1.1                          A bill for an act 
  1.2             relating to higher education; appropriating money for 
  1.3             educational and related purposes to the higher 
  1.4             education services office, board of trustees of the 
  1.5             Minnesota state colleges and universities, board of 
  1.6             regents of the University of Minnesota, and the Mayo 
  1.7             Medical Foundation with certain restrictions; making 
  1.8             various changes to the state grant program and the 
  1.9             college savings plan; providing for purchasing and 
  1.10            other administrative changes at MnSCU; authorizing 
  1.11            revenue bonds; amending Minnesota Statutes 2002, 
  1.12            sections 124D.42, subdivision 3; 135A.14, by adding a 
  1.13            subdivision; 136A.08, subdivision 3; 136A.101, 
  1.14            subdivision 5a; 136A.121, subdivisions 6, 7, 9, 9a, 
  1.15            13; 136A.125, subdivision 4; 136A.171; 136A.29, 
  1.16            subdivision 9; 136A.69; 136F.12; 136F.40, subdivision 
  1.17            2; 136F.45, subdivisions 1, 2; 136F.581, subdivision 
  1.18            2; 136F.59, subdivision 3; 136F.60, subdivision 3; 
  1.19            136G.01; 136G.03, subdivision 31, by adding 
  1.20            subdivisions; 136G.05, subdivisions 4, 5, 10; 136G.09, 
  1.21            subdivisions 1, 2, 6, 7, 8, 9; 136G.11, subdivisions 
  1.22            1, 2, 3, 9, 13; 136G.13, subdivisions 1, 3; 137.44; 
  1.23            299A.45, subdivision 2; proposing coding for new law 
  1.24            in Minnesota Statutes, chapters 135A; 136F; 136G; 
  1.25            repealing Minnesota Statutes 2002, sections 124D.95; 
  1.26            136A.1211; 136A.122; 136A.124; 136F.13; 136F.56; 
  1.27            136F.582; 136F.59, subdivision 2; 136G.03, subdivision 
  1.28            25. 
  1.29  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.30                             ARTICLE 1
  1.31                           APPROPRIATIONS
  1.32  Section 1.  [HIGHER EDUCATION APPROPRIATIONS.] 
  1.33     The sums in the columns marked "APPROPRIATIONS" are 
  1.34  appropriated from the general fund, or other named fund, to the 
  1.35  agencies and for the purposes specified in this article.  The 
  1.36  listing of an amount under the figure "2004" or "2005" in this 
  1.37  article indicates that the amount is appropriated to be 
  2.1   available for the fiscal year ending June 30, 2004, or June 30, 
  2.2   2005, respectively.  "The first year" is fiscal year 2004.  "The 
  2.3   second year" is fiscal year 2005.  "The biennium" is fiscal 
  2.4   years 2004 and 2005. 
  2.5                           SUMMARY BY FUND 
  2.6                             2004          2005           TOTAL
  2.7   General            $1,354,748,000 $1,344,724,000 $2,699,472,000
  2.8   Health Care
  2.9   Access                  2,157,000      2,157,000      4,314,000
  2.10                   SUMMARY BY AGENCY - ALL FUNDS
  2.11                            2004          2005           TOTAL
  2.12  Higher Education Services Office
  2.13                        155,002,000    155,002,000    310,004,000
  2.14  Board of Trustees of the Minnesota
  2.15  State Colleges and Universities
  2.16                        602,381,000    589,194,000  1,191,575,000
  2.17  Board of Regents of the University
  2.18  of Minnesota
  2.19                        598,131,000    601,294,000  1,199,425,000
  2.20  Mayo Medical Foundation
  2.21                          1,391,000      1,391,000      2,782,000
  2.22                                            APPROPRIATIONS 
  2.23                                         Available for the Year 
  2.24                                             Ending June 30 
  2.25                                            2004         2005 
  2.26  Sec. 2.  HIGHER EDUCATION
  2.27  SERVICES OFFICE
  2.28  Subdivision 1. Total
  2.29  Appropriation                     $  155,002,000 $  155,002,000 
  2.30  The amounts that may be spent from this 
  2.31  appropriation for each purpose are 
  2.32  specified in the following subdivisions.
  2.33  Subd. 2.  State Grants
  2.34     120,575,000    120,575,000
  2.35  This appropriation contains money to 
  2.36  provide educational benefits to 
  2.37  dependent children under age 23 and the 
  2.38  spouses of public safety officers 
  2.39  killed in the line of duty pursuant to 
  2.40  Minnesota Statutes 2002, section 
  2.41  299A.45.  
  2.42  For the biennium, the institution 
  2.43  tuition maximum shall be $7,636 in the 
  2.44  first year and $7,636 in the second 
  2.45  year for four-year institutions and 
  2.46  $5,876 in the first year and $5,876 in 
  3.1   the second year for two-year 
  3.2   institutions. 
  3.3   This appropriation contains money to 
  3.4   set the living and miscellaneous 
  3.5   expense allowance at $5,205 in each 
  3.6   year. 
  3.7   Subd. 3.  Interstate Tuition Reciprocity
  3.8        3,600,000      3,600,000
  3.9   If the appropriation in this 
  3.10  subdivision for either year is 
  3.11  insufficient, the appropriation for the 
  3.12  other year is available to meet 
  3.13  reciprocity contract obligations. 
  3.14  The higher education services office 
  3.15  must negotiate the reciprocity 
  3.16  agreements for remission of nonresident 
  3.17  tuition under Minnesota Statutes, 
  3.18  section 136A.08.  The agreements must 
  3.19  be negotiated under this subdivision 
  3.20  with the goal of reducing and 
  3.21  minimizing the obligation of 
  3.22  participating states to make general 
  3.23  fund transfers for the tuition 
  3.24  reciprocity program while maintaining 
  3.25  access for Minnesota students.  
  3.26  Negotiations must include consideration 
  3.27  of new methods of collaboration with 
  3.28  education institutions in reciprocity 
  3.29  states to improve student access at 
  3.30  lower costs, including on-line 
  3.31  learning.  The chancellor of the 
  3.32  Minnesota state colleges and 
  3.33  universities and the president of the 
  3.34  University of Minnesota or their 
  3.35  designees may participate in any 
  3.36  negotiations on the tuition reciprocity 
  3.37  agreement.  The higher education 
  3.38  services office must present 
  3.39  information on the status of 
  3.40  negotiations under this subdivision to 
  3.41  the higher education finance committees 
  3.42  of the legislature by February 15, 2004.
  3.43  Subd. 4.  State Work Study
  3.44      12,444,000     12,444,000
  3.45  Subd. 5.  Child Care Grants
  3.46       4,743,000      4,743,000
  3.47  Subd. 6.  Minitex 
  3.48       4,381,000      4,381,000
  3.49  Subd. 7.  MnLINK
  3.50         450,000        450,000
  3.51  Any unexpended funds from the 
  3.52  appropriation in Laws 1997, chapter 
  3.53  183, article 1, section 2, subdivision 
  3.54  8, shall cancel on June 30, 2005. 
  3.55  The base appropriation for MnLINK 
  3.56  operations is $400,000 each year 
  4.1   beginning in fiscal year 2006. 
  4.2   Subd. 8.  Learning Network of Minnesota
  4.3        4,829,000      4,829,000
  4.4   Subd. 9.  Income Contingent Loans
  4.5   The higher education services office 
  4.6   shall administer an income-contingent 
  4.7   loan repayment program to assist 
  4.8   graduates of Minnesota schools in 
  4.9   medicine, dentistry, pharmacy, 
  4.10  chiropractic medicine, public health, 
  4.11  and veterinary medicine, and Minnesota 
  4.12  residents graduating from optometry and 
  4.13  osteopathy programs.  Applicant data 
  4.14  collected by the office for this 
  4.15  program may be disclosed to a consumer 
  4.16  credit reporting agency under the same 
  4.17  conditions as those that apply to the 
  4.18  supplemental loan program under 
  4.19  Minnesota Statutes, section 136A.162.  
  4.20  No new applicants may be accepted after 
  4.21  June 30, 1995.  
  4.22  Subd. 10.  Minnesota College Savings Plan
  4.23       1,120,000      1,120,000 
  4.24  Subd. 11.  Agency Administration
  4.25       2,860,000      2,860,000 
  4.26  This appropriation includes $125,000 
  4.27  each year for the student and parent 
  4.28  information program under Minnesota 
  4.29  Statutes, section 136A.87; $184,000 
  4.30  each year for the Get Ready program; 
  4.31  and $255,000 each year for the college 
  4.32  intervention program to foster 
  4.33  postsecondary attendance by providing 
  4.34  outreach services to historically 
  4.35  underserved groups of Minnesota 
  4.36  elementary and secondary students.  The 
  4.37  office may contract with other agencies 
  4.38  or nonprofit organizations for specific 
  4.39  services specifically funded by this 
  4.40  paragraph. 
  4.41  This appropriation contains $100,000 
  4.42  each year for grants to increase 
  4.43  campus-community collaboration and 
  4.44  service learning statewide.  For every 
  4.45  $1 in state funding, grant recipients 
  4.46  must contribute $2 in campus or 
  4.47  community-based support.  
  4.48  Subd. 12.  Balances Forward 
  4.49  A balance in the first year under this 
  4.50  section does not cancel, but is 
  4.51  available for the second year. 
  4.52  Subd. 13.  Transfers 
  4.53  The higher education services office 
  4.54  may transfer unencumbered balances from 
  4.55  the appropriations in this section to 
  4.56  the state grant appropriation, the 
  4.57  interstate tuition reciprocity 
  5.1   appropriation, the child care 
  5.2   appropriation, and the state work study 
  5.3   appropriation. 
  5.4   Subd. 14.  Reporting
  5.5   The higher education services office 
  5.6   shall collect data monthly from 
  5.7   institutions disbursing state financial 
  5.8   aid.  The data collected shall include, 
  5.9   but is not limited to, expenditures by 
  5.10  type to date and unexpended balances. 
  5.11  The higher education services office 
  5.12  shall evaluate and report on state 
  5.13  financial aid expenditures and 
  5.14  unexpended balances to the chairs of 
  5.15  the higher education finance committees 
  5.16  of the senate and house of 
  5.17  representatives and the commissioner of 
  5.18  finance on February 1, May 1, September 
  5.19  1, and December 1 each year. 
  5.20  The higher education services office 
  5.21  shall by January 15, 2004, and by 
  5.22  November 30, 2004, report on the impact 
  5.23  on students of the changes in financial 
  5.24  aid policies made by this act.  
  5.25  Sec. 3.  BOARD OF TRUSTEES OF THE
  5.26  MINNESOTA STATE COLLEGES AND UNIVERSITIES
  5.27  Subdivision 1.  Total
  5.28  Appropriation                        602,381,000    589,194,000 
  5.29  The amounts that may be spent from this 
  5.30  appropriation for each purpose are 
  5.31  specified in the following subdivisions.
  5.32  Subd. 2.  Estimated Expenditures
  5.33  and Appropriations 
  5.34  The legislature estimates that 
  5.35  instructional expenditures will be 
  5.36  $805,065,000 in the first year and 
  5.37  $785,284,000 in the second year. 
  5.38  The legislature estimates that 
  5.39  noninstructional expenditures will be 
  5.40  $65,671,000 in the first year and 
  5.41  $65,671,000 in the second year. 
  5.42  The Northeast Higher Education District 
  5.43  shall be the fiscal agent for the 
  5.44  Arrowhead University Center. 
  5.45  This appropriation includes money for a 
  5.46  grant to Minnesota State University, 
  5.47  Mankato, for the talented youth 
  5.48  mathematics program.  
  5.49  During the biennium, neither the board 
  5.50  nor campuses shall plan or develop 
  5.51  doctoral level programs or degrees 
  5.52  until after they have received the 
  5.53  recommendation of the house and senate 
  5.54  committees on education, finance, and 
  5.55  ways and means. 
  5.56  Subd. 3.  Accountability 
  6.1   The board shall continue to submit 
  6.2   reports as required by Laws 2001, First 
  6.3   Special Session chapter 1, article 1, 
  6.4   section 3, subdivision 3.  For the 
  6.5   purpose of those reports, a first 
  6.6   generation student is a student neither 
  6.7   of whose parents received any 
  6.8   postsecondary education.  
  6.9   Sec. 4.  BOARD OF REGENTS OF THE 
  6.10  UNIVERSITY OF MINNESOTA 
  6.11  Subdivision 1.  Total
  6.12  Appropriation                        598,131,000    601,294,000 
  6.13  The amounts that may be spent from this 
  6.14  appropriation for each purpose are 
  6.15  specified in the following subdivisions.
  6.16  Subd. 2.  Operations and Maintenance
  6.17     527,561,000    530,724,000
  6.18  Estimated Expenditures 
  6.19  and Appropriations 
  6.20  The legislature estimates that 
  6.21  instructional expenditures will be 
  6.22  $401,211,000 in the first year and 
  6.23  $405,340,000 in the second year. 
  6.24  The legislature estimates that 
  6.25  noninstructional expenditures will be 
  6.26  $260,087,000 in the first year and 
  6.27  $260,497,000 in the second year.  
  6.28  Subd. 3.  Health Care Access Fund
  6.29       2,157,000      2,157,000
  6.30  This appropriation is from the health 
  6.31  care access fund for primary care 
  6.32  education initiatives. 
  6.33  Subd. 4.  Special
  6.34  Appropriation                         68,033,000     68,033,000
  6.35  (a) Agriculture and Extension Service 
  6.36      54,273,000     54,273,000
  6.37  This appropriation is for the 
  6.38  Agricultural Experiment Station, 
  6.39  Minnesota Extension Service. 
  6.40  Any salary increases granted by the 
  6.41  University to personnel paid from the 
  6.42  Minnesota Extension appropriation must 
  6.43  not result in a reduction of the county 
  6.44  responsibility for the salary payments. 
  6.45  During the biennium, the University 
  6.46  shall maintain an advisory council 
  6.47  system for each experiment station.  
  6.48  The advisory councils must be broadly 
  6.49  representative of the range in size and 
  6.50  income distribution of farms and 
  6.51  agribusinesses and must not 
  6.52  disproportionately represent those from 
  6.53  the upper half of the size and income 
  6.54  distributions.  
  7.1   (b) Health Sciences 
  7.2        5,384,000      5,384,000
  7.3   This appropriation includes $100,000 
  7.4   each year for resident stipends for the 
  7.5   family practice residency program at 
  7.6   United Hospital in St. Paul.  
  7.7   (c) Institute of Technology  
  7.8        1,487,000      1,487,000
  7.9   (d) System Specials 
  7.10       6,889,000      6,889,000
  7.11   Subd. 5.  Health Care Access Appropriation 
  7.12         380,000        380,000
  7.13  This appropriation is to supplement 
  7.14  appropriations from the health care 
  7.15  access fund for primary care education 
  7.16  initiatives. 
  7.17  Subd. 6.  Accountability 
  7.18  The board shall continue to submit 
  7.19  reports as required by Laws 2001, First 
  7.20  Special Session chapter 1, article 1, 
  7.21  section 4, subdivision 5.  For the 
  7.22  purpose of those reports, a first 
  7.23  generation student is a student neither 
  7.24  of whose parents received any 
  7.25  postsecondary education.  
  7.26  Sec. 5.  MAYO MEDICAL FOUNDATION 
  7.27  Subdivision 1.  Total
  7.28  Appropriation                           1,391,000       1,391,000
  7.29  The amounts that may be spent from this 
  7.30  appropriation for each purpose are 
  7.31  specified in the following subdivisions.
  7.32  Subd. 2.  Medical School
  7.33         514,000        514,000
  7.34  The state of Minnesota must pay a 
  7.35  capitation each year for each student 
  7.36  who is a resident of Minnesota.  The 
  7.37  appropriation may be transferred 
  7.38  between years of the biennium to 
  7.39  accommodate enrollment fluctuations. 
  7.40  The legislature intends that during the 
  7.41  biennium the Mayo foundation use the 
  7.42  capitation money to increase the number 
  7.43  of doctors practicing in rural areas in 
  7.44  need of doctors.  
  7.45  Subd. 3.  Family Practice and
  7.46  Graduate Residency Program
  7.47         531,000        531,000
  7.48  The state of Minnesota must pay a 
  7.49  capitation for 27 residents each year.  
  7.50  A higher capitation may be paid to one 
  8.1   resident each year.  
  8.2   Subd. 4.  St. Cloud Hospital-Mayo 
  8.3   Family Practice Residency Program 
  8.4          346,000        346,000
  8.5   This appropriation is to the Mayo 
  8.6   foundation to support 12 resident 
  8.7   physicians each year in the St. Cloud 
  8.8   Hospital-Mayo Family Practice Residency 
  8.9   program.  The program shall prepare 
  8.10  doctors to practice primary care 
  8.11  medicine in the rural areas of the 
  8.12  state.  It is intended that this 
  8.13  program will improve health care in 
  8.14  rural communities, provide affordable 
  8.15  access to appropriate medical care, and 
  8.16  manage the treatment of patients in a 
  8.17  more cost-effective manner. 
  8.18  Sec. 6.  SELF LOAN RESERVE FUND TRANSFER
  8.19  Notwithstanding any law to the 
  8.20  contrary, by June 30, 2003, the 
  8.21  commissioner of finance shall transfer 
  8.22  $30,000,000 of uncommitted balances in 
  8.23  the SELF loan reserve fund, under 
  8.24  Minnesota Statutes, section 136A.1701, 
  8.25  to the budget reserve account in the 
  8.26  general fund.  By June 30, 2007, the 
  8.27  commissioner of finance shall return 
  8.28  this amount to the SELF loan reserve 
  8.29  fund.  The amount necessary to make the 
  8.30  return transfer is appropriated from 
  8.31  the general fund to the commissioner of 
  8.32  finance for the fiscal year ending June 
  8.33  30, 2007. 
  8.34  <b>[EFFECTIVE DATE.]</b> This section is 
  8.35  effective the day following final 
  8.36  enactment.  
  8.37  Sec. 7.  POSTSECONDARY SYSTEMS 
  8.38  By February 15 of each year, the board 
  8.39  of trustees of the Minnesota state 
  8.40  colleges and universities must and the 
  8.41  board of regents of the University of 
  8.42  Minnesota is requested to report to the 
  8.43  legislature on progress under the 
  8.44  master academic plan for the 
  8.45  metropolitan area.  The report must 
  8.46  include a discussion of coordination 
  8.47  and duplication of program offerings, 
  8.48  developmental and remedial education, 
  8.49  credit transfers within and between the 
  8.50  postsecondary systems, and planning and 
  8.51  delivery of coordinated programs.  In 
  8.52  order to better achieve the goal of a 
  8.53  more integrated, effective, and 
  8.54  seamless postsecondary education system 
  8.55  in Minnesota, the report must also 
  8.56  identify statewide efforts at 
  8.57  integration and cooperation between the 
  8.58  postsecondary systems.  
  8.59                             ARTICLE 2
  8.60                           POLICY CHANGES
  9.1      Section 1.  Minnesota Statutes 2002, section 135A.14, is 
  9.2   amended by adding a subdivision to read: 
  9.3      Subd. 6a.  [MENINGITIS INFORMATION.] Each public and 
  9.4   private postsecondary institution shall provide information on 
  9.5   the risks of meningococcal disease and on the availability and 
  9.6   effectiveness of any vaccine to each individual who is a 
  9.7   first-time enrollee and who resides in on-campus student 
  9.8   housing.  The institution may provide the information in an 
  9.9   electronic format.  The institution must consult with the 
  9.10  department of health on the preparation of the informational 
  9.11  materials provided under this subdivision. 
  9.12     <b>[EFFECTIVE DATE.]</b> This section is effective June 1, 2003.  
  9.13     Sec. 2.  [135A.145] [SALE OF STUDENT INFORMATION; MARKETING 
  9.14  CREDIT CARDS TO STUDENTS.] 
  9.15     Subdivision 1.  [PROHIBITED PRACTICES.] No public or 
  9.16  private postsecondary educational institution in this state, 
  9.17  including its agents, employees, student or alumni 
  9.18  organizations, or affiliates, may: 
  9.19     (1) sell, give, or otherwise transfer to any card issuer 
  9.20  student contact or other personal information without the 
  9.21  student's affirmative consent, except information designated as 
  9.22  public data on individuals by section 13.32, subdivision 5; or 
  9.23     (2) enter into any agreement to market credit cards to 
  9.24  undergraduate students at a postsecondary educational 
  9.25  institution. 
  9.26     For purposes of this section, the terms "credit," "credit 
  9.27  card," and "card issuer" have the meanings given them in the 
  9.28  Truth in Lending Act, United States Code, title 15, section 1602.
  9.29     The University of Minnesota is a public postsecondary 
  9.30  educational institution for purposes of this section. 
  9.31     Subd. 2.  [VIOLATIONS.] The attorney general may seek the 
  9.32  penalties and remedies available under section 8.31 against any 
  9.33  person who violates this section. 
  9.34     Sec. 3.  [135A.157] [PENALTIES FOR RIOTING.] 
  9.35     If a student enrolled in a postsecondary institution is 
  9.36  convicted of damage to property or violence to persons in 
 10.1   connection with a riot, the student is not eligible for a state 
 10.2   grant award under section 136A.121 after conviction and must pay 
 10.3   the highest applicable tuition rate, including the nonresident 
 10.4   tuition rate, to attend a public postsecondary institution in 
 10.5   any subsequent enrollment periods.  For the purpose of this 
 10.6   section, "riot" means a first, second, or third degree riot as 
 10.7   defined in section 609.71. 
 10.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 10.9   following final enactment. 
 10.10     Sec. 4.  Minnesota Statutes 2002, section 136A.101, 
 10.11  subdivision 5a, is amended to read: 
 10.12     Subd. 5a.  [ASSIGNED FAMILY RESPONSIBILITY.] "Assigned 
 10.13  family responsibility" means the amount of a family contribution 
 10.14  to a student's cost of attendance, as determined by a federal 
 10.15  need analysis, except that, beginning for the 1998-1999 academic 
 10.16  year, up to $25,000 in savings and other assets shall be 
 10.17  subtracted from the federal calculation of net worth before 
 10.18  determining the contribution.  For dependent students, the 
 10.19  assigned family responsibility is the parental contribution.  
 10.20  For independent students with dependents other than a spouse, 
 10.21  the assigned family responsibility is the student contribution. 
 10.22  For independent students without dependents other than a spouse, 
 10.23  the assigned family responsibility is 80 percent of the student 
 10.24  contribution.  Beginning in fiscal year 2002, the assigned 
 10.25  family responsibility for all independent students is reduced an 
 10.26  additional ten percent. 
 10.27     Sec. 5.  Minnesota Statutes 2002, section 136A.121, 
 10.28  subdivision 6, is amended to read: 
 10.29     Subd. 6.  [COST OF ATTENDANCE.] (a) The recognized cost of 
 10.30  attendance consists of allowances specified in law for living 
 10.31  and miscellaneous expenses, and an allowance for tuition and 
 10.32  fees equal to the lesser of the actual average tuition and fees 
 10.33  charged by the institution, or the private institution tuition 
 10.34  and fee maximums established in law. 
 10.35     (b) For the purpose of paragraph (a), the private 
 10.36  institution tuition and fee maximum for two- and four-year, 
 11.1   private, residential, liberal arts, degree-granting colleges and 
 11.2   universities must be the same. 
 11.3      (c) For a student registering for less than full time, the 
 11.4   office shall prorate the living and miscellaneous expense 
 11.5   allowance to the actual number of credits for which the student 
 11.6   is enrolled. 
 11.7      The recognized cost of attendance for a student who is 
 11.8   confined to a Minnesota correctional institution shall consist 
 11.9   of the tuition and fee component in paragraph (a), with no 
 11.10  allowance for living and miscellaneous expenses. 
 11.11     For the purpose of this subdivision, "fees" include only 
 11.12  those fees that are mandatory and charged to all students 
 11.13  attending the institution. 
 11.14     A student enrolled in a two-year program at a four-year 
 11.15  institution is eligible for the institution tuition and fee 
 11.16  maximum established by law for two-year institutions if less 
 11.17  than 50 percent of the undergraduate degrees awarded by the 
 11.18  four-year institution in the second year preceding the grant 
 11.19  application are baccalaureate degrees and for the maximum 
 11.20  established by law for four-year institutions if 50 percent or 
 11.21  more of the undergraduate degrees awarded by the institution in 
 11.22  the second year preceding the grant application are 
 11.23  baccalaureate degrees. 
 11.24     Sec. 6.  Minnesota Statutes 2002, section 136A.121, 
 11.25  subdivision 7, is amended to read: 
 11.26     Subd. 7.  [INSUFFICIENT APPROPRIATION.] If the amount 
 11.27  appropriated is determined by the office to be insufficient to 
 11.28  make full awards to applicants under subdivision 5, before any 
 11.29  award for that year has been disbursed, awards must be reduced 
 11.30  by: 
 11.31     (1) adding a surcharge to the applicant's assigned family 
 11.32  responsibility, as defined in section 136A.101, subdivision 5a; 
 11.33  and 
 11.34     (2) a percentage increase in the applicant's assigned 
 11.35  student responsibility, as defined in subdivision 5. 
 11.36     Sec. 7.  Minnesota Statutes 2002, section 136A.121, 
 12.1   subdivision 9, is amended to read: 
 12.2      Subd. 9.  [AWARDS.] An undergraduate student who meets the 
 12.3   office's requirements is eligible to apply for and receive a 
 12.4   grant in any year of undergraduate study unless the student has 
 12.5   obtained a baccalaureate degree or previously has been enrolled 
 12.6   full time or the equivalent for ten eight semesters or the 
 12.7   equivalent, excluding courses taken from a Minnesota school or 
 12.8   post-secondary institution which is not participating in the 
 12.9   state grant program and from which a student transferred no 
 12.10  credit.  An undergraduate student who would be eligible to apply 
 12.11  for and receive a grant but for the eight-semester limitation 
 12.12  may apply for and receive a grant for up to 12 additional 
 12.13  credits if the student can demonstrate that the additional 
 12.14  credits will complete the course work necessary to be awarded a 
 12.15  baccalaureate degree.  
 12.16     Sec. 8.  Minnesota Statutes 2002, section 136A.121, 
 12.17  subdivision 9a, is amended to read: 
 12.18     Subd. 9a.  [FULL-YEAR GRANTS.] Students may receive state 
 12.19  grants for four consecutive quarters or three consecutive 
 12.20  semesters during the course of a single fiscal year.  In 
 12.21  calculating a state grant for the fourth quarter or third 
 12.22  semester, the office must use the same calculation as it would 
 12.23  for any other term, except that the calculation must subtract 
 12.24  any federal Pell grant for which a student would be eligible 
 12.25  even if the student has exhausted the Pell grant for that fiscal 
 12.26  year. 
 12.27     Sec. 9.  Minnesota Statutes 2002, section 136A.121, 
 12.28  subdivision 13, is amended to read: 
 12.29     Subd. 13.  [DEADLINE.] The office shall accept applications 
 12.30  for state grants until February 15 and may establish a deadline 
 12.31  for the acceptance of applications that is later than February 
 12.32  15 of each academic year.  A student who applies for state grant 
 12.33  funds after the first semester or the equivalent of the academic 
 12.34  year may not receive retroactive funding for that first semester 
 12.35  or the equivalent. 
 12.36     Sec. 10.  Minnesota Statutes 2002, section 136A.125, 
 13.1   subdivision 4, is amended to read: 
 13.2      Subd. 4.  [AMOUNT AND LENGTH OF GRANTS.] The amount of a 
 13.3   child care grant must be based on: 
 13.4      (1) the income of the applicant and the applicant's spouse; 
 13.5      (2) the number in the applicant's family, as defined by the 
 13.6   office; and 
 13.7      (3) the number of eligible children in the applicant's 
 13.8   family.  
 13.9      The maximum award to the applicant shall be $2,600 $2,200 
 13.10  for each eligible child per academic year, except that the 
 13.11  campus financial aid officer may apply to the office for 
 13.12  approval to increase grants by up to ten percent to compensate 
 13.13  for higher market charges for infant care in a community.  The 
 13.14  office shall develop policies to determine community market 
 13.15  costs and review institutional requests for compensatory grant 
 13.16  increases to ensure need and equal treatment.  The office shall 
 13.17  prepare a chart to show the amount of a grant that will be 
 13.18  awarded per child based on the factors in this subdivision.  The 
 13.19  chart shall include a range of income and family size. 
 13.20     Sec. 11.  Minnesota Statutes 2002, section 136A.29, 
 13.21  subdivision 9, is amended to read: 
 13.22     Subd. 9.  The authority is authorized and empowered to 
 13.23  issue revenue bonds whose aggregate principal amount at any time 
 13.24  shall not exceed $650,000,000 $800,000,000 and to issue notes, 
 13.25  bond anticipation notes, and revenue refunding bonds of the 
 13.26  authority under the provisions of sections 136A.25 to 136A.42, 
 13.27  to provide funds for acquiring, constructing, reconstructing, 
 13.28  enlarging, remodeling, renovating, improving, furnishing, or 
 13.29  equipping one or more projects or parts thereof. 
 13.30     Sec. 12.  Minnesota Statutes 2002, section 136A.69, is 
 13.31  amended to read: 
 13.32     136A.69 [FEES.] 
 13.33     The office shall collect reasonable registration fees that 
 13.34  are sufficient to recover, but do not exceed, its costs of 
 13.35  administering the registration program.  The office shall charge 
 13.36  $950 for renewal registration fees and $1,100 for initial 
 14.1   registration fees. 
 14.2      Sec. 13.  Minnesota Statutes 2002, section 136F.12, is 
 14.3   amended to read: 
 14.4      136F.12 [FOND DU LAC CAMPUS.] 
 14.5      Subdivision 1.  [UNIQUE MISSIONS.] The Fond du Lac campus 
 14.6   has a unique mission among two-year colleges to serve the lower 
 14.7   division general education needs in Carlton and south St. Louis 
 14.8   counties, and the education needs of American Indians throughout 
 14.9   the state and especially in northern Minnesota.  The campus has 
 14.10  a further unique mission to provide programs in support of its 
 14.11  federal land grant status.  Accordingly, while the college is 
 14.12  governed by the board of trustees, its governance is 
 14.13  accomplished in conjunction with the board of directors of Fond 
 14.14  du Lac tribal college.  
 14.15     Subd. 2.  [SELECTED PROGRAMS.] Notwithstanding section 
 14.16  135A.052, subdivision 1, to better meet the education needs of 
 14.17  Minnesota's American Indian students, and in furtherance of the 
 14.18  unique missions provided in subdivision 1, Fond du Lac tribal 
 14.19  and community college may offer two baccalaureate programs; one 
 14.20  in elementary education and one in sustainable development, as 
 14.21  approved by the board of trustees of the Minnesota state 
 14.22  colleges and universities and the board of directors of Fond du 
 14.23  Lac tribal and community college. 
 14.24     Subd. 3.  [BARGAINING UNIT ASSIGNMENT.] Notwithstanding 
 14.25  section 179A.10, subdivision 2, the state university unit shall 
 14.26  include faculty who teach upper division courses at the Fond du 
 14.27  Lac tribal and community college. 
 14.28     Sec. 14.  Minnesota Statutes 2002, section 137.44, is 
 14.29  amended to read: 
 14.30     137.44 [HEALTH PROFESSIONAL EDUCATION BUDGET PLAN.] 
 14.31     The board of regents is requested to adopt a biennial 
 14.32  budget plan for making expenditures from the medical education 
 14.33  endowment fund funds dedicated for the instructional costs of 
 14.34  health professional programs at publicly funded academic health 
 14.35  centers and affiliated teaching institutions.  The budget plan 
 14.36  may be submitted as part of the University of Minnesota's 
 15.1   biennial budget request. 
 15.2      Sec. 15.  [REPEALER.] 
 15.3      Minnesota Statutes 2002, sections 124D.95; 136A.1211; 
 15.4   136A.122; and 136A.124, are repealed. 
 15.5                              ARTICLE 3
 15.6                          HESO HOUSEKEEPING
 15.7      Section 1.  Minnesota Statutes 2002, section 124D.42, 
 15.8   subdivision 3, is amended to read: 
 15.9      Subd. 3.  [POSTSERVICE BENEFIT.] (a) Each eligible 
 15.10  organization must agree to provide to every participant who 
 15.11  fulfills the terms of a contract under subdivision 2, a 
 15.12  nontransferable postservice benefit.  The benefit must be not 
 15.13  less than $4,725 per year of full-time service or prorated for 
 15.14  part-time service or for partial service of at least 900 hours.  
 15.15  Upon signing a contract under subdivision 2, each eligible 
 15.16  organization must deposit funds to cover the full amount of 
 15.17  postservice benefits obligated, except for national education 
 15.18  awards that are deposited in the national service trust fund.  
 15.19  Funds encumbered in fiscal years 1994 and 1995 for postservice 
 15.20  benefits must be available until the participants for whom the 
 15.21  funds were encumbered are no longer eligible to draw benefits.  
 15.22     (b) Nothing in this subdivision prevents a grantee 
 15.23  organization from using funds from nonfederal or nonstate 
 15.24  sources to increase the value of postservice benefits above the 
 15.25  value described in paragraph (a). 
 15.26     (c) The higher education services office must establish an 
 15.27  account for depositing funds for postservice benefits received 
 15.28  from eligible organizations.  If a participant does not complete 
 15.29  the term of service or, upon successful completion of the 
 15.30  program, does not use a postservice benefit according to 
 15.31  subdivision 4 within seven years, the amount of the postservice 
 15.32  benefit must be refunded to the eligible organization or, at the 
 15.33  organization's discretion, dedicated to another eligible 
 15.34  participant.  Interest earned on funds deposited in the 
 15.35  postservice benefit account is appropriated to the higher 
 15.36  education services office for the costs of administering the 
 16.1   postservice benefits accounts.  
 16.2      (d) The state must provide an additional postservice 
 16.3   benefit to any participant who successfully completes the 
 16.4   program.  The benefit must be a credit of five points to be 
 16.5   added to the competitive open rating of a participant who 
 16.6   obtains a passing grade on a civil service examination under 
 16.7   chapter 43A.  The benefit is available for five years after 
 16.8   completing the community service. 
 16.9      Sec. 2.  Minnesota Statutes 2002, section 136A.08, 
 16.10  subdivision 3, is amended to read: 
 16.11     Subd. 3.  [WISCONSIN.] A higher education reciprocity 
 16.12  agreement with the state of Wisconsin may include provision for 
 16.13  the transfer of funds between Minnesota and Wisconsin provided 
 16.14  that an income tax reciprocity agreement between Minnesota and 
 16.15  Wisconsin is in effect for the period of time included under the 
 16.16  higher education reciprocity agreement.  If this provision is 
 16.17  included, the amount of funds to be transferred shall be 
 16.18  determined according to a formula which is mutually acceptable 
 16.19  to the office and a duly designated agency representing 
 16.20  Wisconsin.  The formula shall recognize differences in tuition 
 16.21  rates between the two states and the number of students 
 16.22  attending institutions in each state under the agreement.  Any 
 16.23  payments to Minnesota by Wisconsin shall be deposited by the 
 16.24  office in the general fund of the state treasury.  The amount 
 16.25  required for the payments shall be certified by the director of 
 16.26  the office to the commissioner of finance annually. 
 16.27     Sec. 3.  Minnesota Statutes 2002, section 136A.171, is 
 16.28  amended to read: 
 16.29     136A.171 [REVENUE BONDS; ISSUANCE; PROCEEDS.] 
 16.30     The higher education services office may issue revenue 
 16.31  bonds to obtain funds for loans made in accordance with the 
 16.32  provisions of this chapter.  The aggregate amount of revenue 
 16.33  bonds, issued directly by the office, outstanding at any one 
 16.34  time, not including refunded bonds or otherwise defeased or 
 16.35  discharged bonds, shall not exceed $550,000,000 $850,000,000.  
 16.36  Proceeds from the issuance of bonds may be held and invested by 
 17.1   the office pending disbursement in the form of loans.  All 
 17.2   interest and profits from the investments shall inure to the 
 17.3   benefit of the office and shall be available to the office for 
 17.4   the same purposes as the proceeds from the sale of revenue bonds 
 17.5   including, but not limited to, costs incurred in administering 
 17.6   loans under this chapter and loan reserve funds. 
 17.7      Sec. 4.  Minnesota Statutes 2002, section 136G.01, is 
 17.8   amended to read: 
 17.9      136G.01 [PLAN ESTABLISHED.] 
 17.10     A college savings plan known as the Minnesota college 
 17.11  savings plan is established.  In establishing this plan, the 
 17.12  legislature seeks to encourage individuals to save for 
 17.13  post-secondary education by: 
 17.14     (1) providing a qualified state tuition plan under federal 
 17.15  tax law; 
 17.16     (2) providing matching grants for contributions to the 
 17.17  program by low- and middle-income families; and 
 17.18     (3) by encouraging individuals, foundations, and businesses 
 17.19  to provide additional grants to participating students. 
 17.20     Sec. 5.  Minnesota Statutes 2002, section 136G.03, is 
 17.21  amended by adding a subdivision to read: 
 17.22     Subd. 4a.  [APPLICATION.] "Application" means the form 
 17.23  executed by a prospective account owner to enter into a 
 17.24  participation agreement and open an account in the plan.  The 
 17.25  application incorporates by reference the participation 
 17.26  agreement. 
 17.27     Sec. 6.  Minnesota Statutes 2002, section 136G.03, is 
 17.28  amended by adding a subdivision to read: 
 17.29     Subd. 21a.  [MINOR TRUST ACCOUNT.] "Minor trust account" 
 17.30  means a Uniform Gift to Minors Act account, Uniform Transfers to 
 17.31  Minors Act account, or a trust instrument naming a minor person 
 17.32  as beneficiary, created and operating under the laws of 
 17.33  Minnesota or another state. 
 17.34     Sec. 7.  Minnesota Statutes 2002, section 136G.03, 
 17.35  subdivision 31, is amended to read: 
 17.36     Subd. 31.  [ROLLOVER DISTRIBUTION.] "Rollover distribution" 
 18.1   means a transfer of funds made: 
 18.2      (1) from one account to another account within 60 days of a 
 18.3   distribution; 
 18.4      (2) from another qualified state tuition program to an 
 18.5   account within 60 days of the distribution; or 
 18.6      (3) to another qualified state tuition program from an 
 18.7   account within 60 days of a distribution. 
 18.8      Each When there is a change of beneficiary in a rollover 
 18.9   distribution, the transfer of funds must be made for the benefit 
 18.10  of a new beneficiary who is a member of the family of the prior 
 18.11  beneficiary.  A rollover distribution from one qualified tuition 
 18.12  plan to another once every 12 months without a change of 
 18.13  beneficiary is permitted.  
 18.14     Sec. 8.  Minnesota Statutes 2002, section 136G.05, 
 18.15  subdivision 4, is amended to read: 
 18.16     Subd. 4.  [PLAN TO COMPLY WITH FEDERAL LAW.] The director 
 18.17  shall ensure that the plan meets the requirements for a 
 18.18  qualified state tuition program under section 529(b)(1)(A)(ii) 
 18.19  of the Internal Revenue Code.  The director may request a 
 18.20  private letter ruling or rulings from the Internal Revenue 
 18.21  Service or take any other steps to ensure that the plan 
 18.22  qualifies under section 529 of the Internal Revenue Code or 
 18.23  other relevant provisions of federal law. 
 18.24     Sec. 9.  Minnesota Statutes 2002, section 136G.05, 
 18.25  subdivision 5, is amended to read: 
 18.26     Subd. 5.  [MINIMUM PENALTY NONQUALIFIED DISTRIBUTIONS AND 
 18.27  MATCHING GRANTS.] In establishing the terms of the program, the 
 18.28  office must provide that refunds of amounts in an account are 
 18.29  subject to a minimum penalty, as required by section 529(b)(3) 
 18.30  of the Internal Revenue Code.  If the refunds or payments are 
 18.31  not used for qualified higher education expenses of the 
 18.32  designated beneficiary, this penalty must equal, at least, the 
 18.33  proportionate amount of any matching grants deposited in the 
 18.34  account under section 136G.11 and the investment return on the 
 18.35  grants, plus an additional penalty that meets the requirement of 
 18.36  federal law.  There cannot be a nonqualified withdrawal of 
 19.1   matching grant funds and any refund of matching grants must be 
 19.2   returned to the plan. 
 19.3      Sec. 10.  Minnesota Statutes 2002, section 136G.05, 
 19.4   subdivision 10, is amended to read: 
 19.5      Subd. 10.  [DATA.] Account owner data, account data, and 
 19.6   data on beneficiaries of accounts are private data on 
 19.7   individuals or nonpublic data as defined in section 13.02, 
 19.8   except that the names and addresses of the beneficiaries of 
 19.9   accounts that receive matching grants are public. 
 19.10     Sec. 11.  Minnesota Statutes 2002, section 136G.09, 
 19.11  subdivision 1, is amended to read: 
 19.12     Subdivision 1.  [CONTRIBUTIONS TO AN ACCOUNT.] A person may 
 19.13  make contributions to an account on behalf of a beneficiary. 
 19.14  Contributions to an account made by persons other than the 
 19.15  account owner become the property of the account owner.  A 
 19.16  person does not acquire an interest in an account by making 
 19.17  contributions to an account.  Contributions to an account must 
 19.18  be made by check, money order, or other commercially acceptable 
 19.19  means as permitted by the United States Internal Revenue Service 
 19.20  and other applicable federal and state law and authorized 
 19.21  approved by the plan administrator in cooperation with the 
 19.22  office and the board. 
 19.23     Sec. 12.  Minnesota Statutes 2002, section 136G.09, 
 19.24  subdivision 2, is amended to read: 
 19.25     Subd. 2.  [AUTHORITY OF ACCOUNT OWNER.] Except as provided 
 19.26  for minor trust accounts in section 136G.14, an account owner is 
 19.27  the only person entitled to: 
 19.28     (1) select or change a beneficiary or a contingent account 
 19.29  owner; or 
 19.30     (2) request distributions or rollover distributions from an 
 19.31  account. 
 19.32     Sec. 13.  Minnesota Statutes 2002, section 136G.09, 
 19.33  subdivision 6, is amended to read: 
 19.34     Subd. 6.  [CHANGE OF BENEFICIARY.] Except as provided for 
 19.35  minor trust accounts in section 136G.14, an account owner may 
 19.36  change the beneficiary of an account to a member of the family 
 20.1   of the current beneficiary, at any time without penalty, if the 
 20.2   change will not cause the total account balance of all accounts 
 20.3   held for the new beneficiary to exceed the maximum account 
 20.4   balance limit as provided in subdivision 8.  A change of 
 20.5   beneficiary other than as permitted in this subdivision is 
 20.6   treated as a nonqualified distribution under section 136G.13, 
 20.7   subdivision 3. 
 20.8      Sec. 14.  Minnesota Statutes 2002, section 136G.09, 
 20.9   subdivision 7, is amended to read: 
 20.10     Subd. 7.  [CHANGE OF ACCOUNT OWNERSHIP.] Except as provided 
 20.11  for minor trust accounts in section 136G.14, an account owner 
 20.12  may transfer ownership of an account to another person eligible 
 20.13  to be an account owner.  All transfers of ownership are absolute 
 20.14  and irrevocable. 
 20.15     Sec. 15.  Minnesota Statutes 2002, section 136G.09, 
 20.16  subdivision 8, is amended to read: 
 20.17     Subd. 8.  [MAXIMUM ACCOUNT BALANCE LIMIT.] (a) When a 
 20.18  contribution is made, the total account balance of all accounts 
 20.19  held for the same beneficiary, including matching grant 
 20.20  accounts, must not exceed the maximum account balance limit as 
 20.21  determined under this subdivision. 
 20.22     (b) The maximum account balance limit is reduced for 
 20.23  withdrawals from any account for the same beneficiary that are 
 20.24  qualified distributions, distributions due to the death or 
 20.25  disability of the beneficiary, or distributions due to the 
 20.26  beneficiary receiving a scholarship.  Subsequent contributions 
 20.27  must not be made to replenish an account if the contribution 
 20.28  results in the total account balance of all accounts held for 
 20.29  the beneficiary to exceed the reduced maximum account balance 
 20.30  limit.  Any subsequent contributions must be rejected.  A 
 20.31  subsequent contribution accepted in error must be returned to 
 20.32  the account owner plus any earnings on the contribution less any 
 20.33  applicable penalties. 
 20.34     (c) The maximum account balance limit is not reduced for a 
 20.35  nonqualified distribution or a rollover distribution.  When such 
 20.36  distributions are taken, subsequent contributions may be made to 
 21.1   replenish an account up to the maximum account balance limit. 
 21.2      (d) The office must establish a maximum account balance 
 21.3   limit.  The office must adjust the maximum account balance 
 21.4   limit, as necessary, or on January 1 of each year.  The maximum 
 21.5   account balance limit must not exceed the amount permitted for 
 21.6   the plan to qualify as a qualified state tuition program under 
 21.7   section 529 of the Internal Revenue Code.  For calendar years 
 21.8   2002 2004 and 2003 2005, the maximum account balance limit is 
 21.9   $235,000. 
 21.10     (e) (c) If the total account balance of all accounts held 
 21.11  for a single beneficiary reaches the maximum account balance 
 21.12  limit prior to the end of that calendar year, the beneficiary 
 21.13  may receive an applicable matching grant for that calendar year. 
 21.14     Sec. 16.  Minnesota Statutes 2002, section 136G.09, 
 21.15  subdivision 9, is amended to read: 
 21.16     Subd. 9.  [EXCESS CONTRIBUTIONS AND BALANCES.] A 
 21.17  contribution to any account for a beneficiary must be rejected 
 21.18  if the contribution would cause the total account balance of all 
 21.19  accounts held for the same beneficiary, including the matching 
 21.20  grant account, to exceed the maximum account balance limit under 
 21.21  section 529 of the Internal Revenue Code as established by the 
 21.22  office.  If a contribution under this subdivision is accepted in 
 21.23  error, the contribution must be returned to the account owner 
 21.24  plus any earnings thereon, less applicable penalties.  A payment 
 21.25  of an excess contribution to the account owner may be a 
 21.26  nonqualified distribution subject to a penalty. 
 21.27     Sec. 17.  Minnesota Statutes 2002, section 136G.11, 
 21.28  subdivision 1, is amended to read: 
 21.29     Subdivision 1.  [MATCHING GRANT QUALIFICATION.] By March 
 21.30  1 June 30 of each year, a state matching grant must be added to 
 21.31  each account established under the program if the following 
 21.32  conditions are met: 
 21.33     (1) the contributor applies, in writing in a form 
 21.34  prescribed by the director, for a matching grant; 
 21.35     (2) a minimum contribution of $200 was made during the 
 21.36  preceding calendar year; and 
 22.1      (3) the family income of the beneficiary did not exceed 
 22.2   $80,000. 
 22.3      Sec. 18.  Minnesota Statutes 2002, section 136G.11, 
 22.4   subdivision 2, is amended to read: 
 22.5      Subd. 2.  [FAMILY INCOME.] (a) For purposes of this 
 22.6   section, "family income" means: 
 22.7      (1) if the beneficiary is under age 25, the combined 
 22.8   adjusted gross income of the beneficiary's parents or legal 
 22.9   guardians as reported on the federal tax return or returns for 
 22.10  the most recently available tax calendar year in which 
 22.11  contributions were made.  If the beneficiary's parents are 
 22.12  divorced, the income of the parent claiming the beneficiary as a 
 22.13  dependent on the federal individual income tax return and the 
 22.14  income of that parent's spouse, if any, is used to determine 
 22.15  family income; or 
 22.16     (2) if the beneficiary is age 25 or older, the combined 
 22.17  adjusted gross income of the beneficiary and spouse, if any. 
 22.18     (b) For a parent or legal guardian of beneficiaries under 
 22.19  age 25 and for beneficiaries age 25 or older who resided in 
 22.20  Minnesota and filed a federal individual income tax return two 
 22.21  years prior to the year in which the matching grant is awarded, 
 22.22  the matching grant must be based on family income from Internal 
 22.23  Revenue Service tax data on file with the Minnesota department 
 22.24  of revenue.  
 22.25     (c) Parents or legal guardians of beneficiaries under age 
 22.26  25 and beneficiaries age 25 or older who did not reside in 
 22.27  Minnesota two years prior to the year in which the matching 
 22.28  grant is awarded must provide a signed copy of their federal 
 22.29  individual income tax return to the office, regardless of who 
 22.30  the account owner is, in order to be considered for a matching 
 22.31  grant, the matching grant must be based on family income from 
 22.32  the calendar year in which contributions were made. 
 22.33     Sec. 19.  Minnesota Statutes 2002, section 136G.11, 
 22.34  subdivision 3, is amended to read: 
 22.35     Subd. 3.  [RESIDENCY REQUIREMENT.] (a) If the beneficiary 
 22.36  is under age 25, the beneficiary's parents or legal guardians 
 23.1   must be Minnesota residents to qualify for a matching grant.  If 
 23.2   the beneficiary is age 25 or older, the beneficiary must be a 
 23.3   Minnesota resident to qualify for a matching grant. 
 23.4      (b) To meet the residency requirements, the parent or legal 
 23.5   guardian of beneficiaries under age 25 must have filed a 
 23.6   Minnesota individual income tax return as a Minnesota resident, 
 23.7   claiming and claimed the beneficiary as a dependent, two years 
 23.8   prior to the year in which the matching grant is awarded on 
 23.9   their federal tax return for the calendar year in which 
 23.10  contributions were made.  For beneficiaries age 25 or older, the 
 23.11  beneficiary, and a spouse, if any, must have filed a 
 23.12  Minnesota and a federal individual income tax return as a 
 23.13  Minnesota resident two years prior to the year in which the 
 23.14  matching grant is awarded for the calendar year in which 
 23.15  contributions were made. 
 23.16     (c) A parent of beneficiaries under age 25 and 
 23.17  beneficiaries age 25 or older who did not reside in Minnesota 
 23.18  two years prior to the year in which the matching grant is 
 23.19  awarded must establish Minnesota residency through the issuance 
 23.20  of a Minnesota driver's license or identification card in the 
 23.21  calendar year in which contributions were made are not eligible 
 23.22  for a matching grant. 
 23.23     Sec. 20.  Minnesota Statutes 2002, section 136G.11, 
 23.24  subdivision 9, is amended to read: 
 23.25     Subd. 9.  [ANNUAL APPLICATION.] An account owner must 
 23.26  submit an application form for a matching grant on an annual 
 23.27  basis.  The application must be postmarked by December 31 May 1 
 23.28  of the year preceding the awarding of the in which the matching 
 23.29  grant would be awarded if the applicant qualifies for a matching 
 23.30  grant.  
 23.31     Sec. 21.  Minnesota Statutes 2002, section 136G.11, 
 23.32  subdivision 13, is amended to read: 
 23.33     Subd. 13.  [FORFEITURE OF MATCHING GRANTS.] (a) Matching 
 23.34  grants are forfeited if: 
 23.35     (1) the account owner transfers the total account balance 
 23.36  of an account to another account or to another qualified state 
 24.1   tuition program; 
 24.2      (2) the beneficiary receives a full tuition scholarship or 
 24.3   admission to a United States service academy; 
 24.4      (3) the beneficiary dies or becomes disabled; 
 24.5      (4) the account owner changes the beneficiary of the 
 24.6   account; or 
 24.7      (5) the account owner closes the account with a 
 24.8   nonqualified withdrawal. 
 24.9      (b) Matching grants must be proportionally forfeited if: 
 24.10     (1) the account owner transfers a portion of an account to 
 24.11  another account or to another qualified state tuition program; 
 24.12     (2) the beneficiary receives a scholarship covering a 
 24.13  portion of qualified higher education expenses; or 
 24.14     (3) the account owner makes a partial nonqualified 
 24.15  withdrawal. 
 24.16     (c) If the account owner makes a misrepresentation in a 
 24.17  participation agreement or an application for a matching grant 
 24.18  that results in a matching grant, the matching grant associated 
 24.19  with the misrepresentation is forfeited.  The office and the 
 24.20  board must instruct the plan administrator as to the amount to 
 24.21  be forfeited from the matching grant account.  The office and 
 24.22  the board must withdraw the matching grant or the proportion of 
 24.23  the matching grant that is related to the misrepresentation. 
 24.24     Sec. 22.  Minnesota Statutes 2002, section 136G.13, 
 24.25  subdivision 1, is amended to read: 
 24.26     Subdivision 1.  [QUALIFIED DISTRIBUTION METHODS.] (a) 
 24.27  Qualified distributions may be made: 
 24.28     (1) directly to participating eligible educational 
 24.29  institutions on behalf of the beneficiary; or 
 24.30     (2) in the form of a check payable to both the beneficiary 
 24.31  and the eligible educational institution; or 
 24.32     (3) to an account owner with a receipt verifying the 
 24.33  payment of qualified higher education expenses. 
 24.34     (b) When administratively feasible, distributions may be 
 24.35  made when the account owner and beneficiary certify prior to the 
 24.36  distribution that the distribution will be expended for 
 25.1   qualified higher education expenses a reasonable time after the 
 25.2   distribution.  The plan administrator may retain a penalty on 
 25.3   the earnings portion of the nonqualified distribution until 
 25.4   payment of qualified higher education expenses are 
 25.5   substantiated.  A payment receipt showing payment for qualified 
 25.6   higher education expenses must be submitted to the program 
 25.7   administrator within 30 days of distribution. 
 25.8      (c) (b) Qualified distributions must be withdrawn 
 25.9   proportionally from contributions and earnings in an account 
 25.10  owner's account on the date of distribution as provided in 
 25.11  section 529 of the Internal Revenue Code. 
 25.12     Sec. 23.  Minnesota Statutes 2002, section 136G.13, 
 25.13  subdivision 3, is amended to read: 
 25.14     Subd. 3.  [NONQUALIFIED DISTRIBUTION.] An account owner may 
 25.15  request a nonqualified distribution from an account at any 
 25.16  time.  Nonqualified distributions are based on the total account 
 25.17  balances in an account owner's account and must be withdrawn 
 25.18  proportionally from contributions and earnings as provided in 
 25.19  section 529 of the Internal Revenue Code.  The earnings portion 
 25.20  of a nonqualified distribution is subject to a penalty federal 
 25.21  additional tax pursuant to section 529 of the Internal Revenue 
 25.22  Code.  For purposes of this subdivision, "earnings portion" 
 25.23  means the ratio of the earnings in the account to the total 
 25.24  account balance, immediately prior to the distribution, 
 25.25  multiplied by the distribution.  The penalty must be withheld 
 25.26  from the total amount of any distribution.  
 25.27     Sec. 24.  [136G.14] [MINOR TRUST ACCOUNTS.] 
 25.28     (a) This section applies to a plan account in which funds 
 25.29  of a minor trust account are invested. 
 25.30     (b) The account owner may not be changed to any person 
 25.31  other than a successor custodian or the beneficiary unless a 
 25.32  court order directing the change of ownership is provided to the 
 25.33  plan administrator.  The custodian must sign all forms and 
 25.34  requests submitted to the plan administrator in the custodian's 
 25.35  representative capacity.  The custodian must notify the plan 
 25.36  administrator in writing when the beneficiary becomes legally 
 26.1   entitled to be the account owner.  An account owner under this 
 26.2   section may not select a contingent account owner. 
 26.3      (c) The beneficiary of an account under this section may 
 26.4   not be changed.  If the beneficiary dies, assets in a plan 
 26.5   account become the property of the beneficiary's estate.  Funds 
 26.6   in an account must not be transferred or rolled over to another 
 26.7   account owner or to an account for another beneficiary.  A 
 26.8   nonqualified distribution from an account, or a distribution due 
 26.9   to the disability or scholarship award to the beneficiary, must 
 26.10  be used for the benefit of the beneficiary. 
 26.11     Sec. 25.  Minnesota Statutes 2002, section 299A.45, 
 26.12  subdivision 2, is amended to read: 
 26.13     Subd. 2.  [AWARD AMOUNT.] (a) The amount of the award 
 26.14  is the lesser of: 
 26.15     (1) for public institutions, the actual tuition and fees 
 26.16  charged by the institution; or 
 26.17     (2) for private institutions the lesser of (i) the 
 26.18  actual average tuition and fees charged by the institution; or 
 26.19  (ii) the highest tuition and fees charged by a public 
 26.20  institution in Minnesota 
 26.21     (2) the tuition maximums established by law for the state 
 26.22  grant program under section 136A.121. 
 26.23     (b) An award under this subdivision must not affect a 
 26.24  recipient's eligibility for a state grant under section 136A.121.
 26.25     (c) For the purposes of this subdivision, "fees" include 
 26.26  only those fees that are mandatory and charged to all students 
 26.27  attending the institution.  
 26.28     Sec. 26.  [LEARN AND EARN PROGRAM; POSTSECONDARY 
 26.29  OPPORTUNITIES ACCOUNT.] 
 26.30     The higher education services office shall maintain a 
 26.31  postsecondary opportunities account for students who earned 
 26.32  stipends and bonuses that were deposited in the account through 
 26.33  the learn and earn graduation achievement program under 
 26.34  Minnesota Statutes 2000, section 124D.32.  A participating 
 26.35  student may, upon graduation from high school, use the funds 
 26.36  accumulated for the student toward the costs of attending a 
 27.1   Minnesota postsecondary institution or a career-training 
 27.2   program, including the costs of tuition, books, and lab fees.  
 27.3   Funds accumulated for a student must be available to the student 
 27.4   from the time a student graduates from high school until ten 
 27.5   years after the date the student entered the learn and earn 
 27.6   graduation achievement program.  After ten years, the office 
 27.7   shall close the account and any remaining money in the account 
 27.8   must cancel to the general fund. 
 27.9      Sec. 27.  [REPEALER.] 
 27.10     Minnesota Statutes 2002, section 136G.03, subdivision 25, 
 27.11  is repealed. 
 27.12                             ARTICLE 4
 27.13                    MNSCU ADMINISTRATIVE CHANGES
 27.14     Section 1.  Minnesota Statutes 2002, section 136F.40, 
 27.15  subdivision 2, is amended to read: 
 27.16     Subd. 2.  [CONTRACTS.] (a) The board may enter into a 
 27.17  contract with the chancellor, a vice-chancellor, or a president, 
 27.18  containing terms and conditions of employment.  The terms of the 
 27.19  contract must be authorized under a plan approved under section 
 27.20  43A.18, subdivision 3a. 
 27.21     (b) Notwithstanding section 43A.17, subdivision 11, or 
 27.22  other law to the contrary, a contract under this section may 
 27.23  provide a liquidated salary amount or other compensation if a 
 27.24  contract is terminated by the board prior to its expiration.  
 27.25     (c) Notwithstanding section 356.24 or other law to the 
 27.26  contrary, a contract under this section may contain a deferred 
 27.27  compensation plan made in conformance with section 457(f) of the 
 27.28  Internal Revenue Code. 
 27.29     Sec. 2.  Minnesota Statutes 2002, section 136F.45, 
 27.30  subdivision 1, is amended to read: 
 27.31     Subdivision 1.  [PURCHASE.] (a) At the request of an 
 27.32  employee, the board may negotiate and purchase an individual 
 27.33  annuity contract custodial account under section 403(b)(7) of 
 27.34  the Internal Revenue Code, for an employee for retirement or 
 27.35  other purposes from a company licensed to do business in 
 27.36  Minnesota, and may allocate a portion of the compensation 
 28.1   otherwise payable to the employee as salary for the purpose of 
 28.2   paying the entire premium contribution due or to become due 
 28.3   under the contract account.  The allocation shall be made in a 
 28.4   manner that will qualify the annuity premiums custodial account 
 28.5   contributions, or a portion portions thereof, for the benefit 
 28.6   afforded under section 403(b)(7) of the current federal Internal 
 28.7   Revenue Code or any equivalent provision of subsequent federal 
 28.8   income tax law.  The employee shall own the contract account and 
 28.9   the employee's rights thereunder shall be nonforfeitable except 
 28.10  for failure to pay premiums contributions.  
 28.11     (b) At its discretion, and in the same manner provided in 
 28.12  paragraph (a), the board may negotiate and purchase individual 
 28.13  custodial accounts under section 403(b)(7) of the Internal 
 28.14  Revenue Code, for employees of the higher education services 
 28.15  office as defined in section 136A.03.  Participation under this 
 28.16  paragraph must be in accordance with any applicable federal law. 
 28.17     Sec. 3.  Minnesota Statutes 2002, section 136F.45, 
 28.18  subdivision 2, is amended to read: 
 28.19     Subd. 2.  [DEPOSITS; PAYMENT.] All amounts so allocated 
 28.20  shall be deposited in an annuity account established by the 
 28.21  board.  Payment of annuity premiums custodial account 
 28.22  contributions shall be made when due or in accordance with the 
 28.23  salary agreement entered into between the employee and the 
 28.24  board.  The money in the annuity account is not subject to the 
 28.25  budget, allotment, and incumbrance system provided for in 
 28.26  chapter 16A. 
 28.27     Sec. 4.  Minnesota Statutes 2002, section 136F.581, 
 28.28  subdivision 2, is amended to read: 
 28.29     Subd. 2.  [POLICIES AND PROCEDURES.] The board shall 
 28.30  develop policies, and each college and university shall develop 
 28.31  procedures, for purchases and contracts that are consistent with 
 28.32  the authority granted in subdivision 1.  The policies and 
 28.33  procedures shall be developed through the system and campus 
 28.34  labor management committees and shall include provisions 
 28.35  requiring the system and campuses to determine that they cannot 
 28.36  use available staff before contracting with additional outside 
 29.1   consultants or services.  In addition, each college and 
 29.2   university, in consultation with the system office of the 
 29.3   chancellor, shall develop procedures for those purchases and 
 29.4   contracts that can be accomplished by a college and university 
 29.5   without board approval.  The board policies must allow each 
 29.6   college and university the local authority to enter into 
 29.7   contracts for construction projects of up to $250,000 and to 
 29.8   make other purchases of up to $50,000, without receiving board 
 29.9   approval.  The board may allow a college or university local 
 29.10  authority to make purchases over $50,000 without receiving board 
 29.11  approval. 
 29.12     Sec. 5.  Minnesota Statutes 2002, section 136F.59, 
 29.13  subdivision 3, is amended to read: 
 29.14     Subd. 3.  [OFFICE OF TECHNOLOGY.] The system office of the 
 29.15  chancellor and the campuses shall cooperate with the office of 
 29.16  technology in its responsibility to coordinate information and 
 29.17  communications technology development throughout the state.  The 
 29.18  system and campuses shall consult with the office of technology 
 29.19  throughout any efforts to plan or implement information and 
 29.20  communication systems to ensure that the systems are effective, 
 29.21  efficient, and, where appropriate, compatible with other state 
 29.22  systems. 
 29.23     Sec. 6.  Minnesota Statutes 2002, section 136F.60, 
 29.24  subdivision 3, is amended to read: 
 29.25     Subd. 3.  [EASEMENTS.] (a) The board may grant permanent or 
 29.26  temporary easements over, under, or across any land under its 
 29.27  jurisdiction for reasonable purposes determined by the board as 
 29.28  provided in paragraphs (b) and (c).  
 29.29     (b) The board may grant a revocable easement or permit 
 29.30  under this paragraph.  An easement or permit is revocable by 
 29.31  written notice given by the board if at any time its continuance 
 29.32  will conflict with a public use of the land over, under, or upon 
 29.33  which it is granted, or for any other reason.  The notice must 
 29.34  be in writing and is effective 90 days after the notice is sent 
 29.35  by certified mail to the last known address of the holder of 
 29.36  record of the easement.  If the address of the holder of the 
 30.1   easement or permit is not known, it expires 90 days after the 
 30.2   notice is recorded in the office of the county recorder of the 
 30.3   county in which the land is located.  Upon revocation of an 
 30.4   easement or permit, the board may allow a reasonable time to 
 30.5   vacate the premises affected. 
 30.6      (c) State land subject to an easement or permit granted by 
 30.7   the board remains subject to sale or lease, and the sale or 
 30.8   lease does not revoke the permit or easement granted. 
 30.9      Sec. 7.  [136F.65] [ACCEPTANCE OF FEDERAL MONEY.] 
 30.10     The board of trustees is hereby designated the state agency 
 30.11  empowered to accept any and all money provided for or made 
 30.12  available to this state by the United States of America or any 
 30.13  department or agency thereof for the construction and equipping 
 30.14  of any building for university or college purposes in accordance 
 30.15  with the provisions of federal law and any rules or regulations 
 30.16  promulgated thereunder and are further authorized to do any and 
 30.17  all things required of this state by such federal law and the 
 30.18  rules and regulations promulgated thereunder in order to obtain 
 30.19  such federal money.  
 30.20     Sec. 8.  [REPEALER.] 
 30.21     Minnesota Statutes 2002, sections 136F.13; 136F.56; 
 30.22  136F.582; and 136F.59, subdivision 2, are repealed. 
 30.23     Sec. 9.  [EFFECTIVE DATE.] 
 30.24     Sections 1 to 8 are effective the day following final 
 30.25  enactment.