SF 968

as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to higher education; higher education 
  1.3             services office; making various clarifying, 
  1.4             conforming, technical, and other changes to 
  1.5             reciprocity agreements, state grants, fees, and the 
  1.6             Minnesota college savings plan; increasing revenue 
  1.7             bond limit for the higher education facilities 
  1.8             authority; clarifying use of certain learn and earn 
  1.9             money; amending Minnesota Statutes 2002, sections 
  1.10            124D.42, subdivision 3; 136A.08, subdivision 3; 
  1.11            136A.101, subdivision 5a; 136A.121, subdivisions 6, 7; 
  1.12            136A.1211; 136A.171; 136A.69; 136G.01; 136G.03, by 
  1.13            adding subdivisions; 136G.05, subdivisions 4, 5, 10; 
  1.14            136G.09, subdivisions 1, 2, 6, 7, 8, 9; 136G.11, 
  1.15            subdivisions 1, 2, 3, 9, 13; 136G.13, subdivision 3; 
  1.16            299A.45, subdivision 2; proposing coding for new law 
  1.17            in Minnesota Statutes, chapter 136G; repealing 
  1.18            Minnesota Statutes 2002, sections 136A.124; 136G.03, 
  1.19            subdivision 25. 
  1.20  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.21     Section 1.  Minnesota Statutes 2002, section 124D.42, 
  1.22  subdivision 3, is amended to read: 
  1.23     Subd. 3.  [POSTSERVICE BENEFIT.] (a) Each eligible 
  1.24  organization must agree to provide to every participant who 
  1.25  fulfills the terms of a contract under subdivision 2, a 
  1.26  nontransferable postservice benefit.  The benefit must be not 
  1.27  less than $4,725 per year of full-time service or prorated for 
  1.28  part-time service or for partial service of at least 900 hours.  
  1.29  Upon signing a contract under subdivision 2, each eligible 
  1.30  organization must deposit funds to cover the full amount of 
  1.31  postservice benefits obligated, except for national education 
  1.32  awards that are deposited in the national service trust fund.  
  2.1   Funds encumbered in fiscal years 1994 and 1995 for postservice 
  2.2   benefits must be available until the participants for whom the 
  2.3   funds were encumbered are no longer eligible to draw benefits.  
  2.4      (b) Nothing in this subdivision prevents a grantee 
  2.5   organization from using funds from nonfederal or nonstate 
  2.6   sources to increase the value of postservice benefits above the 
  2.7   value described in paragraph (a). 
  2.8      (c) The higher education services office must establish an 
  2.9   account for depositing funds for postservice benefits received 
  2.10  from eligible organizations.  If a participant does not complete 
  2.11  the term of service or, upon successful completion of the 
  2.12  program, does not use a postservice benefit according to 
  2.13  subdivision 4 within seven years, the amount of the postservice 
  2.14  benefit must be refunded to the eligible organization or, at the 
  2.15  organization's discretion, dedicated to another eligible 
  2.16  participant.  Interest earned on funds deposited in the 
  2.17  postservice benefit account is appropriated to the higher 
  2.18  education services office for the costs of administering the 
  2.19  postservice benefits accounts.  
  2.20     (d) The state must provide an additional postservice 
  2.21  benefit to any participant who successfully completes the 
  2.22  program.  The benefit must be a credit of five points to be 
  2.23  added to the competitive open rating of a participant who 
  2.24  obtains a passing grade on a civil service examination under 
  2.25  chapter 43A.  The benefit is available for five years after 
  2.26  completing the community service. 
  2.27     Sec. 2.  Minnesota Statutes 2002, section 136A.08, 
  2.28  subdivision 3, is amended to read: 
  2.29     Subd. 3.  [WISCONSIN.] A higher education reciprocity 
  2.30  agreement with the state of Wisconsin may include provision for 
  2.31  the transfer of funds between Minnesota and Wisconsin provided 
  2.32  that an income tax reciprocity agreement between Minnesota and 
  2.33  Wisconsin is in effect for the period of time included under the 
  2.34  higher education reciprocity agreement.  If this provision is 
  2.35  included, the amount of funds to be transferred shall be 
  2.36  determined according to a formula which is mutually acceptable 
  3.1   to the office and a duly designated agency representing 
  3.2   Wisconsin.  The formula shall recognize differences in tuition 
  3.3   rates between the two states and the number of students 
  3.4   attending institutions in each state under the agreement.  Any 
  3.5   payments to Minnesota by Wisconsin shall be deposited by the 
  3.6   office in the general fund of the state treasury.  The amount 
  3.7   required for the payments shall be certified by the director of 
  3.8   the office to the commissioner of finance annually. 
  3.9      Sec. 3.  Minnesota Statutes 2002, section 136A.101, 
  3.10  subdivision 5a, is amended to read: 
  3.11     Subd. 5a.  [ASSIGNED FAMILY RESPONSIBILITY.] "Assigned 
  3.12  family responsibility" means the amount of a family contribution 
  3.13  to a student's cost of attendance, as determined by a federal 
  3.14  need analysis, except that, beginning for the 1998-1999 academic 
  3.15  year, up to $25,000 in savings and other assets shall be 
  3.16  subtracted from the federal calculation of net worth before 
  3.17  determining the contribution.  For dependent students, the 
  3.18  assigned family responsibility is the parental contribution.  
  3.19  For independent students with dependents other than a spouse, 
  3.20  the assigned family responsibility is the student contribution. 
  3.21  For independent students without dependents other than a spouse, 
  3.22  the assigned family responsibility is 80 percent of the student 
  3.23  contribution.  Beginning in fiscal year 2002, The assigned 
  3.24  family responsibility for all independent students is reduced an 
  3.25  additional ten percent.  
  3.26     Sec. 4.  Minnesota Statutes 2002, section 136A.121, 
  3.27  subdivision 6, is amended to read: 
  3.28     Subd. 6.  [COST OF ATTENDANCE.] (a) The recognized cost of 
  3.29  attendance consists of allowances specified in law for living 
  3.30  and miscellaneous expenses, and an allowance for tuition and 
  3.31  fees equal to the lesser of the actual tuition and fees charged 
  3.32  by the institution, or the private institution tuition and fee 
  3.33  maximums established in law. 
  3.34     (b) For the purpose of paragraph (a), the private 
  3.35  institution tuition and fee maximum for two- and four-year, 
  3.36  private, residential, liberal arts, degree-granting colleges and 
  4.1   universities must be the same. 
  4.2      (c) For a student registering for less than full time, the 
  4.3   office shall prorate the living and miscellaneous expense 
  4.4   allowance to the actual number of credits for which the student 
  4.5   is enrolled. 
  4.6      The recognized cost of attendance for a student who is 
  4.7   confined to a Minnesota correctional institution shall consist 
  4.8   of the tuition and fee component in paragraph (a), with no 
  4.9   allowance for living and miscellaneous expenses. 
  4.10     Sec. 5.  Minnesota Statutes 2002, section 136A.121, 
  4.11  subdivision 7, is amended to read: 
  4.12     Subd. 7.  [INSUFFICIENT APPROPRIATION.] If the amount 
  4.13  appropriated is determined by the office to be insufficient to 
  4.14  make full awards to applicants under subdivision 5, before any 
  4.15  award for that year has been disbursed, awards must be reduced 
  4.16  by: 
  4.17     (1) adding a surcharge to the applicant's assigned family 
  4.18  responsibility, as defined in section 136A.101, subdivision 5a; 
  4.19  and 
  4.20     (2) a percentage increase in the applicant's assigned 
  4.21  student responsibility, as defined in subdivision 5.  
  4.22  The office may also impose other measures, if necessary, 
  4.23  including establishing an award cutoff deadline and eliminating 
  4.24  summer grant payments. 
  4.25     Sec. 6.  Minnesota Statutes 2002, section 136A.1211, is 
  4.26  amended to read: 
  4.27     136A.1211 [USE OF STATE GRANT SAVINGS.] 
  4.28     Savings in the state grant program resulting from an 
  4.29  increase in the maximum federal Pell grant from the anticipated 
  4.30  level of $3,125 $4,050 shall be used by the office to increase 
  4.31  the living and miscellaneous expense allowance. 
  4.32     Sec. 7.  Minnesota Statutes 2002, section 136A.171, is 
  4.33  amended to read: 
  4.34     136A.171 [REVENUE BONDS; ISSUANCE; PROCEEDS.] 
  4.35     The higher education services office may issue revenue 
  4.36  bonds to obtain funds for loans made in accordance with the 
  5.1   provisions of this chapter.  The aggregate amount of revenue 
  5.2   bonds, issued directly by the office, outstanding at any one 
  5.3   time, not including refunded bonds or otherwise defeased or 
  5.4   discharged bonds, shall not exceed $550,000,000 $850,000,000.  
  5.5   Proceeds from the issuance of bonds may be held and invested by 
  5.6   the office pending disbursement in the form of loans.  All 
  5.7   interest and profits from the investments shall inure to the 
  5.8   benefit of the office and shall be available to the office for 
  5.9   the same purposes as the proceeds from the sale of revenue bonds 
  5.10  including, but not limited to, costs incurred in administering 
  5.11  loans under this chapter and loan reserve funds. 
  5.12     Sec. 8.  Minnesota Statutes 2002, section 136A.69, is 
  5.13  amended to read: 
  5.14     136A.69 [FEES.] 
  5.15     The office shall collect reasonable registration fees that 
  5.16  are sufficient to recover, but do not exceed, its costs of 
  5.17  administering the registration program.  The office shall charge 
  5.18  $1,100 for initial registration fees and $950 for annual renewal 
  5.19  fees. 
  5.20     Sec. 9.  Minnesota Statutes 2002, section 136G.01, is 
  5.21  amended to read: 
  5.22     136G.01 [PLAN ESTABLISHED.] 
  5.23     A college savings plan known as the Minnesota college 
  5.24  savings plan is established.  In establishing this plan, the 
  5.25  legislature seeks to encourage individuals to save for 
  5.26  post-secondary education by: 
  5.27     (1) providing a qualified state tuition plan under federal 
  5.28  tax law; 
  5.29     (2) providing matching grants for contributions to the 
  5.30  program by low- and middle-income families; and 
  5.31     (3) by encouraging individuals, foundations, and businesses 
  5.32  to provide additional grants to participating students. 
  5.33     Sec. 10.  Minnesota Statutes 2002, section 136G.03, is 
  5.34  amended by adding a subdivision to read: 
  5.35     Subd. 4a.  [APPLICATION.] "Application" means the form 
  5.36  executed by a prospective account owner to enter into a 
  6.1   participation agreement and open an account in the plan.  The 
  6.2   application incorporates by reference the participation 
  6.3   agreement. 
  6.4      Sec. 11.  Minnesota Statutes 2002, section 136G.03, is 
  6.5   amended by adding a subdivision to read: 
  6.6      Subd. 21a.  [MINOR TRUST ACCOUNT.] "Minor trust account" 
  6.7   means a Uniform Gift to Minors Act account.  A Uniform Transfers 
  6.8   to Minors Act account, or a trust instrument naming a minor 
  6.9   person as beneficiary, created and operating under the laws of 
  6.10  Minnesota or another state. 
  6.11     Sec. 12.  Minnesota Statutes 2002, section 136G.05, 
  6.12  subdivision 4, is amended to read: 
  6.13     Subd. 4.  [PLAN TO COMPLY WITH FEDERAL LAW.] The director 
  6.14  shall ensure that the plan meets the requirements for a 
  6.15  qualified state tuition program under section 529(b)(1)(A)(ii) 
  6.16  of the Internal Revenue Code.  The director may request a 
  6.17  private letter ruling or rulings from the Internal Revenue 
  6.18  Service or take any other steps to ensure that the plan 
  6.19  qualifies under section 529 of the Internal Revenue Code or 
  6.20  other relevant provisions of federal law. 
  6.21     Sec. 13.  Minnesota Statutes 2002, section 136G.05, 
  6.22  subdivision 5, is amended to read: 
  6.23     Subd. 5.  [MINIMUM PENALTY NONQUALIFIED DISTRIBUTIONS AND 
  6.24  MATCHING GRANTS.] In establishing the terms of the program, the 
  6.25  office must provide that refunds of amounts in an account are 
  6.26  subject to a minimum penalty, as required by section 529(b)(3) 
  6.27  of the Internal Revenue Code.  If the refunds or payments are 
  6.28  not used for qualified higher education expenses of the 
  6.29  designated beneficiary, this penalty must equal, at least, the 
  6.30  proportionate amount of any matching grants deposited in the 
  6.31  account under section 136G.11 and the investment return on the 
  6.32  grants, plus an additional penalty that meets the requirement of 
  6.33  federal law.  There cannot be a nonqualified withdrawal of 
  6.34  matching grant funds and any refund of matching grants must be 
  6.35  returned to the plan. 
  6.36     Sec. 14.  Minnesota Statutes 2002, section 136G.05, 
  7.1   subdivision 10, is amended to read: 
  7.2      Subd. 10.  [DATA.] Account owner data, account data, and 
  7.3   data on beneficiaries of accounts are private data on 
  7.4   individuals or nonpublic data as defined in section 13.02, 
  7.5   except that the names and addresses of the beneficiaries of 
  7.6   accounts that receive matching grants are public. 
  7.7      Sec. 15.  Minnesota Statutes 2002, section 136G.09, 
  7.8   subdivision 1, is amended to read: 
  7.9      Subdivision 1.  [CONTRIBUTIONS TO AN ACCOUNT.] A person may 
  7.10  make contributions to an account on behalf of a beneficiary. 
  7.11  Contributions to an account made by persons other than the 
  7.12  account owner become the property of the account owner.  A 
  7.13  person does not acquire an interest in an account by making 
  7.14  contributions to an account.  Contributions to an account must 
  7.15  be made by check, money order, or other commercially acceptable 
  7.16  means as permitted by the United States Internal Revenue Service 
  7.17  and other applicable federal and state law and authorized 
  7.18  approved by the plan administrator in cooperation with the 
  7.19  office and the board. 
  7.20     Sec. 16.  Minnesota Statutes 2002, section 136G.09, 
  7.21  subdivision 2, is amended to read: 
  7.22     Subd. 2.  [AUTHORITY OF ACCOUNT OWNER.] Except as provided 
  7.23  for minor trust accounts in section 136G.14, an account owner is 
  7.24  the only person entitled to: 
  7.25     (1) select or change a beneficiary or a contingent account 
  7.26  owner; or 
  7.27     (2) request distributions or rollover distributions from an 
  7.28  account. 
  7.29     Sec. 17.  Minnesota Statutes 2002, section 136G.09, 
  7.30  subdivision 6, is amended to read: 
  7.31     Subd. 6.  [CHANGE OF BENEFICIARY.] Except as provided for 
  7.32  minor trust accounts in section 136G.14, an account owner may 
  7.33  change the beneficiary of an account to a member of the family 
  7.34  of the current beneficiary, at any time without penalty, if the 
  7.35  change will not cause the total account balance of all accounts 
  7.36  held for the new beneficiary to exceed the maximum account 
  8.1   balance limit as provided in subdivision 8.  A change of 
  8.2   beneficiary other than as permitted in this subdivision is 
  8.3   treated as a nonqualified distribution under section 136G.13, 
  8.4   subdivision 3. 
  8.5      Sec. 18.  Minnesota Statutes 2002, section 136G.09, 
  8.6   subdivision 7, is amended to read: 
  8.7      Subd. 7.  [CHANGE OF ACCOUNT OWNERSHIP.] Except as provided 
  8.8   for minor trust accounts in section 136G.14, an account owner 
  8.9   may transfer ownership of an account to another person eligible 
  8.10  to be an account owner.  All transfers of ownership are absolute 
  8.11  and irrevocable. 
  8.12     Sec. 19.  Minnesota Statutes 2002, section 136G.09, 
  8.13  subdivision 8, is amended to read: 
  8.14     Subd. 8.  [MAXIMUM ACCOUNT BALANCE LIMIT.] (a) When a 
  8.15  contribution is made, the total account balance of all accounts 
  8.16  held for the same beneficiary, including matching grant 
  8.17  accounts, must not exceed the maximum account balance limit as 
  8.18  determined under this subdivision. 
  8.19     (b) The maximum account balance limit is reduced for 
  8.20  withdrawals from any account for the same beneficiary that are 
  8.21  qualified distributions, distributions due to the death or 
  8.22  disability of the beneficiary, or distributions due to the 
  8.23  beneficiary receiving a scholarship.  Subsequent contributions 
  8.24  must not be made to replenish an account if the contribution 
  8.25  results in the total account balance of all accounts held for 
  8.26  the beneficiary to exceed the reduced maximum account balance 
  8.27  limit.  Any subsequent contributions must be rejected.  A 
  8.28  subsequent contribution accepted in error must be returned to 
  8.29  the account owner plus any earnings on the contribution less any 
  8.30  applicable penalties. 
  8.31     (c) The maximum account balance limit is not reduced for a 
  8.32  nonqualified distribution or a rollover distribution.  When such 
  8.33  distributions are taken, subsequent contributions may be made to 
  8.34  replenish an account up to the maximum account balance limit. 
  8.35     (d) The office must establish a maximum account balance 
  8.36  limit.  The office must adjust the maximum account balance 
  9.1   limit, as necessary, or on January 1 of each year.  The maximum 
  9.2   account balance limit must not exceed the amount permitted for 
  9.3   the plan to qualify as a qualified state tuition program under 
  9.4   section 529 of the Internal Revenue Code.  For calendar years 
  9.5   2002 2004 and 2003 2005, the maximum account balance limit is 
  9.6   $235,000. 
  9.7      (e) If the total account balance of all accounts held for a 
  9.8   single beneficiary reaches the maximum account balance limit 
  9.9   prior to the end of that calendar year, the beneficiary may 
  9.10  receive an applicable matching grant for that calendar year. 
  9.11     Sec. 20.  Minnesota Statutes 2002, section 136G.09, 
  9.12  subdivision 9, is amended to read: 
  9.13     Subd. 9.  [EXCESS CONTRIBUTIONS AND BALANCES.] A 
  9.14  contribution to any account for a beneficiary must be rejected 
  9.15  if the contribution would cause the total account balance of all 
  9.16  accounts held for the same beneficiary, including the matching 
  9.17  grant account, to exceed the maximum account balance limit under 
  9.18  section 529 of the Internal Revenue Code as established by the 
  9.19  office.  If a contribution under this subdivision is accepted in 
  9.20  error, the contribution must be returned to the account owner 
  9.21  plus any earnings thereon, less applicable penalties.  A payment 
  9.22  of an excess contribution to the account owner may be a 
  9.23  nonqualified distribution subject to a penalty. 
  9.24     Sec. 21.  Minnesota Statutes 2002, section 136G.11, 
  9.25  subdivision 1, is amended to read: 
  9.26     Subdivision 1.  [MATCHING GRANT QUALIFICATION.] By March 
  9.27  1 June 30 of each year, a state matching grant must be added to 
  9.28  each account established under the program if the following 
  9.29  conditions are met: 
  9.30     (1) the contributor applies, in writing in a form 
  9.31  prescribed by the director, for a matching grant; 
  9.32     (2) a minimum contribution of $200 was made during the 
  9.33  preceding calendar year; and 
  9.34     (3) the family income of the beneficiary did not exceed 
  9.35  $80,000. 
  9.36     Sec. 22.  Minnesota Statutes 2002, section 136G.11, 
 10.1   subdivision 2, is amended to read: 
 10.2      Subd. 2.  [FAMILY INCOME.] (a) For purposes of this 
 10.3   section, "family income" means: 
 10.4      (1) if the beneficiary is under age 25, the combined 
 10.5   adjusted gross income of the beneficiary's parents or legal 
 10.6   guardians as reported on the federal tax return or returns for 
 10.7   the most recently available tax calendar year in which 
 10.8   contributions were made.  If the beneficiary's parents are 
 10.9   divorced, the income of the parent claiming the beneficiary as a 
 10.10  dependent on the federal individual income tax return and the 
 10.11  income of that parent's spouse, if any, is used to determine 
 10.12  family income; or 
 10.13     (2) if the beneficiary is age 25 or older, the combined 
 10.14  adjusted gross income of the beneficiary and spouse, if any. 
 10.15     (b) For a parent or legal guardian of beneficiaries under 
 10.16  age 25 and for beneficiaries age 25 or older who resided in 
 10.17  Minnesota and filed a federal individual income tax return two 
 10.18  years prior to the year in which the matching grant is awarded, 
 10.19  the matching grant must be based on family income from Internal 
 10.20  Revenue Service tax data on file with the Minnesota department 
 10.21  of revenue.  
 10.22     (c) Parents or legal guardians of beneficiaries under age 
 10.23  25 and beneficiaries age 25 or older who did not reside in 
 10.24  Minnesota two years prior to the year in which the matching 
 10.25  grant is awarded must provide a signed copy of their federal 
 10.26  individual income tax return to the office, regardless of who 
 10.27  the account owner is, in order to be considered for a matching 
 10.28  grant, the matching grant must be based on family income from 
 10.29  the calendar year in which contributions were made. 
 10.30     Sec. 23.  Minnesota Statutes 2002, section 136G.11, 
 10.31  subdivision 3, is amended to read: 
 10.32     Subd. 3.  [RESIDENCY REQUIREMENT.] (a) If the beneficiary 
 10.33  is under age 25, the beneficiary's parents or legal guardians 
 10.34  must be Minnesota residents to qualify for a matching grant.  If 
 10.35  the beneficiary is age 25 or older, the beneficiary must be a 
 10.36  Minnesota resident to qualify for a matching grant. 
 11.1      (b) To meet the residency requirements, the parent or legal 
 11.2   guardian of beneficiaries under age 25 must have filed a 
 11.3   Minnesota individual income tax return as a Minnesota resident, 
 11.4   claiming and claimed the beneficiary as a dependent, two years 
 11.5   prior to the year in which the matching grant is awarded on 
 11.6   their federal tax return for the calendar year in which 
 11.7   contributions were made.  For beneficiaries age 25 or older, the 
 11.8   beneficiary, and a spouse, if any, must have filed a 
 11.9   Minnesota and a federal individual income tax return as a 
 11.10  Minnesota resident two years prior to the year in which the 
 11.11  matching grant is awarded for the calendar year in which 
 11.12  contributions were made. 
 11.13     (c) A parent of beneficiaries under age 25 and 
 11.14  beneficiaries age 25 or older who did not reside in Minnesota 
 11.15  two years prior to the year in which the matching grant is 
 11.16  awarded must establish Minnesota residency through the issuance 
 11.17  of a Minnesota driver's license or identification card in the 
 11.18  calendar year in which contributions were made are not eligible 
 11.19  for a matching grant. 
 11.20     Sec. 24.  Minnesota Statutes 2002, section 136G.11, 
 11.21  subdivision 9, is amended to read: 
 11.22     Subd. 9.  [ANNUAL APPLICATION.] An account owner must 
 11.23  submit an application form for a matching grant on an annual 
 11.24  basis.  The application must be postmarked by December 31 May 1 
 11.25  of the year preceding the awarding of the in which the matching 
 11.26  grant would be awarded if the applicant qualifies for a matching 
 11.27  grant.  
 11.28     Sec. 25.  Minnesota Statutes 2002, section 136G.11, 
 11.29  subdivision 13, is amended to read: 
 11.30     Subd. 13.  [FORFEITURE OF MATCHING GRANTS.] (a) Matching 
 11.31  grants are forfeited if: 
 11.32     (1) the account owner transfers the total account balance 
 11.33  of an account to another account or to another qualified state 
 11.34  tuition program; 
 11.35     (2) the beneficiary receives a full tuition scholarship or 
 11.36  admission to a United States service academy; 
 12.1      (3) the beneficiary dies or becomes disabled; 
 12.2      (4) the account owner changes the beneficiary of the 
 12.3   account; or 
 12.4      (5) the account owner closes the account with a 
 12.5   nonqualified withdrawal. 
 12.6      (b) Matching grants must be proportionally forfeited if: 
 12.7      (1) the account owner transfers a portion of an account to 
 12.8   another account or to another qualified state tuition program; 
 12.9      (2) the beneficiary receives a scholarship covering a 
 12.10  portion of qualified higher education expenses; or 
 12.11     (3) the account owner makes a partial nonqualified 
 12.12  withdrawal. 
 12.13     (c) If the account owner makes a misrepresentation in a 
 12.14  participation agreement or an application for a matching grant 
 12.15  that results in a matching grant, the matching grant associated 
 12.16  with the misrepresentation is forfeited.  The office and the 
 12.17  board must instruct the plan administrator as to the amount to 
 12.18  be forfeited from the matching grant account.  The office and 
 12.19  the board must withdraw the matching grant or the proportion of 
 12.20  the matching grant that is related to the misrepresentation. 
 12.21     Sec. 26.  Minnesota Statutes 2002, section 136G.13, 
 12.22  subdivision 3, is amended to read: 
 12.23     Subd. 3.  [NONQUALIFIED DISTRIBUTION.] An account owner may 
 12.24  request a nonqualified distribution from an account at any 
 12.25  time.  Nonqualified distributions are based on the total account 
 12.26  balances in an account owner's account and must be withdrawn 
 12.27  proportionally from contributions and earnings as provided in 
 12.28  section 529 of the Internal Revenue Code.  The earnings portion 
 12.29  of a nonqualified distribution is subject to a penalty an 
 12.30  additional tax.  For purposes of this subdivision, "earnings 
 12.31  portion" means the ratio of the earnings in the account to the 
 12.32  total account balance, immediately prior to the distribution, 
 12.33  multiplied by the distribution.  The penalty must be withheld 
 12.34  from the total amount of any distribution.  
 12.35     Sec. 27.  [136G.14] [MINOR TRUST ACCOUNTS.] 
 12.36     (a) This section applies to a plan account in which funds 
 13.1   of a minor trust account are invested. 
 13.2      (b) The account owner is the custodian of the minor trust 
 13.3   account.  The account owner may not be changed to another 
 13.4   custodian or to the beneficiary unless a court order directing 
 13.5   the change of ownership is provided to the plan administrator.  
 13.6   The custodian must sign all forms and requests submitted to the 
 13.7   plan administrator in the custodian's representative capacity.  
 13.8   The custodian must notify the plan administrator in writing when 
 13.9   the beneficiary becomes legally entitled to be the account 
 13.10  owner.  An account owner under this section may not select a 
 13.11  contingent account owner. 
 13.12     (c) The beneficiary of an account under this section may 
 13.13  not be changed.  If the beneficiary dies, assets in a plan 
 13.14  account become the property of the beneficiary's estate.  Funds 
 13.15  in an account must not be transferred or rolled over to another 
 13.16  account owner or to an account for another beneficiary.  A 
 13.17  nonqualified distribution from an account must be used for the 
 13.18  benefit of the beneficiary. 
 13.19     Sec. 28.  Minnesota Statutes 2002, section 299A.45, 
 13.20  subdivision 2, is amended to read: 
 13.21     Subd. 2.  [AWARD AMOUNT.] (a) The amount of the award 
 13.22  is the lesser of: 
 13.23     (1) for public institutions, the actual tuition and fees 
 13.24  charged by the institution; or 
 13.25     (2) for private institutions the lesser of (i) the actual 
 13.26  tuition and fees charged by the institution; or (ii) the highest 
 13.27  tuition and fees charged by a public institution in Minnesota 
 13.28     (2) the tuition maximums established in law. 
 13.29     (b) An award under this subdivision must not affect a 
 13.30  recipient's eligibility for a state grant under section 136A.121.
 13.31     Sec. 29.  [LEARN AND EARN; PROGRAM INCENTIVES.] 
 13.32     (a) Each participating student shall receive a monetary 
 13.33  stipend for each hour spent in a program component activity, 
 13.34  plus a bonus upon completion of each component during each year 
 13.35  of the program. 
 13.36     (b) An additional amount equal to or greater than each 
 14.1   student's earned stipends and bonuses must be deposited for the 
 14.2   student in a postsecondary opportunities account, established by 
 14.3   the commissioner through the higher education services office.  
 14.4   A student may, upon graduation from high school, use the funds 
 14.5   accumulated for the student toward the costs, including tuition, 
 14.6   books, and lab fees, of attending a Minnesota postsecondary 
 14.7   institution or in a career training program.  Funds accumulated 
 14.8   for a student shall be available to the student from the time 
 14.9   the student graduates from high school until ten years after the 
 14.10  date the student entered the learn and earn graduation 
 14.11  achievement program.  After ten years, the commissioner shall 
 14.12  close the student's account and any remaining money in the 
 14.13  account shall revert to the general fund. 
 14.14     The commissioner shall establish a procedure for providing 
 14.15  the monetary stipends and bonuses to students.  The commissioner 
 14.16  may delegate this authority to grantees. 
 14.17     Sec. 30.  [REPEALER.] 
 14.18     Minnesota Statutes 2002, sections 136A.124; and 136G.03, 
 14.19  subdivision 25, are repealed.