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 Mayo 
  1.7             Medical Foundation, with certain conditions; making 
  1.8             various changes to the state grant program and the 
  1.9             college savings plan; providing for organizational, 
  1.10            administrative, and other changes at the higher 
  1.11            education services office and the Minnesota state 
  1.12            colleges and universities; authorizing revenue bonds; 
  1.13            amending Minnesota Statutes 2002, sections 41D.01, 
  1.14            subdivision 4; 124D.42, subdivision 3; 135A.14, by 
  1.15            adding a subdivision; 136A.01, subdivision 1; 
  1.16            136A.011, subdivision 2; 136A.03; 136A.031, 
  1.17            subdivisions 2, 5; 136A.08, subdivision 3; 136A.101, 
  1.18            subdivision 5a; 136A.121, subdivisions 6, 7, 9, 9a, 
  1.19            13; 136A.125, subdivisions 2, 4; 136A.171; 136A.29, 
  1.20            subdivision 9; 136A.69; 136F.12; 136F.40, subdivision 
  1.21            2; 136F.45, subdivisions 1, 2; 136F.581, subdivisions 
  1.22            1, 2; 136F.59, subdivision 3; 136F.60, subdivision 3; 
  1.23            136G.01; 136G.03, subdivision 31, by adding 
  1.24            subdivisions; 136G.05, subdivisions 4, 5, 10; 136G.09, 
  1.25            subdivisions 1, 2, 6, 7, 8, 9; 136G.11, subdivisions 
  1.26            1, 2, 3, 9, 13; 136G.13, subdivisions 1, 3; 137.022, 
  1.27            subdivision 3; 137.0245, subdivision 2; 137.44; 
  1.28            299A.45, subdivision 2; proposing coding for new law 
  1.29            in Minnesota Statutes, chapters 136F; 136G; repealing 
  1.30            Minnesota Statutes 2002, sections 15A.081, subdivision 
  1.31            7b; 124D.95; 136A.1211; 136A.122; 136A.124; 136F.13; 
  1.32            136F.56; 136F.582; 136F.59, subdivision 2; 136G.03, 
  1.33            subdivision 25. 
  1.34  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.35                             ARTICLE 1
  1.36                           APPROPRIATIONS
  1.37  Section 1.  [HIGHER EDUCATION APPROPRIATIONS.] 
  1.38     The sums in the columns marked "APPROPRIATIONS" are 
  1.39  appropriated from the general fund, or other named fund, to the 
  2.1   agencies and for the purposes specified in this article.  The 
  2.2   listing of an amount under the figure "2004" or "2005" in this 
  2.3   article indicates that the amount is appropriated to be 
  2.4   available for the fiscal year ending June 30, 2004, or June 30, 
  2.5   2005, respectively.  "The first year" is fiscal year 2004.  "The 
  2.6   second year" is fiscal year 2005.  "The biennium" is fiscal 
  2.7   years 2004 and 2005. 
  2.8                           SUMMARY BY FUND 
  2.9                             2004          2005           TOTAL
  2.10  General            $1,284,558,000 $1,274,154,000 $2,558,712,000
  2.11  Health Care
  2.12  Access                  2,157,000      2,157,000      4,314,000
  2.13                   SUMMARY BY AGENCY - ALL FUNDS
  2.14                            2004          2005           TOTAL
  2.15  Higher Education Services Office
  2.16                        175,002,000    175,002,000    350,004,000
  2.17  Board of Trustees of the Minnesota
  2.18  State Colleges and Universities
  2.19                        560,881,000    547,694,000  1,108,575,000
  2.20  Board of Regents of the University
  2.21  of Minnesota
  2.22                        549,441,000    552,224,000  1,101,665,000
  2.23  Mayo Medical Foundation
  2.24                          1,391,000      1,391,000      2,782,000
  2.25                                            APPROPRIATIONS 
  2.26                                         Available for the Year 
  2.27                                             Ending June 30 
  2.28                                            2004         2005 
  2.29  Sec. 2.  HIGHER EDUCATION
  2.30  SERVICES OFFICE
  2.31  Subdivision 1. Total
  2.32  Appropriation                     $  175,002,000 $  175,002,000 
  2.33  The amounts that may be spent from this 
  2.34  appropriation for each purpose are 
  2.35  specified in the following subdivisions.
  2.36  Subd. 2.  State Grants
  2.37     140,575,000    140,575,000
  2.38  For the biennium, the private 
  2.39  institution tuition maximum shall be 
  2.40  $8,983 in the first year and $8,983 in 
  2.41  the second year for four-year 
  2.42  institutions and $6,913 in the first 
  2.43  year and $6,913 in the second year for 
  2.44  two-year institutions. 
  3.1   This appropriation contains money to 
  3.2   provide educational benefits to 
  3.3   dependent children under age 23 and the 
  3.4   spouses of public safety officers 
  3.5   killed in the line of duty pursuant to 
  3.6   Minnesota Statutes 2002, section 
  3.7   299A.45.  
  3.8   This appropriation contains money to 
  3.9   set the living and miscellaneous 
  3.10  expense allowance at $5,205 in each 
  3.11  year. 
  3.12  Subd. 3.  Interstate Tuition Reciprocity
  3.13       3,600,000      3,600,000
  3.14  If the appropriation in this 
  3.15  subdivision for either year is 
  3.16  insufficient, the appropriation for the 
  3.17  other year is available to meet 
  3.18  reciprocity contract obligations. 
  3.19  Subd. 4.  State Work Study
  3.20      12,444,000     12,444,000
  3.21  Subd. 5.  Child Care Grants
  3.22       4,743,000      4,743,000
  3.23  Subd. 6.  Minitex 
  3.24       4,381,000      4,381,000
  3.25  Subd. 7.  MnLINK
  3.26         450,000        450,000
  3.27  The base appropriation for MnLINK 
  3.28  operations is $400,000 each year in 
  3.29  fiscal years 2006 and 2007. 
  3.30  Any unexpended funds from the 
  3.31  appropriation in Laws 1997, chapter 
  3.32  183, article 1, section 2, subdivision 
  3.33  8, shall cancel on June 30, 2005. 
  3.34  Subd. 8.  Learning Network  
  3.35  of Minnesota
  3.36       4,829,000      4,829,000 
  3.37  Subd. 9.  Income Contingent Loans
  3.38  The higher education services office 
  3.39  shall administer an income-contingent 
  3.40  loan repayment program to assist 
  3.41  graduates of Minnesota schools in 
  3.42  medicine, dentistry, pharmacy, 
  3.43  chiropractic medicine, public health, 
  3.44  and veterinary medicine, and Minnesota 
  3.45  residents graduating from optometry and 
  3.46  osteopathy programs.  Applicant data 
  3.47  collected by the office for this 
  3.48  program may be disclosed to a consumer 
  3.49  credit reporting agency under the same 
  3.50  conditions as those that apply to the 
  3.51  supplemental loan program under 
  3.52  Minnesota Statutes, section 136A.162.  
  3.53  No new applicants may be accepted after 
  4.1   June 30, 1995. 
  4.2   Subd. 10.  Minnesota College 
  4.3   Savings Plan
  4.4        1,120,000      1,120,000 
  4.5   Subd. 11.  Agency 
  4.6   Administration
  4.7        2,860,000      2,860,000 
  4.8   This appropriation includes $125,000 
  4.9   each year for the student and parent 
  4.10  information program under Minnesota 
  4.11  Statutes, section 136A.87; $184,000 
  4.12  each year for the Get Ready program; 
  4.13  and $255,000 each year for the college 
  4.14  intervention program to foster 
  4.15  postsecondary attendance by providing 
  4.16  outreach services to historically 
  4.17  underserved groups of Minnesota 
  4.18  elementary and secondary students.  The 
  4.19  office may contract with other agencies 
  4.20  or nonprofit organizations for specific 
  4.21  services specifically funded by this 
  4.22  paragraph. 
  4.23  This appropriation contains $100,000 
  4.24  each year for grants to increase 
  4.25  campus-community collaboration and 
  4.26  service learning statewide.  For every 
  4.27  $1 in state funding, grant recipients 
  4.28  must contribute $2 in campus or 
  4.29  community-based support.  
  4.30  Subd. 12.  Balances Forward 
  4.31  A balance in the first year under this 
  4.32  section does not cancel, but is 
  4.33  available for the second year. 
  4.34  Subd. 13.  Transfers 
  4.35  The higher education services office 
  4.36  may transfer unencumbered balances from 
  4.37  the appropriations in this section to 
  4.38  the state grant appropriation and the 
  4.39  interstate tuition reciprocity 
  4.40  appropriation. 
  4.41  Subd. 14.  Reporting
  4.42  The higher education services office 
  4.43  shall collect data monthly from 
  4.44  institutions disbursing state financial 
  4.45  aid.  The data collected shall include, 
  4.46  but is not limited to, expenditures by 
  4.47  type to date and unexpended balances. 
  4.48  The higher education services office 
  4.49  shall evaluate and report monthly on 
  4.50  state financial aid expenditures and 
  4.51  unexpended balances to the chairs of 
  4.52  the higher education finance committees 
  4.53  of the senate and house of 
  4.54  representatives and the commissioner of 
  4.55  finance.  By July 15, December 1, 
  4.56  February 15, and April 15, the services 
  4.57  office shall provide updated state 
  4.58  grant spending projections taking into 
  5.1   account the most current and projected 
  5.2   enrollment and tuition and fee 
  5.3   information, economic conditions, and 
  5.4   other relevant factors.  Before 
  5.5   submitting state grant spending 
  5.6   projections, the office shall meet and 
  5.7   consult with representatives of public 
  5.8   and private postsecondary education, 
  5.9   the department of finance, governor's 
  5.10  office, legislative staff, and 
  5.11  financial aid administrators.  The 
  5.12  board of regents of the University of 
  5.13  Minnesota, the board of trustees of the 
  5.14  Minnesota state colleges and 
  5.15  universities, and private institutions 
  5.16  that participate in the state grant 
  5.17  program shall submit tuition and fee 
  5.18  information to the higher education 
  5.19  services office no later than July 1 of 
  5.20  each year. 
  5.21  The higher education services office 
  5.22  shall by January 15, 2004, and by 
  5.23  November 30, 2004, report on the impact 
  5.24  on students of the changes in financial 
  5.25  aid policies made by this act.  
  5.26  Sec. 3.  BOARD OF TRUSTEES OF THE
  5.27  MINNESOTA STATE COLLEGES AND UNIVERSITIES
  5.28  Subdivision 1.  Total
  5.29  Appropriation                        560,881,000    547,694,000 
  5.30  The amounts that may be spent from this 
  5.31  appropriation for each purpose are 
  5.32  specified in the following subdivisions.
  5.33  Subd. 2.  Estimated Expenditures
  5.34  and Appropriations 
  5.35  The legislature estimates that 
  5.36  instructional expenditures will be 
  5.37  $750,105,000 in the first year and 
  5.38  $730,324,000 in the second year.  The 
  5.39  legislature estimates that 
  5.40  noninstructional expenditures will be 
  5.41  $60,811,000 in the first year and 
  5.42  $60,811,000 in the second year. 
  5.43  This appropriation includes money for a 
  5.44  grant to Minnesota State University, 
  5.45  Mankato, for the talented youth 
  5.46  mathematics program.  
  5.47  During the biennium, neither the board 
  5.48  nor campuses shall plan or develop 
  5.49  doctoral level programs or degrees 
  5.50  until after they have received the 
  5.51  recommendation of the house and senate 
  5.52  committees on education, finance, and 
  5.53  ways and means. 
  5.54  During the biennium, technical and 
  5.55  consolidated colleges shall make use of 
  5.56  instructional advisory committees 
  5.57  consisting of employers, students, and 
  5.58  instructors.  The instructional 
  5.59  advisory committee shall be consulted 
  5.60  when a technical program is proposed to 
  5.61  be created, modified, or eliminated.  
  5.62  If a decision is made to eliminate a 
  6.1   program, a college shall adequately 
  6.2   notify students and make plans to 
  6.3   assist students affected by the closure.
  6.4   In each year, the board of trustees 
  6.5   shall increase the percentage of the 
  6.6   total general fund expenditures for 
  6.7   direct instruction and academic 
  6.8   support, as reported in the federal 
  6.9   Integrated Postsecondary Education Data 
  6.10  System (IPEDS). 
  6.11  Subd. 3.  Accountability 
  6.12  The board shall continue to submit the 
  6.13  data and information enumerated in Laws 
  6.14  2001, First Special Session chapter 1, 
  6.15  article 1, section 3, subdivision 3, in 
  6.16  the accountability report currently 
  6.17  under development.  For the purpose of 
  6.18  those reports, a first generation 
  6.19  student is a student neither of whose 
  6.20  parents received any postsecondary 
  6.21  education. 
  6.22  Sec. 4.  BOARD OF REGENTS OF THE 
  6.23  UNIVERSITY OF MINNESOTA 
  6.24  Subdivision 1.  Total
  6.25  Appropriation                        549,441,000    552,224,000 
  6.26  The amounts that may be spent from this 
  6.27  appropriation for each purpose are 
  6.28  specified in the following subdivisions.
  6.29  Subd. 2.  Operations and
  6.30  Maintenance
  6.31     483,917,000    486,700,000
  6.32  Estimated Expenditures 
  6.33  and Appropriations 
  6.34  The legislature estimates that 
  6.35  instructional expenditures will be 
  6.36  $368,020,000 in the first year and 
  6.37  $371,860,000 in the second year.  The 
  6.38  legislature estimates that 
  6.39  noninstructional expenditures will be 
  6.40  $238,571,000 the first year and 
  6.41  $238,793,000 in the second year. 
  6.42  Subd. 3.  Health Care Access Fund
  6.43       2,157,000      2,157,000
  6.44  This appropriation is from the health 
  6.45  care access fund for primary care 
  6.46  education initiatives. 
  6.47  Subd. 4.  Special
  6.48  Appropriation                         63,367,000     63,367,000
  6.49  (a) Agriculture and Extension Service 
  6.50      50,625,000     50,625,000
  6.51  This appropriation is for the 
  6.52  Agricultural Experiment Station, 
  6.53  Minnesota Extension Service. 
  7.1   Any salary increases granted by the 
  7.2   University to personnel paid from the 
  7.3   Minnesota Extension appropriation must 
  7.4   not result in a reduction of the county 
  7.5   responsibility for the salary payments. 
  7.6   During the biennium, the University 
  7.7   shall maintain an advisory council 
  7.8   system for each experiment station.  
  7.9   The advisory councils must be broadly 
  7.10  representative of the range in size and 
  7.11  income distribution of farms and 
  7.12  agribusinesses and must not 
  7.13  disproportionately represent those from 
  7.14  the upper half of the size and income 
  7.15  distributions.  
  7.16  The university must continue to provide 
  7.17  support for the rapid agricultural 
  7.18  response fund, and sustainable and 
  7.19  organic agriculture initiatives 
  7.20  including, but not limited to, the 
  7.21  alternative swine systems program. 
  7.22  (b) Health Sciences 
  7.23       4,929,000      4,929,000
  7.24  This appropriation is for the rural 
  7.25  physicians associates program, the 
  7.26  Veterinary Diagnostic Laboratory, 
  7.27  health sciences research, dental care, 
  7.28  and the Biomedical Engineering Center. 
  7.29  (c) Institute of Technology  
  7.30       1,387,000      1,387,000
  7.31  This appropriation is for the 
  7.32  Geological Survey and the Talented 
  7.33  Youth Mathematics Program. 
  7.34  (d) System Specials 
  7.35       6,426,000      6,426,000
  7.36  This appropriation is for general 
  7.37  research, student loans matching money, 
  7.38  industrial relations education, Natural 
  7.39  Resources Research Institute, Center 
  7.40  for Urban and Regional Affairs, Bell 
  7.41  Museum of Natural History, and the 
  7.42  Humphrey exhibit. 
  7.43  Subd. 5.  Academic Health Center
  7.44  The appropriation to the academic 
  7.45  health center under Minnesota Statutes, 
  7.46  chapter 297F, if enacted, is 
  7.47  anticipated to be $22,515,000 in the 
  7.48  first year and $22,403,000 in the 
  7.49  second year. 
  7.50  Subd. 6.  Accountability 
  7.51  The board shall continue to submit the 
  7.52  data and information enumerated in Laws 
  7.53  2001, First Special Session chapter 1, 
  7.54  article 1, section 4, subdivision 5, in 
  7.55  the board's university plan, 
  7.56  performance, and accountability 
  8.1   report.  For the purpose of those 
  8.2   reports, a first generation student is 
  8.3   a student neither of whose parents 
  8.4   received any postsecondary education.  
  8.5   Sec. 5.  MAYO MEDICAL FOUNDATION 
  8.6   Subdivision 1.  Total
  8.7   Appropriation                           1,391,000       1,391,000
  8.8   The amounts that may be spent from this 
  8.9   appropriation for each purpose are 
  8.10  specified in the following subdivisions.
  8.11  Subd. 2.  Medical School
  8.12         514,000        514,000
  8.13  The state of Minnesota must pay a 
  8.14  capitation each year for each student 
  8.15  who is a resident of Minnesota.  The 
  8.16  appropriation may be transferred 
  8.17  between years of the biennium to 
  8.18  accommodate enrollment fluctuations. 
  8.19  The legislature intends that during the 
  8.20  biennium the Mayo foundation use the 
  8.21  capitation money to increase the number 
  8.22  of doctors practicing in rural areas in 
  8.23  need of doctors.  
  8.24  Subd. 3.  Family Practice and
  8.25  Graduate Residency Program
  8.26         531,000        531,000
  8.27  The state of Minnesota must pay a 
  8.28  capitation of 27 residents each year. 
  8.29  Subd. 4.  St. Cloud Hospital-Mayo 
  8.30  Family Practice Residency Program
  8.31         346,000        346,000
  8.32  This appropriation is to the Mayo 
  8.33  foundation to support 12 resident 
  8.34  physicians each year in the St. Cloud 
  8.35  Hospital-Mayo Family Practice Residency 
  8.36  program.  The program shall prepare 
  8.37  doctors to practice primary care 
  8.38  medicine in the rural areas of the 
  8.39  state.  It is intended that this 
  8.40  program will improve health care in 
  8.41  rural communities, provide affordable 
  8.42  access to appropriate medical care, and 
  8.43  manage the treatment of patients in a 
  8.44  more cost-effective manner. 
  8.45  Sec. 6.  SELF LOAN RESERVE FUND TRANSFER
  8.46  Notwithstanding any law to the 
  8.47  contrary, by June 30, 2003, the 
  8.48  commissioner of finance shall transfer 
  8.49  $30,000,000 of uncommitted balances in 
  8.50  the SELF loan reserve fund, under 
  8.51  Minnesota Statutes, section 136A.1701, 
  8.52  to the budget reserve account in the 
  8.53  general fund.  By June 30, 2007, the 
  8.54  commissioner of finance shall return 
  8.55  this amount to the SELF loan reserve 
  8.56  fund.  The amount necessary to make the 
  9.1   return transfer is appropriated from 
  9.2   the general fund to the commissioner of 
  9.3   finance for the fiscal year ending June 
  9.4   30, 2007. 
  9.5   <b>[EFFECTIVE DATE.]</b> This section is 
  9.6   effective the day following final 
  9.7   enactment.  
  9.8   Sec. 7.  POSTSECONDARY SYSTEMS 
  9.9   As part of the boards' biennial budget 
  9.10  requests, the board of trustees of the 
  9.11  Minnesota state colleges and 
  9.12  universities and the board of regents 
  9.13  of the University of Minnesota shall 
  9.14  report to the legislature on progress 
  9.15  under the master academic plan for the 
  9.16  metropolitan area.  The report must 
  9.17  include a discussion of coordination 
  9.18  and duplication of program offerings, 
  9.19  developmental and remedial education, 
  9.20  credit transfers within and between the 
  9.21  postsecondary systems, and planning and 
  9.22  delivery of coordinated programs.  In 
  9.23  order to better achieve the goal of a 
  9.24  more integrated, effective, and 
  9.25  seamless postsecondary education system 
  9.26  in Minnesota, the report must also 
  9.27  identify statewide efforts at 
  9.28  integration and cooperation between the 
  9.29  postsecondary systems. 
  9.30  Sec. 8.  K-12 TEACHER INSTRUCTION AND 
  9.31  LICENSURE SURVEY 
  9.32  The Minnesota Association of Colleges 
  9.33  of Teacher Education is requested to 
  9.34  collect data from each of its member 
  9.35  institutions that measure the 
  9.36  involvement of teacher education 
  9.37  programs and their faculty with 
  9.38  Minnesota K-12 schools.  The data shall 
  9.39  include at least:  current Minnesota 
  9.40  licensure status of faculty, K-12 
  9.41  teaching experience of college faculty 
  9.42  under that licensure within the last 
  9.43  five years, descriptions of college and 
  9.44  faculty collaborations with K-12 
  9.45  teachers and students, and information 
  9.46  on other projects involving higher 
  9.47  education in K-12 schools.  The data 
  9.48  shall be presented to the education 
  9.49  policy and finance committees of the 
  9.50  legislature by February 15, 2004. 
  9.51                             ARTICLE 2
  9.52                           POLICY CHANGES
  9.53     Section 1.  Minnesota Statutes 2002, section 41D.01, 
  9.54  subdivision 4, is amended to read: 
  9.55     Subd. 4.  [EXPIRATION.] This section expires on June 
  9.56  30, 2003 2008. 
  9.57     Sec. 2.  Minnesota Statutes 2002, section 135A.14, is 
  9.58  amended by adding a subdivision to read: 
 10.1      Subd. 6a.  [MENINGITIS INFORMATION.] Each public and 
 10.2   private postsecondary institution shall provide information on 
 10.3   the risks of meningococcal disease and on the availability and 
 10.4   effectiveness of any vaccine to each individual who is a 
 10.5   first-time enrollee and who resides in on-campus student 
 10.6   housing.  The institution may provide the information in an 
 10.7   electronic format.  The institution must consult with the 
 10.8   department of health on the preparation of the informational 
 10.9   materials provided under this subdivision. 
 10.10     <b>[EFFECTIVE DATE.]</b> This section is effective June 1, 2003.  
 10.11     Sec. 3.  Minnesota Statutes 2002, section 136A.01, 
 10.12  subdivision 1, is amended to read: 
 10.13     Subdivision 1.  [CREATION.] An office for higher education 
 10.14  in the state of Minnesota, to be known as the Minnesota higher 
 10.15  education services office or HESO, is created with a director 
 10.16  appointed by the governor with the advice and consent of the 
 10.17  senate and serving at the pleasure of the governor. 
 10.18     <b>[EFFECTIVE DATE.]</b> This section is effective when a vacancy 
 10.19  occurs in the position of director or December 30, 2003, 
 10.20  whichever is first. 
 10.21     Sec. 4.  Minnesota Statutes 2002, section 136A.011, 
 10.22  subdivision 2, is amended to read: 
 10.23     Subd. 2.  [DUTIES.] The council shall: 
 10.24     (1) appoint the director of the higher education services 
 10.25  office, as provided in section 136A.03; 
 10.26     (2) provide advice and review regarding the performance of 
 10.27  the higher education services office in its duties and in any 
 10.28  policies, procedures, or rules the office prescribes to perform 
 10.29  its duties; and 
 10.30     (3) (2) communicate with and make recommendations to the 
 10.31  governor and the legislature. 
 10.32     Sec. 5.  Minnesota Statutes 2002, section 136A.03, is 
 10.33  amended to read: 
 10.34     136A.03 [EXECUTIVE OFFICERS; EMPLOYEES.] 
 10.35     The director of the higher education services office shall 
 10.36  possess the powers and perform the duties as prescribed by the 
 11.1   higher education services council and be under the 
 11.2   administrative control of the director.  The director shall 
 11.3   serve in the unclassified service of the state civil service.  
 11.4   The director, or the director's designated representative, on 
 11.5   behalf of the office is authorized to sign contracts and execute 
 11.6   all instruments necessary or appropriate to carry out the 
 11.7   purposes of sections 136A.01 to 136A.178 for the office.  The 
 11.8   salary of the director shall be established by the higher 
 11.9   education services council according to section 15A.0815.  The 
 11.10  director shall be a person qualified by training or experience 
 11.11  in the field of higher education or in financial aid 
 11.12  administration.  The director may appoint other professional 
 11.13  employees who shall serve in the unclassified service of the 
 11.14  state civil service.  All other employees shall be in the 
 11.15  classified civil service.  
 11.16     An officer or professional employee appointed by the 
 11.17  director to serve in the unclassified service as provided in 
 11.18  this section, is a person who has studied higher education or a 
 11.19  related field at the graduate level or has similar experience 
 11.20  and who is qualified for a career in financial aid and other 
 11.21  aspects of higher education and for activities in keeping with 
 11.22  the planning and administrative responsibilities of the office 
 11.23  and who is appointed to assume responsibility for administration 
 11.24  of educational programs or research in matters of higher 
 11.25  education. 
 11.26     Sec. 6.  Minnesota Statutes 2002, section 136A.031, 
 11.27  subdivision 2, is amended to read: 
 11.28     Subd. 2.  [HIGHER EDUCATION ADVISORY COUNCIL.] A higher 
 11.29  education advisory council (HEAC) is established.  The HEAC is 
 11.30  composed of the president and the senior vice-president for 
 11.31  academic affairs of the University of Minnesota or designee; the 
 11.32  chancellor of the Minnesota state colleges and universities or 
 11.33  designee; the associate vice-chancellors of the state 
 11.34  universities, community colleges, and technical colleges; the 
 11.35  commissioner of children, families, and learning; the president 
 11.36  of the private college council; and a representative from the 
 12.1   Minnesota association of private post-secondary schools; and a 
 12.2   member appointed by the governor.  The HEAC shall (1) bring to 
 12.3   the attention of the higher education services council any 
 12.4   matters that the HEAC deems necessary, and (2) review and 
 12.5   comment upon matters before the council.  The council shall 
 12.6   refer all proposals to the HEAC before submitting 
 12.7   recommendations to the governor and the legislature.  The 
 12.8   council shall provide time for a report from the HEAC at each 
 12.9   meeting of the council. 
 12.10     Sec. 7.  Minnesota Statutes 2002, section 136A.031, 
 12.11  subdivision 5, is amended to read: 
 12.12     Subd. 5.  [EXPIRATION.] Notwithstanding section 15.059, 
 12.13  subdivision 5a 5, the advisory groups established in this 
 12.14  section expire on June 30, 2003 2005. 
 12.15     Sec. 8.  Minnesota Statutes 2002, section 136A.101, 
 12.16  subdivision 5a, is amended to read: 
 12.17     Subd. 5a.  [ASSIGNED FAMILY RESPONSIBILITY.] "Assigned 
 12.18  family responsibility" means the amount of a family contribution 
 12.19  to a student's cost of attendance, as determined by a federal 
 12.20  need analysis, except that, beginning for the 1998-1999 academic 
 12.21  year, up to $25,000 in savings and other assets shall be 
 12.22  subtracted from the federal calculation of net worth before 
 12.23  determining the contribution.  For dependent students, the 
 12.24  assigned family responsibility is the parental contribution.  
 12.25  For independent students with dependents other than a spouse, 
 12.26  the assigned family responsibility is the student contribution. 
 12.27  For independent students without dependents other than a spouse, 
 12.28  the assigned family responsibility is 80 72 percent of the 
 12.29  student contribution.  Beginning in fiscal year 2002, The 
 12.30  assigned family responsibility for all other independent 
 12.31  students is reduced an additional ten 90 percent of the student 
 12.32  contribution. 
 12.33     Sec. 9.  Minnesota Statutes 2002, section 136A.121, 
 12.34  subdivision 6, is amended to read: 
 12.35     Subd. 6.  [COST OF ATTENDANCE.] (a) The recognized cost of 
 12.36  attendance consists of allowances specified in law for living 
 13.1   and miscellaneous expenses, and an allowance for tuition and 
 13.2   fees equal to the lesser of the actual average tuition and fees 
 13.3   charged by the institution, or the private institution tuition 
 13.4   and fee maximums established in law. 
 13.5      (b) For the purpose of paragraph (a), the private 
 13.6   institution tuition and fee maximum for two- and four-year, 
 13.7   private, residential, liberal arts, degree-granting colleges and 
 13.8   universities must be the same. 
 13.9      (c) For a student registering for less than full time, the 
 13.10  office shall prorate the living and miscellaneous expense 
 13.11  allowance cost of attendance to the actual number of credits for 
 13.12  which the student is enrolled. 
 13.13     The recognized cost of attendance for a student who is 
 13.14  confined to a Minnesota correctional institution shall consist 
 13.15  of the tuition and fee component in paragraph (a), with no 
 13.16  allowance for living and miscellaneous expenses. 
 13.17     For the purpose of this subdivision, "fees" include only 
 13.18  those fees that are mandatory and charged to full-time resident 
 13.19  students attending the institution. 
 13.20     Sec. 10.  Minnesota Statutes 2002, section 136A.121, 
 13.21  subdivision 7, is amended to read: 
 13.22     Subd. 7.  [INSUFFICIENT APPROPRIATION.] If the amount 
 13.23  appropriated is determined by the office to be insufficient to 
 13.24  make full awards to applicants under subdivision 5, before any 
 13.25  award for that year has been disbursed, awards must be reduced 
 13.26  by: 
 13.27     (1) adding a surcharge to the applicant's assigned family 
 13.28  responsibility, as defined in section 136A.101, subdivision 5a; 
 13.29  and 
 13.30     (2) a percentage increase in the applicant's assigned 
 13.31  student responsibility, as defined in subdivision 5. 
 13.32  The reduction under clauses (1) and (2) must be equal dollar 
 13.33  amounts. 
 13.34     Sec. 11.  Minnesota Statutes 2002, section 136A.121, 
 13.35  subdivision 9, is amended to read: 
 13.36     Subd. 9.  [AWARDS.] An undergraduate student who meets the 
 14.1   office's requirements is eligible to apply for and receive a 
 14.2   grant in any year of undergraduate study unless the student has 
 14.3   obtained a baccalaureate degree or previously has been enrolled 
 14.4   full time or the equivalent for ten eight semesters or the 
 14.5   equivalent, excluding courses taken from a Minnesota school or 
 14.6   post-secondary institution which is not participating in the 
 14.7   state grant program and from which a student transferred no 
 14.8   credit.  A student enrolled in a two-year program at a four-year 
 14.9   institution is only eligible for the tuition and fee maximums 
 14.10  established by law for two-year institutions. 
 14.11     Sec. 12.  Minnesota Statutes 2002, section 136A.121, 
 14.12  subdivision 9a, is amended to read: 
 14.13     Subd. 9a.  [FULL-YEAR GRANTS.] Students may receive state 
 14.14  grants for four consecutive quarters or three consecutive 
 14.15  semesters during the course of a single fiscal year.  In 
 14.16  calculating a state grant for the fourth quarter or third 
 14.17  semester, the office must use the same calculation as it would 
 14.18  for any other term, except that the calculation must subtract 
 14.19  any federal Pell grant for which a student would be eligible 
 14.20  even if the student has exhausted the Pell grant for that fiscal 
 14.21  year. 
 14.22     Sec. 13.  Minnesota Statutes 2002, section 136A.121, 
 14.23  subdivision 13, is amended to read: 
 14.24     Subd. 13.  [DEADLINE.] The office shall accept applications 
 14.25  for state grants until February 15 and may establish a deadline 
 14.26  for the acceptance of applications that is later than February 
 14.27  15 deadline for the office to accept applications for state 
 14.28  grants for a term, is 14 days after the start of that term. 
 14.29     Sec. 14.  Minnesota Statutes 2002, section 136A.125, 
 14.30  subdivision 2, is amended to read: 
 14.31     Subd. 2.  [ELIGIBLE STUDENTS.] An applicant is eligible for 
 14.32  a child care grant if the applicant: 
 14.33     (1) is a resident of the state of Minnesota; 
 14.34     (2) has a child 12 years of age or younger, or 14 years of 
 14.35  age or younger who is handicapped as defined in section 125A.02, 
 14.36  and who is receiving or will receive care on a regular basis 
 15.1   from a licensed or legal, nonlicensed caregiver; 
 15.2      (3) is income eligible as determined by the office's 
 15.3   policies and rules, but is not a recipient of assistance from 
 15.4   the Minnesota family investment program; 
 15.5      (4) has not earned a baccalaureate degree and has been 
 15.6   enrolled full time less than ten eight semesters or the 
 15.7   equivalent; 
 15.8      (5) is pursuing a nonsectarian program or course of study 
 15.9   that applies to an undergraduate degree, diploma, or 
 15.10  certificate; 
 15.11     (6) is enrolled at least half time in an eligible 
 15.12  institution; and 
 15.13     (7) is in good academic standing and making satisfactory 
 15.14  academic progress. 
 15.15     Sec. 15.  Minnesota Statutes 2002, section 136A.125, 
 15.16  subdivision 4, is amended to read: 
 15.17     Subd. 4.  [AMOUNT AND LENGTH OF GRANTS.] The amount of a 
 15.18  child care grant must be based on: 
 15.19     (1) the income of the applicant and the applicant's spouse; 
 15.20     (2) the number in the applicant's family, as defined by the 
 15.21  office; and 
 15.22     (3) the number of eligible children in the applicant's 
 15.23  family.  
 15.24     The maximum award to the applicant shall be $2,600 $2,200 
 15.25  for each eligible child per academic year, except that the 
 15.26  campus financial aid officer may apply to the office for 
 15.27  approval to increase grants by up to ten percent to compensate 
 15.28  for higher market charges for infant care in a community.  The 
 15.29  office shall develop policies to determine community market 
 15.30  costs and review institutional requests for compensatory grant 
 15.31  increases to ensure need and equal treatment.  The office shall 
 15.32  prepare a chart to show the amount of a grant that will be 
 15.33  awarded per child based on the factors in this subdivision.  The 
 15.34  chart shall include a range of income and family size. 
 15.35     Sec. 16.  Minnesota Statutes 2002, section 136A.29, 
 15.36  subdivision 9, is amended to read: 
 16.1      Subd. 9.  The authority is authorized and empowered to 
 16.2   issue revenue bonds whose aggregate principal amount at any time 
 16.3   shall not exceed $650,000,000 $800,000,000 and to issue notes, 
 16.4   bond anticipation notes, and revenue refunding bonds of the 
 16.5   authority under the provisions of sections 136A.25 to 136A.42, 
 16.6   to provide funds for acquiring, constructing, reconstructing, 
 16.7   enlarging, remodeling, renovating, improving, furnishing, or 
 16.8   equipping one or more projects or parts thereof. 
 16.9      Sec. 17.  Minnesota Statutes 2002, section 136A.69, is 
 16.10  amended to read: 
 16.11     136A.69 [FEES.] 
 16.12     The office shall collect reasonable registration fees that 
 16.13  are sufficient to recover, but do not exceed, its costs of 
 16.14  administering the registration program.  The office shall charge 
 16.15  $1,100 for initial registration fees and $950 for annual renewal 
 16.16  fees. 
 16.17     Sec. 18.  Minnesota Statutes 2002, section 136F.12, is 
 16.18  amended to read: 
 16.19     136F.12 [FOND DU LAC CAMPUS.] 
 16.20     Subdivision 1.  [UNIQUE MISSIONS.] The Fond du Lac campus 
 16.21  has a unique mission among two-year colleges to serve the lower 
 16.22  division general education needs in Carlton and south St. Louis 
 16.23  counties, and the education needs of American Indians throughout 
 16.24  the state and especially in northern Minnesota.  The campus has 
 16.25  a further unique mission to provide programs in support of its 
 16.26  federal land grant status.  Accordingly, while the college is 
 16.27  governed by the board of trustees, its governance is 
 16.28  accomplished in conjunction with the board of directors of Fond 
 16.29  du Lac tribal college.  
 16.30     Subd. 2.  [SELECTED PROGRAMS.] Notwithstanding section 
 16.31  135A.052, subdivision 1, to better meet the education needs of 
 16.32  Minnesota's American Indian students, and in furtherance of the 
 16.33  unique missions provided in subdivision 1, Fond du Lac tribal 
 16.34  and community college may offer a baccalaureate program in 
 16.35  elementary education, as approved by the board of trustees of 
 16.36  the Minnesota state colleges and universities, and the board of 
 17.1   directors of Fond du Lac tribal and community college. 
 17.2      Subd. 3.  [BARGAINING UNIT ASSIGNMENT.] Notwithstanding 
 17.3   section 179A.10, subdivision 2, the state university 
 17.4   instructional unit shall include faculty who teach upper 
 17.5   division courses at the Fond du Lac tribal and community college.
 17.6      Sec. 19.  Minnesota Statutes 2002, section 137.022, 
 17.7   subdivision 3, is amended to read: 
 17.8      Subd. 3.  [ENDOWED CHAIR ACCOUNT.] (a) For purposes of this 
 17.9   section, the permanent university fund has three accounts.  The 
 17.10  sources of the money in the endowed mineral research and 
 17.11  scholarship accounts are set out in paragraph (b) and 
 17.12  subdivision 4.  All money in the fund that is not otherwise 
 17.13  allocated is in the endowed chair account.  The income from the 
 17.14  endowed chair account must be used, and capital gains allocated 
 17.15  to that account may be used, to provide endowment support for 
 17.16  professorial chairs in academic disciplines.  The endowment 
 17.17  support for the chairs from the income and the capital gains 
 17.18  must not total more than six percent per year of the 36-month 
 17.19  trailing average market value of the endowed chair account of 
 17.20  the fund, as computed quarterly or otherwise as directed by the 
 17.21  regents.  The endowment support from the income and the capital 
 17.22  gains must not provide more than half the sum of the endowment 
 17.23  support for all university chairs and professorships endowed, 
 17.24  with nonstate sources providing the remainder.  The endowment 
 17.25  support from the income and the capital gains may provide more 
 17.26  than half the endowment support of an individual chair.  
 17.27     (b) If any portion of the annual appropriation of the 
 17.28  income is not used for the purposes specified in paragraph (a) 
 17.29  or subdivision 4, that portion lapses and must be added to the 
 17.30  principal of the three accounts of the permanent university fund 
 17.31  in proportion to the market value of each account. 
 17.32     Sec. 20.  Minnesota Statutes 2002, section 137.44, is 
 17.33  amended to read: 
 17.34     137.44 [HEALTH PROFESSIONAL EDUCATION BUDGET PLAN.] 
 17.35     The board of regents is requested to adopt a biennial 
 17.36  budget plan for making expenditures from the medical education 
 18.1   endowment fund funds dedicated for the instructional costs of 
 18.2   health professional programs at publicly funded academic health 
 18.3   centers and affiliated teaching institutions.  The budget plan 
 18.4   may be submitted as part of the University of Minnesota's 
 18.5   biennial budget request. 
 18.6      Sec. 21.  [REPEALER.] 
 18.7      Minnesota Statutes 2002, sections 15A.081, subdivision 7b; 
 18.8   124D.95; 136A.1211; 136A.122; and 136A.124, are repealed. 
 18.9                              ARTICLE 3
 18.10                         HESO HOUSEKEEPING
 18.11     Section 1.  Minnesota Statutes 2002, section 124D.42, 
 18.12  subdivision 3, is amended to read: 
 18.13     Subd. 3.  [POSTSERVICE BENEFIT.] (a) Each eligible 
 18.14  organization must agree to provide to every participant who 
 18.15  fulfills the terms of a contract under subdivision 2, a 
 18.16  nontransferable postservice benefit.  The benefit must be not 
 18.17  less than $4,725 per year of full-time service or prorated for 
 18.18  part-time service or for partial service of at least 900 hours.  
 18.19  Upon signing a contract under subdivision 2, each eligible 
 18.20  organization must deposit funds to cover the full amount of 
 18.21  postservice benefits obligated, except for national education 
 18.22  awards that are deposited in the national service trust fund.  
 18.23  Funds encumbered in fiscal years 1994 and 1995 for postservice 
 18.24  benefits must be available until the participants for whom the 
 18.25  funds were encumbered are no longer eligible to draw benefits.  
 18.26     (b) Nothing in this subdivision prevents a grantee 
 18.27  organization from using funds from nonfederal or nonstate 
 18.28  sources to increase the value of postservice benefits above the 
 18.29  value described in paragraph (a). 
 18.30     (c) The higher education services office must establish an 
 18.31  account for depositing funds for postservice benefits received 
 18.32  from eligible organizations.  If a participant does not complete 
 18.33  the term of service or, upon successful completion of the 
 18.34  program, does not use a postservice benefit according to 
 18.35  subdivision 4 within seven years, the amount of the postservice 
 18.36  benefit must be refunded to the eligible organization or, at the 
 19.1   organization's discretion, dedicated to another eligible 
 19.2   participant.  Interest earned on funds deposited in the 
 19.3   postservice benefit account is appropriated to the higher 
 19.4   education services office for the costs of administering the 
 19.5   postservice benefits accounts.  
 19.6      (d) The state must provide an additional postservice 
 19.7   benefit to any participant who successfully completes the 
 19.8   program.  The benefit must be a credit of five points to be 
 19.9   added to the competitive open rating of a participant who 
 19.10  obtains a passing grade on a civil service examination under 
 19.11  chapter 43A.  The benefit is available for five years after 
 19.12  completing the community service. 
 19.13     Sec. 2.  Minnesota Statutes 2002, section 136A.08, 
 19.14  subdivision 3, is amended to read: 
 19.15     Subd. 3.  [WISCONSIN.] A higher education reciprocity 
 19.16  agreement with the state of Wisconsin may include provision for 
 19.17  the transfer of funds between Minnesota and Wisconsin provided 
 19.18  that an income tax reciprocity agreement between Minnesota and 
 19.19  Wisconsin is in effect for the period of time included under the 
 19.20  higher education reciprocity agreement.  If this provision is 
 19.21  included, the amount of funds to be transferred shall be 
 19.22  determined according to a formula which is mutually acceptable 
 19.23  to the office and a duly designated agency representing 
 19.24  Wisconsin.  The formula shall recognize differences in tuition 
 19.25  rates between the two states and the number of students 
 19.26  attending institutions in each state under the agreement.  Any 
 19.27  payments to Minnesota by Wisconsin shall be deposited by the 
 19.28  office in the general fund of the state treasury.  The amount 
 19.29  required for the payments shall be certified by the director of 
 19.30  the office to the commissioner of finance annually. 
 19.31     Sec. 3.  Minnesota Statutes 2002, section 136A.171, is 
 19.32  amended to read: 
 19.33     136A.171 [REVENUE BONDS; ISSUANCE; PROCEEDS.] 
 19.34     The higher education services office may issue revenue 
 19.35  bonds to obtain funds for loans made in accordance with the 
 19.36  provisions of this chapter.  The aggregate amount of revenue 
 20.1   bonds, issued directly by the office, outstanding at any one 
 20.2   time, not including refunded bonds or otherwise defeased or 
 20.3   discharged bonds, shall not exceed $550,000,000 $850,000,000.  
 20.4   Proceeds from the issuance of bonds may be held and invested by 
 20.5   the office pending disbursement in the form of loans.  All 
 20.6   interest and profits from the investments shall inure to the 
 20.7   benefit of the office and shall be available to the office for 
 20.8   the same purposes as the proceeds from the sale of revenue bonds 
 20.9   including, but not limited to, costs incurred in administering 
 20.10  loans under this chapter and loan reserve funds. 
 20.11     Sec. 4.  Minnesota Statutes 2002, section 136G.01, is 
 20.12  amended to read: 
 20.13     136G.01 [PLAN ESTABLISHED.] 
 20.14     A college savings plan known as the Minnesota college 
 20.15  savings plan is established.  In establishing this plan, the 
 20.16  legislature seeks to encourage individuals to save for 
 20.17  post-secondary education by: 
 20.18     (1) providing a qualified state tuition plan under federal 
 20.19  tax law; 
 20.20     (2) providing matching grants for contributions to the 
 20.21  program by low- and middle-income families; and 
 20.22     (3) by encouraging individuals, foundations, and businesses 
 20.23  to provide additional grants to participating students. 
 20.24     Sec. 5.  Minnesota Statutes 2002, section 136G.03, is 
 20.25  amended by adding a subdivision to read: 
 20.26     Subd. 4a.  [APPLICATION.] "Application" means the form 
 20.27  executed by a prospective account owner to enter into a 
 20.28  participation agreement and open an account in the plan.  The 
 20.29  application incorporates by reference the participation 
 20.30  agreement. 
 20.31     Sec. 6.  Minnesota Statutes 2002, section 136G.03, is 
 20.32  amended by adding a subdivision to read: 
 20.33     Subd. 21a.  [MINOR TRUST ACCOUNT.] "Minor trust account" 
 20.34  means a Uniform Gift to Minors Act account, a Uniform Transfers 
 20.35  to Minors Act account, or a trust instrument naming a minor 
 20.36  person as beneficiary, created and operating under the laws of 
 21.1   Minnesota or another state. 
 21.2      Sec. 7.  Minnesota Statutes 2002, section 136G.03, 
 21.3   subdivision 31, is amended to read: 
 21.4      Subd. 31.  [ROLLOVER DISTRIBUTION.] "Rollover distribution" 
 21.5   means a transfer of funds made: 
 21.6      (1) from one account to another account within 60 days of a 
 21.7   distribution; 
 21.8      (2) from another qualified state tuition program to an 
 21.9   account within 60 days of the distribution; or 
 21.10     (3) to another qualified state tuition program from an 
 21.11  account within 60 days of a distribution. 
 21.12     Each When there is a change of beneficiary in a rollover 
 21.13  distribution, the transfer of funds must be made for the benefit 
 21.14  of a new beneficiary who is a member of the family of the prior 
 21.15  beneficiary.  A rollover distribution from one qualified tuition 
 21.16  plan to another once every 12 months without a change of 
 21.17  beneficiary is permitted.  
 21.18     Sec. 8.  Minnesota Statutes 2002, section 136G.05, 
 21.19  subdivision 4, is amended to read: 
 21.20     Subd. 4.  [PLAN TO COMPLY WITH FEDERAL LAW.] The director 
 21.21  shall ensure that the plan meets the requirements for a 
 21.22  qualified state tuition program under section 529(b)(1)(A)(ii) 
 21.23  of the Internal Revenue Code.  The director may request a 
 21.24  private letter ruling or rulings from the Internal Revenue 
 21.25  Service or take any other steps to ensure that the plan 
 21.26  qualifies under section 529 of the Internal Revenue Code or 
 21.27  other relevant provisions of federal law. 
 21.28     Sec. 9.  Minnesota Statutes 2002, section 136G.05, 
 21.29  subdivision 5, is amended to read: 
 21.30     Subd. 5.  [MINIMUM PENALTY NONQUALIFIED DISTRIBUTIONS AND 
 21.31  MATCHING GRANTS.] In establishing the terms of the program, the 
 21.32  office must provide that refunds of amounts in an account are 
 21.33  subject to a minimum penalty, as required by section 529(b)(3) 
 21.34  of the Internal Revenue Code.  If the refunds or payments are 
 21.35  not used for qualified higher education expenses of the 
 21.36  designated beneficiary, this penalty must equal, at least, the 
 22.1   proportionate amount of any matching grants deposited in the 
 22.2   account under section 136G.11 and the investment return on the 
 22.3   grants, plus an additional penalty that meets the requirement of 
 22.4   federal law.  There cannot be a nonqualified withdrawal of 
 22.5   matching grant funds and any refund of matching grants must be 
 22.6   returned to the plan. 
 22.7      Sec. 10.  Minnesota Statutes 2002, section 136G.05, 
 22.8   subdivision 10, is amended to read: 
 22.9      Subd. 10.  [DATA.] Account owner data, account data, and 
 22.10  data on beneficiaries of accounts are private data on 
 22.11  individuals or nonpublic data as defined in section 13.02, 
 22.12  except that the names and addresses of the beneficiaries of 
 22.13  accounts that receive matching grants are public. 
 22.14     Sec. 11.  Minnesota Statutes 2002, section 136G.09, 
 22.15  subdivision 1, is amended to read: 
 22.16     Subdivision 1.  [CONTRIBUTIONS TO AN ACCOUNT.] A person may 
 22.17  make contributions to an account on behalf of a beneficiary. 
 22.18  Contributions to an account made by persons other than the 
 22.19  account owner become the property of the account owner.  A 
 22.20  person does not acquire an interest in an account by making 
 22.21  contributions to an account.  Contributions to an account must 
 22.22  be made by check, money order, or other commercially acceptable 
 22.23  means as permitted by the United States Internal Revenue Service 
 22.24  and other applicable federal and state law and authorized 
 22.25  approved by the plan administrator in cooperation with the 
 22.26  office and the board. 
 22.27     Sec. 12.  Minnesota Statutes 2002, section 136G.09, 
 22.28  subdivision 2, is amended to read: 
 22.29     Subd. 2.  [AUTHORITY OF ACCOUNT OWNER.] Except as provided 
 22.30  for minor trust accounts in section 136G.14, an account owner is 
 22.31  the only person entitled to: 
 22.32     (1) select or change a beneficiary or a contingent account 
 22.33  owner; or 
 22.34     (2) request distributions or rollover distributions from an 
 22.35  account. 
 22.36     Sec. 13.  Minnesota Statutes 2002, section 136G.09, 
 23.1   subdivision 6, is amended to read: 
 23.2      Subd. 6.  [CHANGE OF BENEFICIARY.] Except as provided for 
 23.3   minor trust accounts in section 136G.14, an account owner may 
 23.4   change the beneficiary of an account to a member of the family 
 23.5   of the current beneficiary, at any time without penalty, if the 
 23.6   change will not cause the total account balance of all accounts 
 23.7   held for the new beneficiary to exceed the maximum account 
 23.8   balance limit as provided in subdivision 8.  A change of 
 23.9   beneficiary other than as permitted in this subdivision is 
 23.10  treated as a nonqualified distribution under section 136G.13, 
 23.11  subdivision 3. 
 23.12     Sec. 14.  Minnesota Statutes 2002, section 136G.09, 
 23.13  subdivision 7, is amended to read: 
 23.14     Subd. 7.  [CHANGE OF ACCOUNT OWNERSHIP.] Except as provided 
 23.15  for minor trust accounts in section 136G.14, an account owner 
 23.16  may transfer ownership of an account to another person eligible 
 23.17  to be an account owner.  All transfers of ownership are absolute 
 23.18  and irrevocable. 
 23.19     Sec. 15.  Minnesota Statutes 2002, section 136G.09, 
 23.20  subdivision 8, is amended to read: 
 23.21     Subd. 8.  [MAXIMUM ACCOUNT BALANCE LIMIT.] (a) When a 
 23.22  contribution is made, the total account balance of all accounts 
 23.23  held for the same beneficiary, including matching grant 
 23.24  accounts, must not exceed the maximum account balance limit as 
 23.25  determined under this subdivision. 
 23.26     (b) The maximum account balance limit is reduced for 
 23.27  withdrawals from any account for the same beneficiary that are 
 23.28  qualified distributions, distributions due to the death or 
 23.29  disability of the beneficiary, or distributions due to the 
 23.30  beneficiary receiving a scholarship.  Subsequent contributions 
 23.31  must not be made to replenish an account if the contribution 
 23.32  results in the total account balance of all accounts held for 
 23.33  the beneficiary to exceed the reduced maximum account balance 
 23.34  limit.  Any subsequent contributions must be rejected.  A 
 23.35  subsequent contribution accepted in error must be returned to 
 23.36  the account owner plus any earnings on the contribution less any 
 24.1   applicable penalties. 
 24.2      (c) The maximum account balance limit is not reduced for a 
 24.3   nonqualified distribution or a rollover distribution.  When such 
 24.4   distributions are taken, subsequent contributions may be made to 
 24.5   replenish an account up to the maximum account balance limit. 
 24.6      (d) The office must establish a maximum account balance 
 24.7   limit.  The office must adjust the maximum account balance 
 24.8   limit, as necessary, or on January 1 of each year.  The maximum 
 24.9   account balance limit must not exceed the amount permitted for 
 24.10  the plan to qualify as a qualified state tuition program under 
 24.11  section 529 of the Internal Revenue Code.  For calendar years 
 24.12  2002 2004 and 2003 2005, the maximum account balance limit is 
 24.13  $235,000. 
 24.14     (e) (c) If the total account balance of all accounts held 
 24.15  for a single beneficiary reaches the maximum account balance 
 24.16  limit prior to the end of that calendar year, the beneficiary 
 24.17  may receive an applicable matching grant for that calendar year. 
 24.18     Sec. 16.  Minnesota Statutes 2002, section 136G.09, 
 24.19  subdivision 9, is amended to read: 
 24.20     Subd. 9.  [EXCESS CONTRIBUTIONS AND BALANCES.] A 
 24.21  contribution to any account for a beneficiary must be rejected 
 24.22  if the contribution would cause the total account balance of all 
 24.23  accounts held for the same beneficiary, including the matching 
 24.24  grant account, to exceed the maximum account balance limit under 
 24.25  section 529 of the Internal Revenue Code as established by the 
 24.26  office.  If a contribution under this subdivision is accepted in 
 24.27  error, the contribution must be returned to the account owner 
 24.28  plus any earnings thereon, less applicable penalties.  A payment 
 24.29  of an excess contribution to the account owner may be a 
 24.30  nonqualified distribution subject to a penalty. 
 24.31     Sec. 17.  Minnesota Statutes 2002, section 136G.11, 
 24.32  subdivision 1, is amended to read: 
 24.33     Subdivision 1.  [MATCHING GRANT QUALIFICATION.] By March 
 24.34  1 June 30 of each year, a state matching grant must be added to 
 24.35  each account established under the program if the following 
 24.36  conditions are met: 
 25.1      (1) the contributor applies, in writing in a form 
 25.2   prescribed by the director, for a matching grant; 
 25.3      (2) a minimum contribution of $200 was made during the 
 25.4   preceding calendar year; and 
 25.5      (3) the family income of the beneficiary did not exceed 
 25.6   $80,000. 
 25.7      Sec. 18.  Minnesota Statutes 2002, section 136G.11, 
 25.8   subdivision 2, is amended to read: 
 25.9      Subd. 2.  [FAMILY INCOME.] (a) For purposes of this 
 25.10  section, "family income" means: 
 25.11     (1) if the beneficiary is under age 25, the combined 
 25.12  adjusted gross income of the beneficiary's parents or legal 
 25.13  guardians as reported on the federal tax return or returns for 
 25.14  the most recently available tax calendar year in which 
 25.15  contributions were made.  If the beneficiary's parents are 
 25.16  divorced, the income of the parent claiming the beneficiary as a 
 25.17  dependent on the federal individual income tax return and the 
 25.18  income of that parent's spouse, if any, is used to determine 
 25.19  family income; or 
 25.20     (2) if the beneficiary is age 25 or older, the combined 
 25.21  adjusted gross income of the beneficiary and spouse, if any. 
 25.22     (b) For a parent or legal guardian of beneficiaries under 
 25.23  age 25 and for beneficiaries age 25 or older who resided in 
 25.24  Minnesota and filed a federal individual income tax return two 
 25.25  years prior to the year in which the matching grant is awarded, 
 25.26  the matching grant must be based on family income from Internal 
 25.27  Revenue Service tax data on file with the Minnesota department 
 25.28  of revenue.  
 25.29     (c) Parents or legal guardians of beneficiaries under age 
 25.30  25 and beneficiaries age 25 or older who did not reside in 
 25.31  Minnesota two years prior to the year in which the matching 
 25.32  grant is awarded must provide a signed copy of their federal 
 25.33  individual income tax return to the office, regardless of who 
 25.34  the account owner is, in order to be considered for a matching 
 25.35  grant, the matching grant must be based on family income from 
 25.36  the calendar year in which contributions were made. 
 26.1      Sec. 19.  Minnesota Statutes 2002, section 136G.11, 
 26.2   subdivision 3, is amended to read: 
 26.3      Subd. 3.  [RESIDENCY REQUIREMENT.] (a) If the beneficiary 
 26.4   is under age 25, the beneficiary's parents or legal guardians 
 26.5   must be Minnesota residents to qualify for a matching grant.  If 
 26.6   the beneficiary is age 25 or older, the beneficiary must be a 
 26.7   Minnesota resident to qualify for a matching grant. 
 26.8      (b) To meet the residency requirements, the parent or legal 
 26.9   guardian of beneficiaries under age 25 must have filed a 
 26.10  Minnesota individual income tax return as a Minnesota resident, 
 26.11  claiming and claimed the beneficiary as a dependent, two years 
 26.12  prior to the year in which the matching grant is awarded on 
 26.13  their federal tax return for the calendar year in which 
 26.14  contributions were made.  For beneficiaries age 25 or older, the 
 26.15  beneficiary, and a spouse, if any, must have filed a 
 26.16  Minnesota and a federal individual income tax return as a 
 26.17  Minnesota resident two years prior to the year in which the 
 26.18  matching grant is awarded for the calendar year in which 
 26.19  contributions were made. 
 26.20     (c) A parent of beneficiaries under age 25 and 
 26.21  beneficiaries age 25 or older who did not reside in Minnesota 
 26.22  two years prior to the year in which the matching grant is 
 26.23  awarded must establish Minnesota residency through the issuance 
 26.24  of a Minnesota driver's license or identification card in the 
 26.25  calendar year in which contributions were made are not eligible 
 26.26  for a matching grant. 
 26.27     Sec. 20.  Minnesota Statutes 2002, section 136G.11, 
 26.28  subdivision 9, is amended to read: 
 26.29     Subd. 9.  [ANNUAL APPLICATION.] An account owner must 
 26.30  submit an application form for a matching grant on an annual 
 26.31  basis.  The application must be postmarked by December 31 May 1 
 26.32  of the year preceding the awarding of the in which the matching 
 26.33  grant would be awarded if the applicant qualifies for a matching 
 26.34  grant.  
 26.35     Sec. 21.  Minnesota Statutes 2002, section 136G.11, 
 26.36  subdivision 13, is amended to read: 
 27.1      Subd. 13.  [FORFEITURE OF MATCHING GRANTS.] (a) Matching 
 27.2   grants are forfeited if: 
 27.3      (1) the account owner transfers the total account balance 
 27.4   of an account to another account or to another qualified state 
 27.5   tuition program; 
 27.6      (2) the beneficiary receives a full tuition scholarship or 
 27.7   admission to a United States service academy; 
 27.8      (3) the beneficiary dies or becomes disabled; 
 27.9      (4) the account owner changes the beneficiary of the 
 27.10  account; or 
 27.11     (5) the account owner closes the account with a 
 27.12  nonqualified withdrawal. 
 27.13     (b) Matching grants must be proportionally forfeited if: 
 27.14     (1) the account owner transfers a portion of an account to 
 27.15  another account or to another qualified state tuition program; 
 27.16     (2) the beneficiary receives a scholarship covering a 
 27.17  portion of qualified higher education expenses; or 
 27.18     (3) the account owner makes a partial nonqualified 
 27.19  withdrawal. 
 27.20     (c) If the account owner makes a misrepresentation in a 
 27.21  participation agreement or an application for a matching grant 
 27.22  that results in a matching grant, the matching grant associated 
 27.23  with the misrepresentation is forfeited.  The office and the 
 27.24  board must instruct the plan administrator as to the amount to 
 27.25  be forfeited from the matching grant account.  The office and 
 27.26  the board must withdraw the matching grant or the proportion of 
 27.27  the matching grant that is related to the misrepresentation. 
 27.28     Sec. 22.  Minnesota Statutes 2002, section 136G.13, 
 27.29  subdivision 1, is amended to read: 
 27.30     Subdivision 1.  [QUALIFIED DISTRIBUTION METHODS.] (a) 
 27.31  Qualified distributions may be made: 
 27.32     (1) directly to participating eligible educational 
 27.33  institutions on behalf of the beneficiary; or 
 27.34     (2) in the form of a check payable to both the beneficiary 
 27.35  and the eligible educational institution; or. 
 27.36     (3) to an account owner with a receipt verifying the 
 28.1   payment of qualified higher education expenses. 
 28.2      (b) When administratively feasible, distributions may be 
 28.3   made when the account owner and beneficiary certify prior to the 
 28.4   distribution that the distribution will be expended for 
 28.5   qualified higher education expenses a reasonable time after the 
 28.6   distribution.  The plan administrator may retain a penalty on 
 28.7   the earnings portion of the nonqualified distribution until 
 28.8   payment of qualified higher education expenses are 
 28.9   substantiated.  A payment receipt showing payment for qualified 
 28.10  higher education expenses must be submitted to the program 
 28.11  administrator within 30 days of distribution. 
 28.12     (c) Qualified distributions must be withdrawn 
 28.13  proportionally from contributions and earnings in an account 
 28.14  owner's account on the date of distribution as provided in 
 28.15  section 529 of the Internal Revenue Code. 
 28.16     Sec. 23.  Minnesota Statutes 2002, section 136G.13, 
 28.17  subdivision 3, is amended to read: 
 28.18     Subd. 3.  [NONQUALIFIED DISTRIBUTION.] An account owner may 
 28.19  request a nonqualified distribution from an account at any 
 28.20  time.  Nonqualified distributions are based on the total account 
 28.21  balances in an account owner's account and must be withdrawn 
 28.22  proportionally from contributions and earnings as provided in 
 28.23  section 529 of the Internal Revenue Code.  The earnings portion 
 28.24  of a nonqualified distribution is subject to a penalty federal 
 28.25  additional tax pursuant to section 529 of the Internal Revenue 
 28.26  Code.  For purposes of this subdivision, "earnings portion" 
 28.27  means the ratio of the earnings in the account to the total 
 28.28  account balance, immediately prior to the distribution, 
 28.29  multiplied by the distribution.  The penalty must be withheld 
 28.30  from the total amount of any distribution.  
 28.31     Sec. 24.  [136G.14] [MINOR TRUST ACCOUNTS.] 
 28.32     (a) This section applies to a plan account in which funds 
 28.33  of a minor trust account are invested. 
 28.34     (b) The account owner may not be changed to any person 
 28.35  other than a successor custodian or the beneficiary unless a 
 28.36  court order directing the change of ownership is provided to the 
 29.1   plan administrator.  The custodian must sign all forms and 
 29.2   requests submitted to the plan administrator in the custodian's 
 29.3   representative capacity.  The custodian must notify the plan 
 29.4   administrator in writing when the beneficiary becomes legally 
 29.5   entitled to be the account owner.  An account owner under this 
 29.6   section may not select a contingent account owner. 
 29.7      (c) The beneficiary of an account under this section may 
 29.8   not be changed.  If the beneficiary dies, assets in a plan 
 29.9   account become the property of the beneficiary's estate.  Funds 
 29.10  in an account must not be transferred or rolled over to another 
 29.11  account owner or to an account for another beneficiary.  A 
 29.12  nonqualified distribution from an account, or a distribution due 
 29.13  to the disability or scholarship award to the beneficiary, must 
 29.14  be used for the benefit of the beneficiary. 
 29.15     Sec. 25.  Minnesota Statutes 2002, section 137.0245, 
 29.16  subdivision 2, is amended to read: 
 29.17     Subd. 2.  [MEMBERSHIP.] The regent candidate advisory 
 29.18  council shall consist of 24 members.  Twelve members shall be 
 29.19  appointed by the subcommittee on committees of the committee on 
 29.20  rules and administration of the senate.  Twelve members shall be 
 29.21  appointed by the speaker of the house of representatives.  Each 
 29.22  appointing authority must appoint one member who is a student 
 29.23  enrolled in a degree program at the University of Minnesota at 
 29.24  the time of appointment.  No more than one-third of the members 
 29.25  appointed by each appointing authority may be current or former 
 29.26  legislators.  No more than two-thirds of the members appointed 
 29.27  by each appointing authority may belong to the same political 
 29.28  party; however, political activity or affiliation is not 
 29.29  required for the appointment of any member.  Geographical 
 29.30  representation must be taken into consideration when making 
 29.31  appointments.  Section 15.0575 shall govern the advisory 
 29.32  council, except that: 
 29.33     (1) the members shall be appointed to six-year terms with 
 29.34  one-third appointed each even-numbered year; and 
 29.35     (2) student members are appointed to two-year terms with 
 29.36  two students appointed each even-numbered year. 
 30.1      Sec. 26.  Minnesota Statutes 2002, section 299A.45, 
 30.2   subdivision 2, is amended to read: 
 30.3      Subd. 2.  [AWARD AMOUNT.] (a) The amount of the award 
 30.4   is the lesser of: 
 30.5      (1) for public institutions, the actual tuition and fees 
 30.6   charged by the institution; or 
 30.7      (2) for private institutions the lesser of (i) the 
 30.8   actual average tuition and fees charged by the institution; or 
 30.9   (ii) the highest tuition and fees charged by a public 
 30.10  institution in Minnesota 
 30.11     (2) the tuition maximums established by law for the state 
 30.12  grant program under section 136A.121. 
 30.13     (b) An award under this subdivision must not affect a 
 30.14  recipient's eligibility for a state grant under section 136A.121.
 30.15     (c) For the purposes of this subdivision, "fees" include 
 30.16  only those fees that are mandatory and charged to all students 
 30.17  attending the institution.  
 30.18     Sec. 27.  [LEARN AND EARN PROGRAM; POSTSECONDARY 
 30.19  OPPORTUNITIES ACCOUNT.] 
 30.20     The higher education services office shall maintain a 
 30.21  postsecondary opportunities account for students who earned 
 30.22  stipends and bonuses that were deposited in the account through 
 30.23  the learn and earn graduation achievement program under 
 30.24  Minnesota Statutes 2000, section 124D.32.  A participating 
 30.25  student may, upon graduation from high school, use the funds 
 30.26  accumulated for the student toward the costs of attending a 
 30.27  Minnesota postsecondary institution or a career-training 
 30.28  program, including the costs of tuition, books, and lab fees.  
 30.29  Funds accumulated for a student must be available to the student 
 30.30  from the time a student graduates from high school until ten 
 30.31  years after the date the student entered the learn and earn 
 30.32  graduation achievement program.  After ten years, the office 
 30.33  shall close the account and any remaining money in the account 
 30.34  must cancel to the general fund. 
 30.35     Sec. 28.  [REPEALER.] 
 30.36     Minnesota Statutes 2002, section 136G.03, subdivision 25, 
 31.1   is repealed. 
 31.2                              ARTICLE 4
 31.3                     MNSCU ADMINISTRATIVE CHANGES
 31.4      Section 1.  Minnesota Statutes 2002, section 136F.40, 
 31.5   subdivision 2, is amended to read: 
 31.6      Subd. 2.  [CONTRACTS.] (a) The board may enter into a 
 31.7   contract with the chancellor, a vice-chancellor, or a president, 
 31.8   containing terms and conditions of employment.  The terms of the 
 31.9   contract must be authorized under a plan approved under section 
 31.10  43A.18, subdivision 3a. 
 31.11     (b) Notwithstanding section 43A.17, subdivision 11, or 
 31.12  other law to the contrary, a contract under this section may 
 31.13  provide a liquidated salary amount or other compensation if a 
 31.14  contract is terminated by the board prior to its expiration.  
 31.15     (c) Notwithstanding section 356.24 or other law to the 
 31.16  contrary, a contract under this section may contain a deferred 
 31.17  compensation plan made in conformance with section 457(f) of the 
 31.18  Internal Revenue Code. 
 31.19     Sec. 2.  Minnesota Statutes 2002, section 136F.45, 
 31.20  subdivision 1, is amended to read: 
 31.21     Subdivision 1.  [PURCHASE.] (a) At the request of an 
 31.22  employee, the board may negotiate and purchase an individual 
 31.23  annuity contract custodial account under section 403(b)(7) of 
 31.24  the Internal Revenue Code, for an employee for retirement or 
 31.25  other purposes from a company licensed to do business in 
 31.26  Minnesota, and may allocate a portion of the compensation 
 31.27  otherwise payable to the employee as salary for the purpose of 
 31.28  paying the entire premium contribution due or to become due 
 31.29  under the contract account.  The allocation shall be made in a 
 31.30  manner that will qualify the annuity premiums custodial account 
 31.31  contributions, or a portion portions thereof, for the benefit 
 31.32  afforded under section 403(b)(7) of the current federal Internal 
 31.33  Revenue Code or any equivalent provision of subsequent federal 
 31.34  income tax law.  The employee shall own the contract account and 
 31.35  the employee's rights thereunder shall be nonforfeitable except 
 31.36  for failure to pay premiums contributions.  
 32.1      (b) At its discretion, and in the same manner provided in 
 32.2   paragraph (a), the board may negotiate and purchase individual 
 32.3   custodial accounts under section 403(b)(7) of the Internal 
 32.4   Revenue Code, for employees of the higher education services 
 32.5   office as defined in section 136A.03.  Participation under this 
 32.6   paragraph must be in accordance with any applicable federal law. 
 32.7      Sec. 3.  Minnesota Statutes 2002, section 136F.45, 
 32.8   subdivision 2, is amended to read: 
 32.9      Subd. 2.  [DEPOSITS; PAYMENT.] All amounts so allocated 
 32.10  shall be deposited in an annuity account established by the 
 32.11  board.  Payment of annuity premiums custodial account 
 32.12  contributions shall be made when due or in accordance with the 
 32.13  salary agreement entered into between the employee and the 
 32.14  board.  The money in the annuity account is not subject to the 
 32.15  budget, allotment, and incumbrance system provided for in 
 32.16  chapter 16A. 
 32.17     Sec. 4.  Minnesota Statutes 2002, section 136F.581, 
 32.18  subdivision 1, is amended to read: 
 32.19     Subdivision 1.  [CONDITIONS AUTHORITY FOR PURCHASES AND 
 32.20  CONTRACTS.] The board and the colleges and universities are 
 32.21  subject to the provisions of section 471.345.  In addition to 
 32.22  the contracting authority under this chapter, the board of 
 32.23  trustees may utilize any contracting options available to the 
 32.24  commissioner of administration under chapter 16A, 16B, or 16C. 
 32.25     Sec. 5.  Minnesota Statutes 2002, section 136F.581, 
 32.26  subdivision 2, is amended to read: 
 32.27     Subd. 2.  [POLICIES AND PROCEDURES.] The board shall 
 32.28  develop policies, and each college and university shall develop 
 32.29  procedures, for purchases and contracts that are consistent with 
 32.30  the authority granted in subdivision 1.  The policies and 
 32.31  procedures shall be developed through the system and campus 
 32.32  labor management committees and shall include provisions 
 32.33  requiring the system and campuses to determine that they cannot 
 32.34  use available staff before contracting with additional outside 
 32.35  consultants or services.  In addition, each college and 
 32.36  university, in consultation with the system office of the 
 33.1   chancellor, shall develop procedures for those purchases and 
 33.2   contracts that can be accomplished by a college and university 
 33.3   without board approval.  The board policies must allow each 
 33.4   college and university the local authority to enter into 
 33.5   contracts for construction projects of up to $250,000 and to 
 33.6   make other purchases of up to $50,000, without receiving board 
 33.7   approval.  The board may allow a college or university local 
 33.8   authority to make purchases over $50,000 without receiving board 
 33.9   approval. 
 33.10     Sec. 6.  Minnesota Statutes 2002, section 136F.59, 
 33.11  subdivision 3, is amended to read: 
 33.12     Subd. 3.  [OFFICE OF TECHNOLOGY.] The system office of the 
 33.13  chancellor and the campuses shall cooperate with the office of 
 33.14  technology in its responsibility to coordinate information and 
 33.15  communications technology development throughout the state.  The 
 33.16  system and campuses shall consult with the office of technology 
 33.17  throughout any efforts to plan or implement information and 
 33.18  communication systems to ensure that the systems are effective, 
 33.19  efficient, and, where appropriate, compatible with other state 
 33.20  systems. 
 33.21     Sec. 7.  Minnesota Statutes 2002, section 136F.60, 
 33.22  subdivision 3, is amended to read: 
 33.23     Subd. 3.  [EASEMENTS.] (a) The board may grant permanent or 
 33.24  temporary easements over, under, or across any land under its 
 33.25  jurisdiction for reasonable purposes determined by the board as 
 33.26  provided in paragraphs (b) and (c).  
 33.27     (b) The board may grant a revocable easement or permit 
 33.28  under this paragraph.  An easement or permit is revocable by 
 33.29  written notice given by the board if at any time its continuance 
 33.30  will conflict with a public use of the land over, under, or upon 
 33.31  which it is granted, or for any other reason.  The notice must 
 33.32  be in writing and is effective 90 days after the notice is sent 
 33.33  by certified mail to the last known address of the holder of 
 33.34  record of the easement.  If the address of the holder of the 
 33.35  easement or permit is not known, it expires 90 days after the 
 33.36  notice is recorded in the office of the county recorder of the 
 34.1   county in which the land is located.  Upon revocation of an 
 34.2   easement or permit, the board may allow a reasonable time to 
 34.3   vacate the premises affected. 
 34.4      (c) State land subject to an easement or permit granted by 
 34.5   the board remains subject to sale or lease, and the sale or 
 34.6   lease does not revoke the permit or easement granted. 
 34.7      Sec. 8.  [136F.65] [ACCEPTANCE OF FEDERAL MONEY.] 
 34.8      The board of trustees is hereby designated the state agency 
 34.9   empowered to accept any and all money provided for or made 
 34.10  available to this state by the United States of America or any 
 34.11  department or agency thereof for the construction and equipping 
 34.12  of any building under the control of the board of trustees in 
 34.13  accordance with the provisions of federal law and any rules or 
 34.14  regulations promulgated thereunder and are further authorized to 
 34.15  do any and all things required of this state by such federal law 
 34.16  and the rules and regulations promulgated thereunder in order to 
 34.17  obtain such federal money. 
 34.18     Sec. 9.  [REPEALER.] 
 34.19     Minnesota Statutes 2002, sections 136F.13; 136F.56; 
 34.20  136F.582; and 136F.59, subdivision 2, are repealed.