERAL.] Data sharing involving the higher education services 
 32.16  office and other institutions is governed by section 136A.05. 
 32.17     (b) [STUDENT FINANCIAL AID.] Data collected and used by the 
 32.18  higher education services office on applicants for financial 
 32.19  assistance are classified under section 136A.162.  
 32.20     (c) [MINNESOTA COLLEGE SAVINGS PLAN DATA.] Account owner 
 32.21  data, account data, and data on beneficiaries of accounts under 
 32.22  the Minnesota college savings plan are classified under section 
 32.23  136A.243, subdivision 10. 
 32.24     (d) [SCHOOL FINANCIAL RECORDS.] Financial records submitted 
 32.25  by schools registering with the higher education services office 
 32.26  are classified under section 136A.64.  
 32.27     Sec. 2.  Minnesota Statutes 2000, section 136A.241, is 
 32.28  amended to read: 
 32.29     136A.241 [EDVEST PROGRAM MINNESOTA COLLEGE SAVINGS PLAN 
 32.30  ESTABLISHED.] 
 32.31     An Edvest savings program A college savings plan known as 
 32.32  the Minnesota college savings plan is established.  In 
 32.33  establishing this program plan, the legislature seeks to 
 32.34  encourage individuals to save for post-secondary education by: 
 32.35     (1) providing a qualified state tuition program plan under 
 32.36  federal tax law; 
 33.1      (2) providing matching grants for contributions to the 
 33.2   program by low- and middle-income families; and 
 33.3      (3) by encouraging individuals, foundations, and businesses 
 33.4   to provide additional grants to participating students. 
 33.5      Sec. 3.  Minnesota Statutes 2000, section 136A.242, is 
 33.6   amended to read: 
 33.7      136A.242 [DEFINITIONS.] 
 33.8      Subdivision 1.  [GENERAL.] For purposes of sections 
 33.9   136A.241 to 136A.245 136A.246, the following terms have the 
 33.10  meanings given. 
 33.11     Subd. 1a.  [ACCOUNT.] "Account" means the formal record of 
 33.12  transactions relating to a Minnesota college savings plan 
 33.13  beneficiary. 
 33.14     Subd. 1b.  [ACCOUNT OWNER.] "Account owner" means a person 
 33.15  who enters into a participation agreement and is entitled to 
 33.16  select or change the beneficiary of an account or to receive 
 33.17  distributions from the account for other than payment of 
 33.18  qualified higher education expenses. 
 33.19     Subd. 2.  [ADJUSTED GROSS INCOME.] "Adjusted gross income" 
 33.20  means adjusted gross income as defined in section 62 of the 
 33.21  Internal Revenue Code. 
 33.22     Subd. 3.  [BENEFICIARY.] "Beneficiary" means the designated 
 33.23  beneficiary for the account, as defined in section 529(e)(1) of 
 33.24  the Internal Revenue Code. 
 33.25     Subd. 4.  [BOARD.] "Board" means the state board of 
 33.26  investment. 
 33.27     Subd. 4a.  [CONTINGENT ACCOUNT OWNER.] "Contingent account 
 33.28  owner" means the individual designated as the account owner, 
 33.29  either in the participation agreement or pursuant to a separate 
 33.30  Minnesota college savings plan form, in the event of the death 
 33.31  of the account owner. 
 33.32     Subd. 4b.  [CONTRIBUTION.] "Contribution" means a payment 
 33.33  directly allocated to an account for the benefit of a 
 33.34  beneficiary.  For a rollover distribution, only the portion of 
 33.35  the rollover amount that constitutes investment in the account 
 33.36  is treated as a contribution to the account. 
 34.1      Subd. 5.  [DIRECTOR.] "Director" means the director of the 
 34.2   higher education services office. 
 34.3      Subd. 5a.  [DISTRIBUTION.] "Distribution" means a 
 34.4   disbursement from an account to the account owner, the 
 34.5   beneficiary, or the beneficiary's estate or to an eligible 
 34.6   educational institution.  Distribution does not include a change 
 34.7   of beneficiary to a member of the family of the prior 
 34.8   beneficiary or a rollover distribution. 
 34.9      Subd. 5b.  [DORMANT ACCOUNT.] "Dormant account" means an 
 34.10  account that has not received contributions for at least three 
 34.11  consecutive years and the account statements mailed to the 
 34.12  account owner have been returned as undeliverable. 
 34.13     Subd. 5c.  [EARNINGS.] "Earnings" means the total account 
 34.14  balance minus the investment in the account. 
 34.15     Subd. 5d.  [ELIGIBLE EDUCATIONAL INSTITUTION.] "Eligible 
 34.16  educational institution" means an institution as defined in 
 34.17  section 529(e)(5) of the Internal Revenue Code. 
 34.18     Subd. 5e.  [INACTIVE ACCOUNT WITH A MATCHING GRANT 
 34.19  ACCOUNT.] "Inactive account with a matching grant account" means 
 34.20  an account in which the beneficiary: 
 34.21     (1) is not the account owner, the beneficiary has reached 
 34.22  28 years of age, and the beneficiary has not informed the plan 
 34.23  administrator that the beneficiary is enrolled in an eligible 
 34.24  educational institution; 
 34.25     (2) is the account owner, the beneficiary was over the age 
 34.26  of 18 when the account was opened, and the beneficiary has not 
 34.27  informed the program administrator that the beneficiary is 
 34.28  enrolled in an eligible educational institution within ten years 
 34.29  of the date of opening the account; or 
 34.30     (3) is the account owner, the beneficiary was a minor when 
 34.31  the account was opened, the account becomes inactive when the 
 34.32  beneficiary turns 28 years of age, and the beneficiary has not 
 34.33  informed the program administrator that the beneficiary is 
 34.34  enrolled in an eligible educational institution. 
 34.35     Subd. 6.  [EXECUTIVE DIRECTOR.] "Executive director" means 
 34.36  the executive director of the state board of investment. 
 35.1      Subd. 7.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
 35.2   means the Internal Revenue Code of 1986, as amended. 
 35.3      Subd. 7a.  [INVESTMENT IN THE ACCOUNT.] "Investment in the 
 35.4   account" means the sum of all contributions made to an account 
 35.5   by a particular date minus the aggregate amount of contributions 
 35.6   included in distributions or rollover distributions, if any, 
 35.7   made from the account as of that date. 
 35.8      Subd. 7b.  [MATCHING GRANT.] "Matching grant" means an 
 35.9   amount added to a matching grant account under section 136A.245. 
 35.10     Subd. 7c.  [MATCHING GRANT ACCOUNT.] "Matching grant 
 35.11  account" means an account owned by the state that contains 
 35.12  matching grants and earnings. 
 35.13     Subd. 7d.  [MAXIMUM ACCOUNT BALANCE LIMIT.] "Maximum 
 35.14  account balance limit" means the amount established by the 
 35.15  office under section 136.2441, subdivision 8, paragraph (d).  
 35.16     Subd. 7e.  [MEMBER OF THE FAMILY.] "Member of the family" 
 35.17  means an individual who is related to the beneficiary as defined 
 35.18  in section 529(e)(2) of the Internal Revenue Code. 
 35.19     Subd. 7f.  [NONQUALIFIED DISTRIBUTION.] "Nonqualified 
 35.20  distribution" means a distribution made from an account other 
 35.21  than (1) a qualified distribution; or (2) a distribution due to 
 35.22  the death or disability of, or scholarship to, a beneficiary. 
 35.23     Subd. 8.  [OFFICE.] "Office" means the higher education 
 35.24  services office. 
 35.25     Subd. 8a.  [PARTICIPATION AGREEMENT.] "Participation 
 35.26  agreement" means an agreement to participate in the Minnesota 
 35.27  college savings plan between an account owner and the state, 
 35.28  through its agencies, the office, and the board. 
 35.29     Subd. 8b.  [PENALTY.] "Penalty" means the amount 
 35.30  established by the office that is applied against the earnings 
 35.31  portion of a nonqualified distribution.  The amount established 
 35.32  by the office must be the minimum required to be de minimis 
 35.33  under section 529 of the Internal Revenue Code.  The office must 
 35.34  impose, collect, and apply penalties consistent with section 529 
 35.35  of the Internal Revenue Code.  
 35.36     Subd. 8c.  [PERSON.] "Person" means an individual, trust, 
 36.1   estate, partnership, association, company, corporation, or the 
 36.2   state.  
 36.3      Subd. 9.  [PROGRAM PLAN.] "Program" or "Edvest Plan" 
 36.4   refers to the program plan established under sections 136A.241 
 36.5   to 136A.245 136A.246. 
 36.6      Subd. 10.  [PLAN ADMINISTRATOR.] "Plan administrator" means 
 36.7   the person selected by the office and the board to administer 
 36.8   the daily operations of the Minnesota college savings plan and 
 36.9   to provide marketing, recordkeeping, investment management, and 
 36.10  other services for the program. 
 36.11     Subd. 11.  [QUALIFIED DISTRIBUTION.] "Qualified 
 36.12  distribution" means a distribution made from an account for 
 36.13  qualified higher education expenses of the beneficiary. 
 36.14     Subd. 12.  [QUALIFIED HIGHER EDUCATION 
 36.15  EXPENSES.] "Qualified higher education expenses" means expenses 
 36.16  as defined in section 529(e)(3) of the Internal Revenue Code. 
 36.17     Subd. 13.  [ROLLOVER DISTRIBUTION.] "Rollover distribution" 
 36.18  means a transfer of funds made: 
 36.19     (1) from one account to another account within 60 days of a 
 36.20  distribution; 
 36.21     (2) from another qualified state tuition program to an 
 36.22  account within 60 days of the distribution; or 
 36.23     (3) to another qualified state tuition program from an 
 36.24  account within 60 days of a distribution. 
 36.25     Each transfer of funds must be made for the benefit of a 
 36.26  new beneficiary who is a member of the family of the prior 
 36.27  beneficiary. 
 36.28     Subd. 14.  [SCHOLARSHIP.] "Scholarship" means a 
 36.29  scholarship, allowance, or payment under section 529(b)(3)(C) of 
 36.30  the Internal Revenue Code. 
 36.31     Subd. 15.  [STATE.] "State" means the state of Minnesota 
 36.32  and any Minnesota agency or political subdivision of Minnesota. 
 36.33     Subd. 16.  [TOTAL ACCOUNT BALANCE.] "Total account balance" 
 36.34  means the amount in an account on a particular date or the fair 
 36.35  market value of an account on a particular date. 
 36.36     Sec. 4.  Minnesota Statutes 2000, section 136A.243, 
 37.1   subdivision 1, is amended to read: 
 37.2      Subdivision 1.  [RESPONSIBILITIES.] (a) The director shall 
 37.3   establish the rules, terms, and conditions for the program plan, 
 37.4   subject to the requirements of sections 136A.241 to 
 37.5   136A.245 136A.246. 
 37.6      (b) The director shall prescribe the application forms, 
 37.7   procedures, and other requirements that apply to the program 
 37.8   plan. 
 37.9      Sec. 5.  Minnesota Statutes 2000, section 136A.243, 
 37.10  subdivision 2, is amended to read: 
 37.11     Subd. 2.  [ACCOUNTS-TYPE PROGRAM PLAN.] The office must 
 37.12  establish the program plan and the program plan must be operated 
 37.13  as an accounts-type program plan that permits individuals 
 37.14  persons to save for qualified higher education costs expenses 
 37.15  incurred at any eligible educational institution, regardless of 
 37.16  whether it is private or public or whether it is located within 
 37.17  or outside of this the state.  A separate account must be 
 37.18  maintained for each beneficiary for whom contributions are made. 
 37.19     Sec. 6.  Minnesota Statutes 2000, section 136A.243, 
 37.20  subdivision 3, is amended to read: 
 37.21     Subd. 3.  [CONSULTATION WITH STATE BOARD OF INVESTMENT.] In 
 37.22  designing and establishing the program's plan's requirements and 
 37.23  in negotiating or entering into contracts with third parties 
 37.24  under subdivision 8, the director shall consult with the 
 37.25  executive director.  The director and the executive director 
 37.26  shall establish an annual fee, equal to a percentage of the 
 37.27  average daily net assets of the plan, to be imposed on 
 37.28  participants to recover the costs of administration, 
 37.29  recordkeeping, and investment management as provided in 
 37.30  subdivision 9 and section 136A.244, subdivision 4. 
 37.31     Sec. 7.  Minnesota Statutes 2000, section 136A.243, 
 37.32  subdivision 4, is amended to read: 
 37.33     Subd. 4.  [PROGRAM PLAN TO COMPLY WITH FEDERAL LAW.] The 
 37.34  director shall take steps to ensure that the program plan meets 
 37.35  the requirements for a qualified state tuition program under 
 37.36  section 529(b)(1)(A)(ii) of the Internal Revenue Code.  The 
 38.1   director may request a private letter ruling or rulings from the 
 38.2   Internal Revenue Service or take any other steps to ensure that 
 38.3   the program plan qualifies under section 529 of the Internal 
 38.4   Revenue Code or other relevant provisions of federal law. 
 38.5      Sec. 8.  Minnesota Statutes 2000, section 136A.243, 
 38.6   subdivision 9, is amended to read: 
 38.7      Subd. 9.  [AUTHORITY TO IMPOSE FEES.] The office may impose 
 38.8   annual fees, as provided in subdivision 3, on participants in 
 38.9   the program plan to recover the costs of administration.  The 
 38.10  office must use its best efforts to keep these fees as low as 
 38.11  possible, consistent with efficient administration, so that the 
 38.12  returns on savings invested in the program plan will be as high 
 38.13  as possible. 
 38.14     Sec. 9.  Minnesota Statutes 2000, section 136A.243, is 
 38.15  amended by adding a subdivision to read: 
 38.16     Subd. 10.  [DATA.] Account owner data, account data, and 
 38.17  data on beneficiaries of accounts are private data on 
 38.18  individuals as defined in section 13.02, except that the names 
 38.19  and addresses of the beneficiaries of accounts that receive 
 38.20  matching grants are public. 
 38.21     Sec. 10.  Minnesota Statutes 2000, section 136A.244, 
 38.22  subdivision 1, is amended to read: 
 38.23     Subdivision 1.  [STATE BOARD TO INVEST.] The state board of 
 38.24  investment shall invest the money deposited in accounts in the 
 38.25  program plan and all investments are directed by the board.  
 38.26  Neither persons making contributions to an account nor 
 38.27  beneficiaries may direct the investment of contributions to the 
 38.28  plan or plan earnings.  
 38.29     Sec. 11.  Minnesota Statutes 2000, section 136A.244, 
 38.30  subdivision 4, is amended to read: 
 38.31     Subd. 4.  [FEES.] The board may impose annual fees, as 
 38.32  provided in section 136A.243, subdivision 3, on participants in 
 38.33  the program plan to recover the cost of investment management 
 38.34  and related tasks for the program plan.  The board must use its 
 38.35  best efforts to keep these fees as low as possible, consistent 
 38.36  with high quality investment management, so that the returns on 
 39.1   savings invested in the program plan will be as high as possible.
 39.2      Sec. 12.  [136A.2441] [MINNESOTA COLLEGE SAVINGS PLAN 
 39.3   ACCOUNTS; GENERALLY.] 
 39.4      Subdivision 1.  [CONTRIBUTIONS TO AN ACCOUNT.] A person may 
 39.5   make contributions to an account on behalf of a beneficiary.  
 39.6   Contributions to an account made by persons other than the 
 39.7   account owner become the property of the account owner.  A 
 39.8   person does not acquire an interest in an account by making 
 39.9   contributions to an account.  Contributions to an account must 
 39.10  be made by check, money order, or other commercially acceptable 
 39.11  means as permitted by the United States Internal Revenue Service 
 39.12  and authorized by the plan administrator in cooperation with the 
 39.13  office and the board. 
 39.14     Subd. 2.  [AUTHORITY OF ACCOUNT OWNER.] An account owner is 
 39.15  the only person entitled to: 
 39.16     (1) select or change a beneficiary or a contingent account 
 39.17  owner; or 
 39.18     (2) request distributions or rollover distributions from an 
 39.19  account. 
 39.20     Subd. 3.  [SECURITY FOR LOANS.] An interest in an account 
 39.21  or matching grant account must not be used as security for a 
 39.22  loan. 
 39.23     Subd. 4.  [SEPARATE ACCOUNTING.] The plan must provide a 
 39.24  separate account for each beneficiary for whom contributions are 
 39.25  made.  Each account must have a single account owner and a 
 39.26  single beneficiary.  An account owner must not open more than 
 39.27  one account for the same beneficiary, but several account owners 
 39.28  may open accounts for the same beneficiary. 
 39.29     Subd. 5.  [NAMING OF BENEFICIARY.] The account owner must 
 39.30  designate the beneficiary of an account when the account is 
 39.31  established, except for accounts established under section 
 39.32  529(e)(1)(C) of the Internal Revenue Code, which do not require 
 39.33  a designated beneficiary until a distribution is made. 
 39.34     Subd. 6.  [CHANGE OF BENEFICIARY.] An account owner may 
 39.35  change the beneficiary of an account to a member of the family 
 39.36  of the current beneficiary, at any time without penalty, if the 
 40.1   change will not cause the total account balance of all accounts 
 40.2   held for the new beneficiary to exceed the maximum account 
 40.3   balance limit as provided in subdivision 8.  A change of 
 40.4   beneficiary other than as permitted in this subdivision is 
 40.5   treated as a nonqualified distribution under section 136A.246, 
 40.6   subdivision 3. 
 40.7      Subd. 7.  [CHANGE OF ACCOUNT OWNERSHIP.] An account owner 
 40.8   may transfer ownership of an account to another person eligible 
 40.9   to be an account owner.  All transfers of ownership are absolute 
 40.10  and irrevocable. 
 40.11     Subd. 8.  [MAXIMUM ACCOUNT BALANCE LIMIT.] (a) When a 
 40.12  contribution is made, the total account balance of all accounts 
 40.13  held for the same beneficiary, including matching grant 
 40.14  accounts, must not exceed the maximum account balance limit as 
 40.15  determined under this subdivision. 
 40.16     (b) The maximum account balance limit is reduced for 
 40.17  withdrawals from any account for the same beneficiary that are 
 40.18  qualified distributions, distributions due to the death or 
 40.19  disability of the beneficiary, or distributions due to the 
 40.20  beneficiary receiving a scholarship.  Subsequent contributions 
 40.21  must not be made to replenish an account if the contribution 
 40.22  results in the total account balance of all accounts held for 
 40.23  the beneficiary to exceed the reduced maximum account balance 
 40.24  limit.  Any subsequent contributions must be rejected.  A 
 40.25  subsequent contribution accepted in error must be returned to 
 40.26  the account owner plus any earnings on the contribution less any 
 40.27  applicable penalties. 
 40.28     (c) The maximum account balance limit is not reduced for a 
 40.29  nonqualified distribution or a rollover distribution.  When such 
 40.30  distributions are taken, subsequent contributions may be made to 
 40.31  replenish an account up to the maximum account balance limit. 
 40.32     (d) The office must establish a maximum account balance 
 40.33  limit.  The maximum account balance limit is four times the cost 
 40.34  of one year of qualified higher education expenses at the most 
 40.35  expensive eligible educational institution in Minnesota.  The 
 40.36  office must adjust the maximum account balance limit, as 
 41.1   necessary, or on January 1 of each year.  Qualified higher 
 41.2   education expenses for the academic year prior to January 1 of 
 41.3   each year must be used in calculating the maximum account 
 41.4   balance limit.  The maximum account balance limit must not 
 41.5   exceed the amount permitted for the plan to qualify as a 
 41.6   qualified state tuition program under section 529 of the 
 41.7   Internal Revenue Code.  
 41.8      (e) If the total account balance of all accounts held for a 
 41.9   single beneficiary reaches the maximum account balance limit 
 41.10  prior to the end of that calendar year, the beneficiary may 
 41.11  receive an applicable matching grant for that calendar year. 
 41.12     Subd. 9.  [EXCESS CONTRIBUTIONS AND BALANCES.] A 
 41.13  contribution to any account for a beneficiary must be rejected 
 41.14  if the contribution would cause the total account balance of all 
 41.15  accounts held for the same beneficiary, including the matching 
 41.16  grant account, to exceed the maximum account balance limit under 
 41.17  section 529 of the Internal Revenue Code as established by the 
 41.18  office.  If a contribution under this subdivision is accepted in 
 41.19  error, the contribution must be returned to the account owner 
 41.20  plus any earnings thereon, less applicable penalties.  A payment 
 41.21  of an excess contribution to the account owner may be a 
 41.22  nonqualified distribution subject to a penalty. 
 41.23     Subd. 10.  [DORMANT ACCOUNTS.] (a) The plan administrator 
 41.24  shall attempt to locate the account owner or the beneficiary, or 
 41.25  both, to determine the disposition of a dormant account.  A fee 
 41.26  of five percent of the total account balance of the dormant 
 41.27  account, not to exceed $100, plus allowable costs, may be 
 41.28  charged for this service.  Costs will not exceed $100 or five 
 41.29  percent of the total account balance in the dormant account, 
 41.30  whichever is less. 
 41.31     (b) If the account owner, or the account owner's legal 
 41.32  heirs, are not found after three attempts by the plan 
 41.33  administrator, the remaining funds in the dormant account must 
 41.34  be turned over to the office.  The funds are treated as 
 41.35  unclaimed property for purposes of sections 345.31 to 345.60, 
 41.36  and the office shall turn all remaining dormant account funds 
 42.1   over to the commissioner of commerce.  If the dormant account 
 42.2   has a matching grant account, all amounts in the beneficiary's 
 42.3   matching grant account, if any, must be returned to the office. 
 42.4      Subd. 11.  [EFFECT OF PLAN CHANGES ON PARTICIPATION 
 42.5   AGREEMENT.] Amendments to sections 136A.241 to 136A.246 
 42.6   automatically amend the participation agreement.  Any amendments 
 42.7   to the operating procedures and policies of the plan shall amend 
 42.8   the participation agreement 30 days after adoption by the office 
 42.9   or the board. 
 42.10     Subd. 12.  [SPECIAL ACCOUNT TO HOLD PLAN ASSETS IN 
 42.11  TRUST.] All assets of the plan, including contributions to 
 42.12  accounts and matching grant accounts and earnings, are held in 
 42.13  trust for the exclusive benefit of account owners and 
 42.14  beneficiaries.  Assets must be held in a separate account in the 
 42.15  state treasury to be known as the Minnesota college savings plan 
 42.16  account.  Plan assets are not subject to claims by creditors of 
 42.17  the state, are not part of the general fund, and are not subject 
 42.18  to appropriation by the state.  Payments from the Minnesota 
 42.19  college savings plan account shall be made under sections 
 42.20  136A.241 to 136A.246. 
 42.21     Sec. 13.  Minnesota Statutes 2000, section 136A.245, 
 42.22  subdivision 2, is amended to read: 
 42.23     Subd. 2.  [FAMILY INCOME.] (a) For purposes of this 
 42.24  section, "family income" means: 
 42.25     (1) if the beneficiary is under age 25, the combined 
 42.26  adjusted gross income of the beneficiary's parents or legal 
 42.27  guardians as reported on the federal tax return or returns for 
 42.28  the most recently available tax year.  If the beneficiary's 
 42.29  parents are divorced, the income of the parent claiming the 
 42.30  beneficiary as a dependent on the federal individual income tax 
 42.31  return and the income of that parent's spouse, if any, is used 
 42.32  to determine family income; or 
 42.33     (2) if the beneficiary is age 25 or older, the combined 
 42.34  adjusted gross income of the beneficiary and spouse, if any. 
 42.35     (b) For a parent or legal guardian of beneficiaries under 
 42.36  age 25 and for beneficiaries age 25 or older who resided in 
 43.1   Minnesota and filed a federal individual income tax return two 
 43.2   years prior to the year in which the matching grant is awarded, 
 43.3   the matching grant must be based on family income from Internal 
 43.4   Revenue Service tax data on file with the Minnesota department 
 43.5   of revenue.  
 43.6      (c) Parents or legal guardians of beneficiaries under age 
 43.7   25 and beneficiaries age 25 or older who did not reside in 
 43.8   Minnesota two years prior to the year in which the matching 
 43.9   grant is awarded must provide a signed copy of their federal 
 43.10  individual income tax return to the office, regardless of who 
 43.11  the account owner is, in order to be considered for a matching 
 43.12  grant. 
 43.13     Sec. 14.  Minnesota Statutes 2000, section 136A.245, is 
 43.14  amended by adding a subdivision to read: 
 43.15     Subd. 2a.  [RESIDENCY REQUIREMENT.] (a) If the beneficiary 
 43.16  is under age 25, the beneficiary's parents or legal guardians 
 43.17  must be Minnesota residents to qualify for a matching grant.  If 
 43.18  the beneficiary is age 25 or older, the beneficiary must be a 
 43.19  Minnesota resident to qualify for a matching grant. 
 43.20     (b) To meet the residency requirements, the parent or legal 
 43.21  guardian of beneficiaries under age 25 must have filed a 
 43.22  Minnesota individual income tax return as a Minnesota resident, 
 43.23  claiming the beneficiary as a dependent, two years prior to the 
 43.24  year in which the matching grant is awarded.  For beneficiaries 
 43.25  age 25 or older, the beneficiary, and a spouse, if any, must 
 43.26  have filed a Minnesota individual income tax return as a 
 43.27  Minnesota resident two years prior to the year in which the 
 43.28  matching grant is awarded. 
 43.29     (c) A parent of beneficiaries under age 25 and 
 43.30  beneficiaries age 25 or older who did not reside in Minnesota 
 43.31  two years prior to the year in which the matching grant is 
 43.32  awarded must establish Minnesota residency through the issuance 
 43.33  of a Minnesota driver's license or identification card. 
 43.34     Sec. 15.  Minnesota Statutes 2000, section 136A.245, is 
 43.35  amended by adding a subdivision to read: 
 43.36     Subd. 2b.  [AGE AND DATE OF BIRTH DETERMINATION OF 
 44.1   BENEFICIARY.] In determining the age of the beneficiary for 
 44.2   purposes of a matching grant, the plan administrator shall use 
 44.3   the age of the beneficiary as reported on the participation 
 44.4   agreement on December 31 of the year in which the request for a 
 44.5   matching grant is made. 
 44.6      Sec. 16.  Minnesota Statutes 2000, section 136A.245, 
 44.7   subdivision 4, is amended to read: 
 44.8      Subd. 4.  [BUDGET LIMIT.] If the total amount of matching 
 44.9   grants determined under subdivision 3 exceeds the amount of the 
 44.10  appropriation for the fiscal year, the director shall 
 44.11  proportionately reduce each grant so that the total equals the 
 44.12  available appropriation.  The director must reduce matching 
 44.13  grants so that the amount of the matching grant assigned to a 
 44.14  beneficiary's account equals: 
 44.15     (1) the ratio of state appropriations for the matching 
 44.16  grant divided by the total dollar amount of matching grants for 
 44.17  all beneficiaries; multiplied by 
 44.18     (2) the dollar amount of the matching grant for each 
 44.19  eligible beneficiary. 
 44.20     Sec. 17.  Minnesota Statutes 2000, section 136A.245, is 
 44.21  amended by adding a subdivision to read: 
 44.22     Subd. 7.  [ANNUAL APPLICATION.] An account owner must 
 44.23  submit an application form for a matching grant on an annual 
 44.24  basis.  The application must be postmarked by December 31 of the 
 44.25  year preceding the awarding of the matching grant.  
 44.26     Sec. 18.  Minnesota Statutes 2000, section 136A.245, is 
 44.27  amended by adding a subdivision to read: 
 44.28     Subd. 8.  [SINGLE BENEFICIARIES WITH MULTIPLE 
 44.29  ACCOUNTS.] (a) A matching grant will first be computed on an 
 44.30  account owned by a parent or legal guardian of the beneficiary, 
 44.31  or an account owner who is also the beneficiary.  If there are 
 44.32  multiple accounts for a single beneficiary, any matching grant, 
 44.33  up to the annual maximum, will be proportionately awarded to the 
 44.34  beneficiary named in accounts owned by the parents or guardians. 
 44.35     (b) If the account owned by a parent or a guardian or an 
 44.36  account owner who is also the beneficiary does not qualify for 
 45.1   the maximum annual matching grant, any remaining matching grant 
 45.2   funds are proportionately distributed to the beneficiary to an 
 45.3   account or accounts owned by someone other than the parent or 
 45.4   guardian. 
 45.5      (c) If the account for a beneficiary is not owned by a 
 45.6   parent or a legal guardian, or an account owner who is also the 
 45.7   beneficiary, then the matching grant will be proportionately 
 45.8   distributed to the beneficiary to accounts owned by others. 
 45.9      Sec. 19.  Minnesota Statutes 2000, section 136A.245, is 
 45.10  amended by adding a subdivision to read: 
 45.11     Subd. 9.  [OWNERSHIP OF MATCHING GRANT FUNDS.] The state 
 45.12  retains ownership of all matching grants and earnings on 
 45.13  matching grants until a qualified distribution is made to a 
 45.14  beneficiary or an eligible educational institution. 
 45.15     Sec. 20.  Minnesota Statutes 2000, section 136A.245, is 
 45.16  amended by adding a subdivision to read: 
 45.17     Subd. 10.  [INACTIVE ACCOUNTS WITH MATCHING GRANTS.] (a) 
 45.18  The plan administrator will attempt to locate the account owner 
 45.19  or the beneficiary of an inactive account with a matching grant 
 45.20  to determine the disposition of the account.  No fee will be 
 45.21  charged for this service.  The matching grants and matching 
 45.22  grant earnings in the account must be returned to the office, 
 45.23  unless the account owner applies for a deferment or the 
 45.24  beneficiary begins attending an eligible educational institution 
 45.25  within one year of the date of notification. 
 45.26     (b) The account owner may apply to the plan administrator 
 45.27  for a deferment of inactive account time limits.  Upon 
 45.28  application, the plan administrator shall grant a one-time 
 45.29  deferment of two years.  In addition, the plan administrator 
 45.30  shall grant a deferment for the beneficiary's initial enlistment 
 45.31  for active duty in the armed forces of the United States, or for 
 45.32  the period of active military duty required as part of the 
 45.33  beneficiary's obligation as a member in a reserve military unit 
 45.34  of the armed forces of the United States. 
 45.35     Sec. 21.  Minnesota Statutes 2000, section 136A.245, is 
 45.36  amended by adding a subdivision to read: 
 46.1      Subd. 11.  [FORFEITURE OF MATCHING GRANTS.] (a) Matching 
 46.2   grants are forfeited if: 
 46.3      (1) the account owner transfers the total account balance 
 46.4   of an account to another account or to another qualified state 
 46.5   tuition program; 
 46.6      (2) the beneficiary receives a full tuition scholarship or 
 46.7   admission to a United States service academy; 
 46.8      (3) the beneficiary dies or becomes disabled; 
 46.9      (4) the account owner changes the beneficiary of the 
 46.10  account; or 
 46.11     (5) the account owner closes the account with a 
 46.12  nonqualified withdrawal. 
 46.13     (b) Matching grants must be proportionally forfeited if: 
 46.14     (1) the account owner transfers a portion of an account to 
 46.15  another account or to another qualified state tuition program; 
 46.16     (2) the beneficiary receives a scholarship covering a 
 46.17  portion of qualified higher education expenses; or 
 46.18     (3) the account owner makes a partial nonqualified 
 46.19  withdrawal. 
 46.20     (c) If the account owner makes a misrepresentation in a 
 46.21  participation agreement or an application for a matching grant 
 46.22  that results in a matching grant, the matching grant associated 
 46.23  with the misrepresentation is forfeited.  The office and the 
 46.24  board must instruct the plan administrator as to the amount to 
 46.25  be forfeited from the matching grant account.  The office and 
 46.26  the board must withdraw the matching grant or the proportion of 
 46.27  the matching grant that is related to the misrepresentation. 
 46.28     Sec. 22.  [136A.246] [ACCOUNT DISTRIBUTIONS.] 
 46.29     Subdivision 1.  [QUALIFIED DISTRIBUTION METHODS.] (a) 
 46.30  Qualified distributions may be made: 
 46.31     (1) directly to participating eligible educational 
 46.32  institutions on behalf of the beneficiary; 
 46.33     (2) in the form of a check payable to both the beneficiary 
 46.34  and the eligible educational institution; or 
 46.35     (3) to an account owner with a receipt verifying the 
 46.36  payment of qualified higher education expenses. 
 47.1      (b) When administratively feasible, distributions may be 
 47.2   made when the account owner and beneficiary certify prior to the 
 47.3   distribution that the distribution will be expended for 
 47.4   qualified higher education expenses a reasonable time after the 
 47.5   distribution.  The plan administrator may retain a penalty on 
 47.6   the earnings portion of the nonqualified distribution until 
 47.7   payment of qualified higher education expenses are 
 47.8   substantiated.  A payment receipt showing payment for qualified 
 47.9   higher education expenses must be submitted to the program 
 47.10  administrator within 30 days of distribution. 
 47.11     (c) Qualified distributions must be withdrawn 
 47.12  proportionally from contributions and earnings in an account 
 47.13  owner's account on the date of distribution as provided in 
 47.14  section 529 of the Internal Revenue Code. 
 47.15     Subd. 2.  [MATCHING GRANT ACCOUNTS.] Qualified 
 47.16  distributions are based on the total account balances in an 
 47.17  account owner's account and matching grant account, if any, on 
 47.18  the date of distribution.  Qualified distributions must be 
 47.19  withdrawn proportionally from each account based on the relative 
 47.20  total account balance of each account to the total account 
 47.21  balance for both accounts.  Amounts for matching grants and 
 47.22  matching grant earnings must only be distributed for qualified 
 47.23  higher education expenses. 
 47.24     Subd. 3.  [NONQUALIFIED DISTRIBUTION.] An account owner may 
 47.25  request a nonqualified distribution from an account at any 
 47.26  time.  Nonqualified distributions are based on the total account 
 47.27  balances in an account owner's account and must be withdrawn 
 47.28  proportionally from contributions and earnings as provided in 
 47.29  section 529 of the Internal Revenue Code.  The earnings portion 
 47.30  of a nonqualified distribution is subject to a penalty.  For 
 47.31  purposes of this subdivision, "earnings portion" means the ratio 
 47.32  of the earnings in the account to the total account balance, 
 47.33  immediately prior to the distribution, multiplied by the 
 47.34  distribution.  The penalty must be withheld from the total 
 47.35  amount of any distribution. 
 47.36     Subd. 4.  [NONQUALIFIED DISTRIBUTIONS FROM MATCHING GRANT 
 48.1   ACCOUNTS.] (a) If an account owner requests a nonqualified 
 48.2   distribution from an account that has a matching grant account, 
 48.3   the total account balance of the matching grant account, if any, 
 48.4   is reduced. 
 48.5      (b) After the nonqualified distribution is withdrawn from 
 48.6   the account including any penalty as provided in subdivision 3, 
 48.7   the account owner forfeits matching grant amounts in the same 
 48.8   proportion as the nonqualified distribution is to the total 
 48.9   account balance of the account. 
 48.10     Subd. 5.  [DISTRIBUTIONS DUE TO DEATH OR DISABILITY OF, OR 
 48.11  SCHOLARSHIP TO, A BENEFICIARY.] An account owner may request a 
 48.12  distribution due to the death or disability of, or scholarship 
 48.13  to, a beneficiary from an account by submitting a completed 
 48.14  request to the plan.  Prior to distribution, the account owner 
 48.15  shall certify the reason for the distribution and provide 
 48.16  written confirmation from a third party that the beneficiary has 
 48.17  died, become disabled, or received a scholarship for attendance 
 48.18  at an eligible educational institution.  The plan must not 
 48.19  consider a request to make a distribution until a third-party 
 48.20  written confirmation is received by the plan.  For purposes of 
 48.21  this subdivision, a third-party written confirmation consists of 
 48.22  the following: 
 48.23     (1) for death of the beneficiary, a certified copy of the 
 48.24  beneficiary's death certificate; 
 48.25     (2) for disability of the beneficiary, a certification by a 
 48.26  physician who is a doctor of medicine or osteopathy stating that 
 48.27  the doctor is legally authorized to practice in a state of the 
 48.28  United States and that the beneficiary is unable to attend any 
 48.29  eligible educational institution because of an injury or illness 
 48.30  that is expected to continue indefinitely or result in death.  
 48.31  Certification must be on a form approved by the plan; or 
 48.32     (3) for a scholarship award to the beneficiary, a letter 
 48.33  from the grantor of the scholarship or from the eligible 
 48.34  educational institution receiving or administering the 
 48.35  scholarship, that identifies the beneficiary by name and social 
 48.36  security number or taxpayer identification number as the 
 49.1   recipient of the scholarship and states the amount of the 
 49.2   scholarship, the period of time or number of credits or units to 
 49.3   which it applies, the date of the scholarship, and, if 
 49.4   applicable, the eligible educational institution to which the 
 49.5   scholarship is to be applied. 
 49.6      Sec. 23.  [REVISOR'S INSTRUCTION.] 
 49.7      (a) The revisor of statutes shall renumber each section of 
 49.8   Minnesota Statutes listed in column A with the section listed in 
 49.9   column B. 
 49.10      Column A          Column B 
 49.11      136A.241          136G.01 
 49.12      136A.242          136G.03 
 49.13      136A.243          136G.05 
 49.14      136A.244          136G.07 
 49.15      136A.2441         136G.09 
 49.16      136A.245          136G.11 
 49.17      136A.246          136G.13 
 49.18     (b) The revisor of statutes shall correct cross-references 
 49.19  in Minnesota Statutes that are recodified by this act, and, if 
 49.20  Minnesota Statutes, sections 136A.241 to 136A.246, are further 
 49.21  amended in the 2001 legislative session, shall codify the 
 49.22  amendments in a manner consistent with this act. 
 49.23     (c) The revisor of statutes shall change "Edvest" to 
 49.24  "Minnesota college savings plan" wherever it appears in 
 49.25  Minnesota Statutes. 
 49.26     Sec. 24.  [EFFECTIVE DATE.] 
 49.27     This article is effective the day following final enactment.