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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

                            CHAPTER 133-S.F.No. 675 
                  An act relating to higher education; appropriating 
                  money for educational and related purposes to the 
                  higher education services office, board of trustees of 
                  the Minnesota state colleges and universities, board 
                  of regents of the university of Minnesota, and Mayo 
                  Medical Foundation, with certain conditions; making 
                  various changes to the state grant program and the 
                  college savings plan; providing for organizational, 
                  administrative, and other changes at the higher 
                  education services office and the Minnesota state 
                  colleges and universities; authorizing revenue bonds; 
                  amending Minnesota Statutes 2002, sections 41D.01, 
                  subdivision 4; 124D.42, subdivision 3; 135A.14, by 
                  adding a subdivision; 136A.01, subdivision 1; 
                  136A.011, subdivision 2; 136A.03; 136A.031, 
                  subdivisions 2, 5; 136A.08, subdivision 3; 136A.101, 
                  subdivision 5a; 136A.121, subdivisions 6, 7, 9, 9a, 
                  13; 136A.125, subdivisions 2, 4; 136A.171; 136A.29, 
                  subdivision 9; 136A.69; 136F.12; 136F.40, subdivision 
                  2; 136F.45, subdivisions 1, 2; 136F.581, subdivisions 
                  1, 2; 136F.59, subdivision 3; 136F.60, subdivision 3; 
                  136G.01; 136G.03, subdivision 31, by adding 
                  subdivisions; 136G.05, subdivisions 4, 5, 10; 136G.09, 
                  subdivisions 1, 2, 6, 7, 8, 9; 136G.11, subdivisions 
                  1, 2, 3, 9, 13; 136G.13, subdivisions 1, 3; 137.022, 
                  subdivision 3; 137.0245, subdivision 2; 137.44; 
                  299A.45, subdivision 2; proposing coding for new law 
                  in Minnesota Statutes, chapters 136F; 136G; repealing 
                  Minnesota Statutes 2002, sections 15A.081, subdivision 
                  7b; 124D.95; 136A.1211; 136A.122; 136A.124; 136F.13; 
                  136F.56; 136F.582; 136F.59, subdivision 2; 136G.03, 
                  subdivision 25. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                   ARTICLE 1
                                 APPROPRIATIONS
        Section 1.  [HIGHER EDUCATION APPROPRIATIONS.] 
           The sums in the columns marked "APPROPRIATIONS" are 
        appropriated from the general fund, or other named fund, to the 
        agencies and for the purposes specified in this article.  The 
        listing of an amount under the figure "2004" or "2005" in this 
        article indicates that the amount is appropriated to be 
        available for the fiscal year ending June 30, 2004, or June 30, 
        2005, respectively.  "The first year" is fiscal year 2004.  "The 
        second year" is fiscal year 2005.  "The biennium" is fiscal 
        years 2004 and 2005. 
                                SUMMARY BY FUND 
                                  2004          2005           TOTAL
        General            $1,284,558,000 $1,274,154,000 $2,558,712,000
        Health Care
        Access                  2,157,000      2,157,000      4,314,000
                         SUMMARY BY AGENCY - ALL FUNDS
                                  2004          2005           TOTAL
        Higher Education Services Office
                              175,002,000    175,002,000    350,004,000
        Board of Trustees of the Minnesota
        State Colleges and Universities
                              560,881,000    547,694,000  1,108,575,000
        Board of Regents of the University
        of Minnesota
                              549,441,000    552,224,000  1,101,665,000
        Mayo Medical Foundation
                                1,391,000      1,391,000      2,782,000
                                                  APPROPRIATIONS 
                                               Available for the Year 
                                                   Ending June 30 
                                                  2004         2005 
        Sec. 2.  HIGHER EDUCATION
        SERVICES OFFICE
        Subdivision 1. Total
        Appropriation                     $  175,002,000 $  175,002,000 
        The amounts that may be spent from this 
        appropriation for each purpose are 
        specified in the following subdivisions.
        Subd. 2.  State Grants
           140,575,000    140,575,000
        For the biennium, the private 
        institution tuition maximum shall be 
        $8,983 in the first year and $8,983 in 
        the second year for four-year 
        institutions and $6,913 in the first 
        year and $6,913 in the second year for 
        two-year institutions. 
        This appropriation contains money to 
        provide educational benefits to 
        dependent children under age 23 and the 
        spouses of public safety officers 
        killed in the line of duty pursuant to 
        Minnesota Statutes 2002, section 
        299A.45.  
        This appropriation contains money to 
        set the living and miscellaneous 
        expense allowance at $5,205 in each 
        year. 
        Subd. 3.  Interstate Tuition Reciprocity
             3,600,000      3,600,000
        If the appropriation in this 
        subdivision for either year is 
        insufficient, the appropriation for the 
        other year is available to meet 
        reciprocity contract obligations. 
        Subd. 4.  State Work Study
            12,444,000     12,444,000
        Subd. 5.  Child Care Grants
             4,743,000      4,743,000
        Subd. 6.  Minitex 
             4,381,000      4,381,000
        Subd. 7.  MnLINK
               450,000        450,000
        The base appropriation for MnLINK 
        operations is $400,000 each year in 
        fiscal years 2006 and 2007. 
        Any unexpended funds from the 
        appropriation in Laws 1997, chapter 
        183, article 1, section 2, subdivision 
        8, shall cancel on June 30, 2005. 
        Subd. 8.  Learning Network  
        of Minnesota
             4,829,000      4,829,000 
        Subd. 9.  Income Contingent Loans
        The higher education services office 
        shall administer an income-contingent 
        loan repayment program to assist 
        graduates of Minnesota schools in 
        medicine, dentistry, pharmacy, 
        chiropractic medicine, public health, 
        and veterinary medicine, and Minnesota 
        residents graduating from optometry and 
        osteopathy programs.  Applicant data 
        collected by the office for this 
        program may be disclosed to a consumer 
        credit reporting agency under the same 
        conditions as those that apply to the 
        supplemental loan program under 
        Minnesota Statutes, section 136A.162.  
        No new applicants may be accepted after 
        June 30, 1995. 
        Subd. 10.  Minnesota College 
        Savings Plan
             1,120,000      1,120,000 
        Subd. 11.  Agency 
        Administration
             2,860,000      2,860,000 
        This appropriation includes $125,000 
        each year for the student and parent 
        information program under Minnesota 
        Statutes, section 136A.87; $184,000 
        each year for the Get Ready program; 
        and $255,000 each year for the college 
        intervention program to foster 
        postsecondary attendance by providing 
        outreach services to historically 
        underserved groups of Minnesota 
        elementary and secondary students.  The 
        office may contract with other agencies 
        or nonprofit organizations for specific 
        services specifically funded by this 
        paragraph. 
        This appropriation contains $100,000 
        each year for grants to increase 
        campus-community collaboration and 
        service learning statewide.  For every 
        $1 in state funding, grant recipients 
        must contribute $2 in campus or 
        community-based support.  
        Subd. 12.  Balances Forward 
        A balance in the first year under this 
        section does not cancel, but is 
        available for the second year. 
        Subd. 13.  Transfers 
        The higher education services office 
        may transfer unencumbered balances from 
        the appropriations in this section to 
        the state grant appropriation and the 
        interstate tuition reciprocity 
        appropriation. 
        Subd. 14.  Reporting
        The higher education services office 
        shall collect data monthly from 
        institutions disbursing state financial 
        aid.  The data collected shall include, 
        but is not limited to, expenditures by 
        type to date and unexpended balances. 
        The higher education services office 
        shall evaluate and report monthly on 
        state financial aid expenditures and 
        unexpended balances to the chairs of 
        the higher education finance committees 
        of the senate and house of 
        representatives and the commissioner of 
        finance.  By July 15, December 1, 
        February 15, and April 15, the services 
        office shall provide updated state 
        grant spending projections taking into 
        account the most current and projected 
        enrollment and tuition and fee 
        information, economic conditions, and 
        other relevant factors.  Before 
        submitting state grant spending 
        projections, the office shall meet and 
        consult with representatives of public 
        and private postsecondary education, 
        the department of finance, governor's 
        office, legislative staff, and 
        financial aid administrators.  The 
        board of regents of the University of 
        Minnesota, the board of trustees of the 
        Minnesota state colleges and 
        universities, and private institutions 
        that participate in the state grant 
        program shall submit tuition and fee 
        information to the higher education 
        services office no later than July 1 of 
        each year. 
        The higher education services office 
        shall by January 15, 2004, and by 
        November 30, 2004, report on the impact 
        on students of the changes in financial 
        aid policies made by this act.  
        Sec. 3.  BOARD OF TRUSTEES OF THE
        MINNESOTA STATE COLLEGES AND UNIVERSITIES
        Subdivision 1.  Total
        Appropriation                        560,881,000    547,694,000 
        The amounts that may be spent from this 
        appropriation for each purpose are 
        specified in the following subdivisions.
        Subd. 2.  Estimated Expenditures
        and Appropriations 
        The legislature estimates that 
        instructional expenditures will be 
        $750,105,000 in the first year and 
        $730,324,000 in the second year.  The 
        legislature estimates that 
        noninstructional expenditures will be 
        $60,811,000 in the first year and 
        $60,811,000 in the second year. 
        This appropriation includes money for a 
        grant to Minnesota State University, 
        Mankato, for the talented youth 
        mathematics program.  
        During the biennium, neither the board 
        nor campuses shall plan or develop 
        doctoral level programs or degrees 
        until after they have received the 
        recommendation of the house and senate 
        committees on education, finance, and 
        ways and means. 
        During the biennium, technical and 
        consolidated colleges shall make use of 
        instructional advisory committees 
        consisting of employers, students, and 
        instructors.  The instructional 
        advisory committee shall be consulted 
        when a technical program is proposed to 
        be created, modified, or eliminated.  
        If a decision is made to eliminate a 
        program, a college shall adequately 
        notify students and make plans to 
        assist students affected by the closure.
        In each year, the board of trustees 
        shall increase the percentage of the 
        total general fund expenditures for 
        direct instruction and academic 
        support, as reported in the federal 
        Integrated Postsecondary Education Data 
        System (IPEDS). 
        Subd. 3.  Accountability 
        The board shall continue to submit the 
        data and information enumerated in Laws 
        2001, First Special Session chapter 1, 
        article 1, section 3, subdivision 3, in 
        the accountability report currently 
        under development.  For the purpose of 
        those reports, a first generation 
        student is a student neither of whose 
        parents received any postsecondary 
        education. 
        Sec. 4.  BOARD OF REGENTS OF THE 
        UNIVERSITY OF MINNESOTA 
        Subdivision 1.  Total
        Appropriation                        549,441,000    552,224,000 
        The amounts that may be spent from this 
        appropriation for each purpose are 
        specified in the following subdivisions.
        Subd. 2.  Operations and
        Maintenance
           483,917,000    486,700,000
        Estimated Expenditures 
        and Appropriations 
        The legislature estimates that 
        instructional expenditures will be 
        $368,020,000 in the first year and 
        $371,860,000 in the second year.  The 
        legislature estimates that 
        noninstructional expenditures will be 
        $238,571,000 the first year and 
        $238,793,000 in the second year. 
        Subd. 3.  Health Care Access Fund
             2,157,000      2,157,000
        This appropriation is from the health 
        care access fund for primary care 
        education initiatives. 
        Subd. 4.  Special
        Appropriation                         63,367,000     63,367,000
        (a) Agriculture and Extension Service 
            50,625,000     50,625,000
        This appropriation is for the 
        Agricultural Experiment Station, 
        Minnesota Extension Service. 
        Any salary increases granted by the 
        University to personnel paid from the 
        Minnesota Extension appropriation must 
        not result in a reduction of the county 
        responsibility for the salary payments. 
        During the biennium, the University 
        shall maintain an advisory council 
        system for each experiment station.  
        The advisory councils must be broadly 
        representative of the range in size and 
        income distribution of farms and 
        agribusinesses and must not 
        disproportionately represent those from 
        the upper half of the size and income 
        distributions.  
        The university must continue to provide 
        support for the rapid agricultural 
        response fund, and sustainable and 
        organic agriculture initiatives 
        including, but not limited to, the 
        alternative swine systems program. 
        (b) Health Sciences 
             4,929,000      4,929,000
        This appropriation is for the rural 
        physicians associates program, the 
        Veterinary Diagnostic Laboratory, 
        health sciences research, dental care, 
        and the Biomedical Engineering Center. 
        (c) Institute of Technology  
             1,387,000      1,387,000
        This appropriation is for the 
        Geological Survey and the Talented 
        Youth Mathematics Program. 
        (d) System Specials 
             6,426,000      6,426,000
        This appropriation is for general 
        research, student loans matching money, 
        industrial relations education, Natural 
        Resources Research Institute, Center 
        for Urban and Regional Affairs, Bell 
        Museum of Natural History, and the 
        Humphrey exhibit. 
        Subd. 5.  Academic Health Center
        The appropriation to the academic 
        health center under Minnesota Statutes, 
        chapter 297F, if enacted, is 
        anticipated to be $22,515,000 in the 
        first year and $22,403,000 in the 
        second year. 
        Subd. 6.  Accountability 
        The board shall continue to submit the 
        data and information enumerated in Laws 
        2001, First Special Session chapter 1, 
        article 1, section 4, subdivision 5, in 
        the board's university plan, 
        performance, and accountability 
        report.  For the purpose of those 
        reports, a first generation student is 
        a student neither of whose parents 
        received any postsecondary education.  
        Sec. 5.  MAYO MEDICAL FOUNDATION 
        Subdivision 1.  Total
        Appropriation                           1,391,000       1,391,000
        The amounts that may be spent from this 
        appropriation for each purpose are 
        specified in the following subdivisions.
        Subd. 2.  Medical School
               514,000        514,000
        The state of Minnesota must pay a 
        capitation each year for each student 
        who is a resident of Minnesota.  The 
        appropriation may be transferred 
        between years of the biennium to 
        accommodate enrollment fluctuations. 
        The legislature intends that during the 
        biennium the Mayo foundation use the 
        capitation money to increase the number 
        of doctors practicing in rural areas in 
        need of doctors.  
        Subd. 3.  Family Practice and
        Graduate Residency Program
               531,000        531,000
        The state of Minnesota must pay a 
        capitation of 27 residents each year. 
        Subd. 4.  St. Cloud Hospital-Mayo 
        Family Practice Residency Program
               346,000        346,000
        This appropriation is to the Mayo 
        foundation to support 12 resident 
        physicians each year in the St. Cloud 
        Hospital-Mayo Family Practice Residency 
        program.  The program shall prepare 
        doctors to practice primary care 
        medicine in the rural areas of the 
        state.  It is intended that this 
        program will improve health care in 
        rural communities, provide affordable 
        access to appropriate medical care, and 
        manage the treatment of patients in a 
        more cost-effective manner. 
        Sec. 6.  SELF LOAN RESERVE FUND TRANSFER
        Notwithstanding any law to the 
        contrary, by June 30, 2003, the 
        commissioner of finance shall transfer 
        $30,000,000 of uncommitted balances in 
        the SELF loan reserve fund, under 
        Minnesota Statutes, section 136A.1701, 
        to the budget reserve account in the 
        general fund.  By June 30, 2007, the 
        commissioner of finance shall return 
        this amount to the SELF loan reserve 
        fund.  The amount necessary to make the 
        return transfer is appropriated from 
        the general fund to the commissioner of 
        finance for the fiscal year ending June 
        30, 2007. 
        [EFFECTIVE DATE.] This section is 
        effective the day following final 
        enactment.  
        Sec. 7.  POSTSECONDARY SYSTEMS 
        As part of the boards' biennial budget 
        requests, the board of trustees of the 
        Minnesota state colleges and 
        universities and the board of regents 
        of the University of Minnesota shall 
        report to the legislature on progress 
        under the master academic plan for the 
        metropolitan area.  The report must 
        include a discussion of coordination 
        and duplication of program offerings, 
        developmental and remedial education, 
        credit transfers within and between the 
        postsecondary systems, and planning and 
        delivery of coordinated programs.  In 
        order to better achieve the goal of a 
        more integrated, effective, and 
        seamless postsecondary education system 
        in Minnesota, the report must also 
        identify statewide efforts at 
        integration and cooperation between the 
        postsecondary systems. 
        Sec. 8.  K-12 TEACHER INSTRUCTION AND 
        LICENSURE SURVEY 
        The Minnesota Association of Colleges 
        of Teacher Education is requested to 
        collect data from each of its member 
        institutions that measure the 
        involvement of teacher education 
        programs and their faculty with 
        Minnesota K-12 schools.  The data shall 
        include at least:  current Minnesota 
        licensure status of faculty, K-12 
        teaching experience of college faculty 
        under that licensure within the last 
        five years, descriptions of college and 
        faculty collaborations with K-12 
        teachers and students, and information 
        on other projects involving higher 
        education in K-12 schools.  The data 
        shall be presented to the education 
        policy and finance committees of the 
        legislature by February 15, 2004. 

                                   ARTICLE 2
                                 POLICY CHANGES
           Section 1.  Minnesota Statutes 2002, section 41D.01, 
        subdivision 4, is amended to read: 
           Subd. 4.  [EXPIRATION.] This section expires on June 
        30, 2003 2008. 
           Sec. 2.  Minnesota Statutes 2002, section 135A.14, is 
        amended by adding a subdivision to read: 
           Subd. 6a.  [MENINGITIS INFORMATION.] Each public and 
        private postsecondary institution shall provide information on 
        the risks of meningococcal disease and on the availability and 
        effectiveness of any vaccine to each individual who is a 
        first-time enrollee and who resides in on-campus student 
        housing.  The institution may provide the information in an 
        electronic format.  The institution must consult with the 
        department of health on the preparation of the informational 
        materials provided under this subdivision. 
           [EFFECTIVE DATE.] This section is effective June 1, 2003.  
           Sec. 3.  Minnesota Statutes 2002, section 136A.01, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CREATION.] An office for higher education 
        in the state of Minnesota, to be known as the Minnesota higher 
        education services office or HESO, is created with a director 
        appointed by the governor with the advice and consent of the 
        senate and serving at the pleasure of the governor. 
           [EFFECTIVE DATE.] This section is effective when a vacancy 
        occurs in the position of director or December 30, 2003, 
        whichever is first. 
           Sec. 4.  Minnesota Statutes 2002, section 136A.011, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DUTIES.] The council shall: 
           (1) appoint the director of the higher education services 
        office, as provided in section 136A.03; 
           (2) provide advice and review regarding the performance of 
        the higher education services office in its duties and in any 
        policies, procedures, or rules the office prescribes to perform 
        its duties; and 
           (3) (2) communicate with and make recommendations to the 
        governor and the legislature. 
           Sec. 5.  Minnesota Statutes 2002, section 136A.03, is 
        amended to read: 
           136A.03 [EXECUTIVE OFFICERS; EMPLOYEES.] 
           The director of the higher education services office shall 
        possess the powers and perform the duties as prescribed by the 
        higher education services council and be under the 
        administrative control of the director.  The director shall 
        serve in the unclassified service of the state civil service.  
        The director, or the director's designated representative, on 
        behalf of the office is authorized to sign contracts and execute 
        all instruments necessary or appropriate to carry out the 
        purposes of sections 136A.01 to 136A.178 for the office.  The 
        salary of the director shall be established by the higher 
        education services council according to section 15A.0815.  The 
        director shall be a person qualified by training or experience 
        in the field of higher education or in financial aid 
        administration.  The director may appoint other professional 
        employees who shall serve in the unclassified service of the 
        state civil service.  All other employees shall be in the 
        classified civil service.  
           An officer or professional employee appointed by the 
        director to serve in the unclassified service as provided in 
        this section, is a person who has studied higher education or a 
        related field at the graduate level or has similar experience 
        and who is qualified for a career in financial aid and other 
        aspects of higher education and for activities in keeping with 
        the planning and administrative responsibilities of the office 
        and who is appointed to assume responsibility for administration 
        of educational programs or research in matters of higher 
        education. 
           Sec. 6.  Minnesota Statutes 2002, section 136A.031, 
        subdivision 2, is amended to read: 
           Subd. 2.  [HIGHER EDUCATION ADVISORY COUNCIL.] A higher 
        education advisory council (HEAC) is established.  The HEAC is 
        composed of the president and the senior vice-president for 
        academic affairs of the University of Minnesota or designee; the 
        chancellor of the Minnesota state colleges and universities or 
        designee; the associate vice-chancellors of the state 
        universities, community colleges, and technical colleges; the 
        commissioner of children, families, and learning; the president 
        of the private college council; and a representative from the 
        Minnesota association of private post-secondary schools; and a 
        member appointed by the governor.  The HEAC shall (1) bring to 
        the attention of the higher education services council any 
        matters that the HEAC deems necessary, and (2) review and 
        comment upon matters before the council.  The council shall 
        refer all proposals to the HEAC before submitting 
        recommendations to the governor and the legislature.  The 
        council shall provide time for a report from the HEAC at each 
        meeting of the council. 
           Sec. 7.  Minnesota Statutes 2002, section 136A.031, 
        subdivision 5, is amended to read: 
           Subd. 5.  [EXPIRATION.] Notwithstanding section 15.059, 
        subdivision 5a 5, the advisory groups established in this 
        section expire on June 30, 2003 2005. 
           Sec. 8.  Minnesota Statutes 2002, section 136A.101, 
        subdivision 5a, is amended to read: 
           Subd. 5a.  [ASSIGNED FAMILY RESPONSIBILITY.] "Assigned 
        family responsibility" means the amount of a family contribution 
        to a student's cost of attendance, as determined by a federal 
        need analysis, except that, beginning for the 1998-1999 academic 
        year, up to $25,000 in savings and other assets shall be 
        subtracted from the federal calculation of net worth before 
        determining the contribution.  For dependent students, the 
        assigned family responsibility is the parental contribution.  
        For independent students with dependents other than a spouse, 
        the assigned family responsibility is the student contribution. 
        For independent students without dependents other than a spouse, 
        the assigned family responsibility is 80 72 percent of the 
        student contribution.  Beginning in fiscal year 2002, The 
        assigned family responsibility for all other independent 
        students is reduced an additional ten 90 percent of the student 
        contribution. 
           Sec. 9.  Minnesota Statutes 2002, section 136A.121, 
        subdivision 6, is amended to read: 
           Subd. 6.  [COST OF ATTENDANCE.] (a) The recognized cost of 
        attendance consists of allowances specified in law for living 
        and miscellaneous expenses, and an allowance for tuition and 
        fees equal to the lesser of the actual average tuition and fees 
        charged by the institution, or the private institution tuition 
        and fee maximums established in law. 
           (b) For the purpose of paragraph (a), the private 
        institution tuition and fee maximum for two- and four-year, 
        private, residential, liberal arts, degree-granting colleges and 
        universities must be the same. 
           (c) For a student registering for less than full time, the 
        office shall prorate the living and miscellaneous expense 
        allowance cost of attendance to the actual number of credits for 
        which the student is enrolled. 
           The recognized cost of attendance for a student who is 
        confined to a Minnesota correctional institution shall consist 
        of the tuition and fee component in paragraph (a), with no 
        allowance for living and miscellaneous expenses. 
           For the purpose of this subdivision, "fees" include only 
        those fees that are mandatory and charged to full-time resident 
        students attending the institution. 
           Sec. 10.  Minnesota Statutes 2002, section 136A.121, 
        subdivision 7, is amended to read: 
           Subd. 7.  [INSUFFICIENT APPROPRIATION.] If the amount 
        appropriated is determined by the office to be insufficient to 
        make full awards to applicants under subdivision 5, before any 
        award for that year has been disbursed, awards must be reduced 
        by: 
           (1) adding a surcharge to the applicant's assigned family 
        responsibility, as defined in section 136A.101, subdivision 5a; 
        and 
           (2) a percentage increase in the applicant's assigned 
        student responsibility, as defined in subdivision 5. 
        The reduction under clauses (1) and (2) must be equal dollar 
        amounts. 
           Sec. 11.  Minnesota Statutes 2002, section 136A.121, 
        subdivision 9, is amended to read: 
           Subd. 9.  [AWARDS.] An undergraduate student who meets the 
        office's requirements is eligible to apply for and receive a 
        grant in any year of undergraduate study unless the student has 
        obtained a baccalaureate degree or previously has been enrolled 
        full time or the equivalent for ten eight semesters or the 
        equivalent, excluding courses taken from a Minnesota school or 
        post-secondary institution which is not participating in the 
        state grant program and from which a student transferred no 
        credit.  A student enrolled in a two-year program at a four-year 
        institution is only eligible for the tuition and fee maximums 
        established by law for two-year institutions. 
           Sec. 12.  Minnesota Statutes 2002, section 136A.121, 
        subdivision 9a, is amended to read: 
           Subd. 9a.  [FULL-YEAR GRANTS.] Students may receive state 
        grants for four consecutive quarters or three consecutive 
        semesters during the course of a single fiscal year.  In 
        calculating a state grant for the fourth quarter or third 
        semester, the office must use the same calculation as it would 
        for any other term, except that the calculation must subtract 
        any federal Pell grant for which a student would be eligible 
        even if the student has exhausted the Pell grant for that fiscal 
        year. 
           Sec. 13.  Minnesota Statutes 2002, section 136A.121, 
        subdivision 13, is amended to read: 
           Subd. 13.  [DEADLINE.] The office shall accept applications 
        for state grants until February 15 and may establish a deadline 
        for the acceptance of applications that is later than February 
        15 deadline for the office to accept applications for state 
        grants for a term, is 14 days after the start of that term. 
           Sec. 14.  Minnesota Statutes 2002, section 136A.125, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ELIGIBLE STUDENTS.] An applicant is eligible for 
        a child care grant if the applicant: 
           (1) is a resident of the state of Minnesota; 
           (2) has a child 12 years of age or younger, or 14 years of 
        age or younger who is handicapped as defined in section 125A.02, 
        and who is receiving or will receive care on a regular basis 
        from a licensed or legal, nonlicensed caregiver; 
           (3) is income eligible as determined by the office's 
        policies and rules, but is not a recipient of assistance from 
        the Minnesota family investment program; 
           (4) has not earned a baccalaureate degree and has been 
        enrolled full time less than ten eight semesters or the 
        equivalent; 
           (5) is pursuing a nonsectarian program or course of study 
        that applies to an undergraduate degree, diploma, or 
        certificate; 
           (6) is enrolled at least half time in an eligible 
        institution; and 
           (7) is in good academic standing and making satisfactory 
        academic progress. 
           Sec. 15.  Minnesota Statutes 2002, section 136A.125, 
        subdivision 4, is amended to read: 
           Subd. 4.  [AMOUNT AND LENGTH OF GRANTS.] The amount of a 
        child care grant must be based on: 
           (1) the income of the applicant and the applicant's spouse; 
           (2) the number in the applicant's family, as defined by the 
        office; and 
           (3) the number of eligible children in the applicant's 
        family.  
           The maximum award to the applicant shall be $2,600 $2,200 
        for each eligible child per academic year, except that the 
        campus financial aid officer may apply to the office for 
        approval to increase grants by up to ten percent to compensate 
        for higher market charges for infant care in a community.  The 
        office shall develop policies to determine community market 
        costs and review institutional requests for compensatory grant 
        increases to ensure need and equal treatment.  The office shall 
        prepare a chart to show the amount of a grant that will be 
        awarded per child based on the factors in this subdivision.  The 
        chart shall include a range of income and family size. 
           Sec. 16.  Minnesota Statutes 2002, section 136A.29, 
        subdivision 9, is amended to read: 
           Subd. 9.  The authority is authorized and empowered to 
        issue revenue bonds whose aggregate principal amount at any time 
        shall not exceed $650,000,000 $800,000,000 and to issue notes, 
        bond anticipation notes, and revenue refunding bonds of the 
        authority under the provisions of sections 136A.25 to 136A.42, 
        to provide funds for acquiring, constructing, reconstructing, 
        enlarging, remodeling, renovating, improving, furnishing, or 
        equipping one or more projects or parts thereof. 
           Sec. 17.  Minnesota Statutes 2002, section 136A.69, is 
        amended to read: 
           136A.69 [FEES.] 
           The office shall collect reasonable registration fees that 
        are sufficient to recover, but do not exceed, its costs of 
        administering the registration program.  The office shall charge 
        $1,100 for initial registration fees and $950 for annual renewal 
        fees. 
           Sec. 18.  Minnesota Statutes 2002, section 136F.12, is 
        amended to read: 
           136F.12 [FOND DU LAC CAMPUS.] 
           Subdivision 1.  [UNIQUE MISSIONS.] The Fond du Lac campus 
        has a unique mission among two-year colleges to serve the lower 
        division general education needs in Carlton and south St. Louis 
        counties, and the education needs of American Indians throughout 
        the state and especially in northern Minnesota.  The campus has 
        a further unique mission to provide programs in support of its 
        federal land grant status.  Accordingly, while the college is 
        governed by the board of trustees, its governance is 
        accomplished in conjunction with the board of directors of Fond 
        du Lac tribal college.  
           Subd. 2.  [SELECTED PROGRAMS.] Notwithstanding section 
        135A.052, subdivision 1, to better meet the education needs of 
        Minnesota's American Indian students, and in furtherance of the 
        unique missions provided in subdivision 1, Fond du Lac tribal 
        and community college may offer a baccalaureate program in 
        elementary education, as approved by the board of trustees of 
        the Minnesota state colleges and universities, and the board of 
        directors of Fond du Lac tribal and community college. 
           Subd. 3.  [BARGAINING UNIT ASSIGNMENT.] Notwithstanding 
        section 179A.10, subdivision 2, the state university 
        instructional unit shall include faculty who teach upper 
        division courses at the Fond du Lac tribal and community college.
           Sec. 19.  Minnesota Statutes 2002, section 137.022, 
        subdivision 3, is amended to read: 
           Subd. 3.  [ENDOWED CHAIR ACCOUNT.] (a) For purposes of this 
        section, the permanent university fund has three accounts.  The 
        sources of the money in the endowed mineral research and 
        scholarship accounts are set out in paragraph (b) and 
        subdivision 4.  All money in the fund that is not otherwise 
        allocated is in the endowed chair account.  The income from the 
        endowed chair account must be used, and capital gains allocated 
        to that account may be used, to provide endowment support for 
        professorial chairs in academic disciplines.  The endowment 
        support for the chairs from the income and the capital gains 
        must not total more than six percent per year of the 36-month 
        trailing average market value of the endowed chair account of 
        the fund, as computed quarterly or otherwise as directed by the 
        regents.  The endowment support from the income and the capital 
        gains must not provide more than half the sum of the endowment 
        support for all university chairs and professorships endowed, 
        with nonstate sources providing the remainder.  The endowment 
        support from the income and the capital gains may provide more 
        than half the endowment support of an individual chair.  
           (b) If any portion of the annual appropriation of the 
        income is not used for the purposes specified in paragraph (a) 
        or subdivision 4, that portion lapses and must be added to the 
        principal of the three accounts of the permanent university fund 
        in proportion to the market value of each account. 
           Sec. 20.  Minnesota Statutes 2002, section 137.44, is 
        amended to read: 
           137.44 [HEALTH PROFESSIONAL EDUCATION BUDGET PLAN.] 
           The board of regents is requested to adopt a biennial 
        budget plan for making expenditures from the medical education 
        endowment fund funds dedicated for the instructional costs of 
        health professional programs at publicly funded academic health 
        centers and affiliated teaching institutions.  The budget plan 
        may be submitted as part of the University of Minnesota's 
        biennial budget request. 
           Sec. 21.  [REPEALER.] 
           Minnesota Statutes 2002, sections 15A.081, subdivision 7b; 
        124D.95; 136A.1211; 136A.122; and 136A.124, are repealed. 

                                   ARTICLE 3
                               HESO HOUSEKEEPING
           Section 1.  Minnesota Statutes 2002, section 124D.42, 
        subdivision 3, is amended to read: 
           Subd. 3.  [POSTSERVICE BENEFIT.] (a) Each eligible 
        organization must agree to provide to every participant who 
        fulfills the terms of a contract under subdivision 2, a 
        nontransferable postservice benefit.  The benefit must be not 
        less than $4,725 per year of full-time service or prorated for 
        part-time service or for partial service of at least 900 hours.  
        Upon signing a contract under subdivision 2, each eligible 
        organization must deposit funds to cover the full amount of 
        postservice benefits obligated, except for national education 
        awards that are deposited in the national service trust fund.  
        Funds encumbered in fiscal years 1994 and 1995 for postservice 
        benefits must be available until the participants for whom the 
        funds were encumbered are no longer eligible to draw benefits.  
           (b) Nothing in this subdivision prevents a grantee 
        organization from using funds from nonfederal or nonstate 
        sources to increase the value of postservice benefits above the 
        value described in paragraph (a). 
           (c) The higher education services office must establish an 
        account for depositing funds for postservice benefits received 
        from eligible organizations.  If a participant does not complete 
        the term of service or, upon successful completion of the 
        program, does not use a postservice benefit according to 
        subdivision 4 within seven years, the amount of the postservice 
        benefit must be refunded to the eligible organization or, at the 
        organization's discretion, dedicated to another eligible 
        participant.  Interest earned on funds deposited in the 
        postservice benefit account is appropriated to the higher 
        education services office for the costs of administering the 
        postservice benefits accounts.  
           (d) The state must provide an additional postservice 
        benefit to any participant who successfully completes the 
        program.  The benefit must be a credit of five points to be 
        added to the competitive open rating of a participant who 
        obtains a passing grade on a civil service examination under 
        chapter 43A.  The benefit is available for five years after 
        completing the community service. 
           Sec. 2.  Minnesota Statutes 2002, section 136A.08, 
        subdivision 3, is amended to read: 
           Subd. 3.  [WISCONSIN.] A higher education reciprocity 
        agreement with the state of Wisconsin may include provision for 
        the transfer of funds between Minnesota and Wisconsin provided 
        that an income tax reciprocity agreement between Minnesota and 
        Wisconsin is in effect for the period of time included under the 
        higher education reciprocity agreement.  If this provision is 
        included, the amount of funds to be transferred shall be 
        determined according to a formula which is mutually acceptable 
        to the office and a duly designated agency representing 
        Wisconsin.  The formula shall recognize differences in tuition 
        rates between the two states and the number of students 
        attending institutions in each state under the agreement.  Any 
        payments to Minnesota by Wisconsin shall be deposited by the 
        office in the general fund of the state treasury.  The amount 
        required for the payments shall be certified by the director of 
        the office to the commissioner of finance annually. 
           Sec. 3.  Minnesota Statutes 2002, section 136A.171, is 
        amended to read: 
           136A.171 [REVENUE BONDS; ISSUANCE; PROCEEDS.] 
           The higher education services office may issue revenue 
        bonds to obtain funds for loans made in accordance with the 
        provisions of this chapter.  The aggregate amount of revenue 
        bonds, issued directly by the office, outstanding at any one 
        time, not including refunded bonds or otherwise defeased or 
        discharged bonds, shall not exceed $550,000,000 $850,000,000.  
        Proceeds from the issuance of bonds may be held and invested by 
        the office pending disbursement in the form of loans.  All 
        interest and profits from the investments shall inure to the 
        benefit of the office and shall be available to the office for 
        the same purposes as the proceeds from the sale of revenue bonds 
        including, but not limited to, costs incurred in administering 
        loans under this chapter and loan reserve funds. 
           Sec. 4.  Minnesota Statutes 2002, section 136G.01, is 
        amended to read: 
           136G.01 [PLAN ESTABLISHED.] 
           A college savings plan known as the Minnesota college 
        savings plan is established.  In establishing this plan, the 
        legislature seeks to encourage individuals to save for 
        post-secondary education by: 
           (1) providing a qualified state tuition plan under federal 
        tax law; 
           (2) providing matching grants for contributions to the 
        program by low- and middle-income families; and 
           (3) by encouraging individuals, foundations, and businesses 
        to provide additional grants to participating students. 
           Sec. 5.  Minnesota Statutes 2002, section 136G.03, is 
        amended by adding a subdivision to read: 
           Subd. 4a.  [APPLICATION.] "Application" means the form 
        executed by a prospective account owner to enter into a 
        participation agreement and open an account in the plan.  The 
        application incorporates by reference the participation 
        agreement. 
           Sec. 6.  Minnesota Statutes 2002, section 136G.03, is 
        amended by adding a subdivision to read: 
           Subd. 21a.  [MINOR TRUST ACCOUNT.] "Minor trust account" 
        means a Uniform Gift to Minors Act account, a Uniform Transfers 
        to Minors Act account, or a trust instrument naming a minor 
        person as beneficiary, created and operating under the laws of 
        Minnesota or another state. 
           Sec. 7.  Minnesota Statutes 2002, section 136G.03, 
        subdivision 31, is amended to read: 
           Subd. 31.  [ROLLOVER DISTRIBUTION.] "Rollover distribution" 
        means a transfer of funds made: 
           (1) from one account to another account within 60 days of a 
        distribution; 
           (2) from another qualified state tuition program to an 
        account within 60 days of the distribution; or 
           (3) to another qualified state tuition program from an 
        account within 60 days of a distribution. 
           Each When there is a change of beneficiary in a rollover 
        distribution, the transfer of funds must be made for the benefit 
        of a new beneficiary who is a member of the family of the prior 
        beneficiary.  A rollover distribution from one qualified tuition 
        plan to another once every 12 months without a change of 
        beneficiary is permitted.  
           Sec. 8.  Minnesota Statutes 2002, section 136G.05, 
        subdivision 4, is amended to read: 
           Subd. 4.  [PLAN TO COMPLY WITH FEDERAL LAW.] The director 
        shall ensure that the plan meets the requirements for a 
        qualified state tuition program under section 529(b)(1)(A)(ii) 
        of the Internal Revenue Code.  The director may request a 
        private letter ruling or rulings from the Internal Revenue 
        Service or take any other steps to ensure that the plan 
        qualifies under section 529 of the Internal Revenue Code or 
        other relevant provisions of federal law. 
           Sec. 9.  Minnesota Statutes 2002, section 136G.05, 
        subdivision 5, is amended to read: 
           Subd. 5.  [MINIMUM PENALTY NONQUALIFIED DISTRIBUTIONS AND 
        MATCHING GRANTS.] In establishing the terms of the program, the 
        office must provide that refunds of amounts in an account are 
        subject to a minimum penalty, as required by section 529(b)(3) 
        of the Internal Revenue Code.  If the refunds or payments are 
        not used for qualified higher education expenses of the 
        designated beneficiary, this penalty must equal, at least, the 
        proportionate amount of any matching grants deposited in the 
        account under section 136G.11 and the investment return on the 
        grants, plus an additional penalty that meets the requirement of 
        federal law.  There cannot be a nonqualified withdrawal of 
        matching grant funds and any refund of matching grants must be 
        returned to the plan. 
           Sec. 10.  Minnesota Statutes 2002, section 136G.05, 
        subdivision 10, is amended to read: 
           Subd. 10.  [DATA.] Account owner data, account data, and 
        data on beneficiaries of accounts are private data on 
        individuals or nonpublic data as defined in section 13.02, 
        except that the names and addresses of the beneficiaries of 
        accounts that receive matching grants are public. 
           Sec. 11.  Minnesota Statutes 2002, section 136G.09, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CONTRIBUTIONS TO AN ACCOUNT.] A person may 
        make contributions to an account on behalf of a beneficiary. 
        Contributions to an account made by persons other than the 
        account owner become the property of the account owner.  A 
        person does not acquire an interest in an account by making 
        contributions to an account.  Contributions to an account must 
        be made by check, money order, or other commercially acceptable 
        means as permitted by the United States Internal Revenue Service 
        and other applicable federal and state law and authorized 
        approved by the plan administrator in cooperation with the 
        office and the board. 
           Sec. 12.  Minnesota Statutes 2002, section 136G.09, 
        subdivision 2, is amended to read: 
           Subd. 2.  [AUTHORITY OF ACCOUNT OWNER.] Except as provided 
        for minor trust accounts in section 136G.14, an account owner is 
        the only person entitled to: 
           (1) select or change a beneficiary or a contingent account 
        owner; or 
           (2) request distributions or rollover distributions from an 
        account. 
           Sec. 13.  Minnesota Statutes 2002, section 136G.09, 
        subdivision 6, is amended to read: 
           Subd. 6.  [CHANGE OF BENEFICIARY.] Except as provided for 
        minor trust accounts in section 136G.14, an account owner may 
        change the beneficiary of an account to a member of the family 
        of the current beneficiary, at any time without penalty, if the 
        change will not cause the total account balance of all accounts 
        held for the new beneficiary to exceed the maximum account 
        balance limit as provided in subdivision 8.  A change of 
        beneficiary other than as permitted in this subdivision is 
        treated as a nonqualified distribution under section 136G.13, 
        subdivision 3. 
           Sec. 14.  Minnesota Statutes 2002, section 136G.09, 
        subdivision 7, is amended to read: 
           Subd. 7.  [CHANGE OF ACCOUNT OWNERSHIP.] Except as provided 
        for minor trust accounts in section 136G.14, an account owner 
        may transfer ownership of an account to another person eligible 
        to be an account owner.  All transfers of ownership are absolute 
        and irrevocable. 
           Sec. 15.  Minnesota Statutes 2002, section 136G.09, 
        subdivision 8, is amended to read: 
           Subd. 8.  [MAXIMUM ACCOUNT BALANCE LIMIT.] (a) When a 
        contribution is made, the total account balance of all accounts 
        held for the same beneficiary, including matching grant 
        accounts, must not exceed the maximum account balance limit as 
        determined under this subdivision. 
           (b) The maximum account balance limit is reduced for 
        withdrawals from any account for the same beneficiary that are 
        qualified distributions, distributions due to the death or 
        disability of the beneficiary, or distributions due to the 
        beneficiary receiving a scholarship.  Subsequent contributions 
        must not be made to replenish an account if the contribution 
        results in the total account balance of all accounts held for 
        the beneficiary to exceed the reduced maximum account balance 
        limit.  Any subsequent contributions must be rejected.  A 
        subsequent contribution accepted in error must be returned to 
        the account owner plus any earnings on the contribution less any 
        applicable penalties. 
           (c) The maximum account balance limit is not reduced for a 
        nonqualified distribution or a rollover distribution.  When such 
        distributions are taken, subsequent contributions may be made to 
        replenish an account up to the maximum account balance limit. 
           (d) The office must establish a maximum account balance 
        limit.  The office must adjust the maximum account balance 
        limit, as necessary, or on January 1 of each year.  The maximum 
        account balance limit must not exceed the amount permitted for 
        the plan to qualify as a qualified state tuition program under 
        section 529 of the Internal Revenue Code.  For calendar years 
        2002 2004 and 2003 2005, the maximum account balance limit is 
        $235,000. 
           (e) (c) If the total account balance of all accounts held 
        for a single beneficiary reaches the maximum account balance 
        limit prior to the end of that calendar year, the beneficiary 
        may receive an applicable matching grant for that calendar year. 
           Sec. 16.  Minnesota Statutes 2002, section 136G.09, 
        subdivision 9, is amended to read: 
           Subd. 9.  [EXCESS CONTRIBUTIONS AND BALANCES.] A 
        contribution to any account for a beneficiary must be rejected 
        if the contribution would cause the total account balance of all 
        accounts held for the same beneficiary, including the matching 
        grant account, to exceed the maximum account balance limit under 
        section 529 of the Internal Revenue Code as established by the 
        office.  If a contribution under this subdivision is accepted in 
        error, the contribution must be returned to the account owner 
        plus any earnings thereon, less applicable penalties.  A payment 
        of an excess contribution to the account owner may be a 
        nonqualified distribution subject to a penalty. 
           Sec. 17.  Minnesota Statutes 2002, section 136G.11, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [MATCHING GRANT QUALIFICATION.] By March 
        1 June 30 of each year, a state matching grant must be added to 
        each account established under the program if the following 
        conditions are met: 
           (1) the contributor applies, in writing in a form 
        prescribed by the director, for a matching grant; 
           (2) a minimum contribution of $200 was made during the 
        preceding calendar year; and 
           (3) the family income of the beneficiary did not exceed 
        $80,000. 
           Sec. 18.  Minnesota Statutes 2002, section 136G.11, 
        subdivision 2, is amended to read: 
           Subd. 2.  [FAMILY INCOME.] (a) For purposes of this 
        section, "family income" means: 
           (1) if the beneficiary is under age 25, the combined 
        adjusted gross income of the beneficiary's parents or legal 
        guardians as reported on the federal tax return or returns for 
        the most recently available tax calendar year in which 
        contributions were made.  If the beneficiary's parents are 
        divorced, the income of the parent claiming the beneficiary as a 
        dependent on the federal individual income tax return and the 
        income of that parent's spouse, if any, is used to determine 
        family income; or 
           (2) if the beneficiary is age 25 or older, the combined 
        adjusted gross income of the beneficiary and spouse, if any. 
           (b) For a parent or legal guardian of beneficiaries under 
        age 25 and for beneficiaries age 25 or older who resided in 
        Minnesota and filed a federal individual income tax return two 
        years prior to the year in which the matching grant is awarded, 
        the matching grant must be based on family income from Internal 
        Revenue Service tax data on file with the Minnesota department 
        of revenue.  
           (c) Parents or legal guardians of beneficiaries under age 
        25 and beneficiaries age 25 or older who did not reside in 
        Minnesota two years prior to the year in which the matching 
        grant is awarded must provide a signed copy of their federal 
        individual income tax return to the office, regardless of who 
        the account owner is, in order to be considered for a matching 
        grant, the matching grant must be based on family income from 
        the calendar year in which contributions were made. 
           Sec. 19.  Minnesota Statutes 2002, section 136G.11, 
        subdivision 3, is amended to read: 
           Subd. 3.  [RESIDENCY REQUIREMENT.] (a) If the beneficiary 
        is under age 25, the beneficiary's parents or legal guardians 
        must be Minnesota residents to qualify for a matching grant.  If 
        the beneficiary is age 25 or older, the beneficiary must be a 
        Minnesota resident to qualify for a matching grant. 
           (b) To meet the residency requirements, the parent or legal 
        guardian of beneficiaries under age 25 must have filed a 
        Minnesota individual income tax return as a Minnesota resident, 
        claiming and claimed the beneficiary as a dependent, two years 
        prior to the year in which the matching grant is awarded on 
        their federal tax return for the calendar year in which 
        contributions were made.  For beneficiaries age 25 or older, the 
        beneficiary, and a spouse, if any, must have filed a 
        Minnesota and a federal individual income tax return as a 
        Minnesota resident two years prior to the year in which the 
        matching grant is awarded for the calendar year in which 
        contributions were made. 
           (c) A parent of beneficiaries under age 25 and 
        beneficiaries age 25 or older who did not reside in Minnesota 
        two years prior to the year in which the matching grant is 
        awarded must establish Minnesota residency through the issuance 
        of a Minnesota driver's license or identification card in the 
        calendar year in which contributions were made are not eligible 
        for a matching grant. 
           Sec. 20.  Minnesota Statutes 2002, section 136G.11, 
        subdivision 9, is amended to read: 
           Subd. 9.  [ANNUAL APPLICATION.] An account owner must 
        submit an application form for a matching grant on an annual 
        basis.  The application must be postmarked by December 31 May 1 
        of the year preceding the awarding of the in which the matching 
        grant would be awarded if the applicant qualifies for a matching 
        grant.  
           Sec. 21.  Minnesota Statutes 2002, section 136G.11, 
        subdivision 13, is amended to read: 
           Subd. 13.  [FORFEITURE OF MATCHING GRANTS.] (a) Matching 
        grants are forfeited if: 
           (1) the account owner transfers the total account balance 
        of an account to another account or to another qualified state 
        tuition program; 
           (2) the beneficiary receives a full tuition scholarship or 
        admission to a United States service academy; 
           (3) the beneficiary dies or becomes disabled; 
           (4) the account owner changes the beneficiary of the 
        account; or 
           (5) the account owner closes the account with a 
        nonqualified withdrawal. 
           (b) Matching grants must be proportionally forfeited if: 
           (1) the account owner transfers a portion of an account to 
        another account or to another qualified state tuition program; 
           (2) the beneficiary receives a scholarship covering a 
        portion of qualified higher education expenses; or 
           (3) the account owner makes a partial nonqualified 
        withdrawal. 
           (c) If the account owner makes a misrepresentation in a 
        participation agreement or an application for a matching grant 
        that results in a matching grant, the matching grant associated 
        with the misrepresentation is forfeited.  The office and the 
        board must instruct the plan administrator as to the amount to 
        be forfeited from the matching grant account.  The office and 
        the board must withdraw the matching grant or the proportion of 
        the matching grant that is related to the misrepresentation. 
           Sec. 22.  Minnesota Statutes 2002, section 136G.13, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [QUALIFIED DISTRIBUTION METHODS.] (a) 
        Qualified distributions may be made: 
           (1) directly to participating eligible educational 
        institutions on behalf of the beneficiary; or 
           (2) in the form of a check payable to both the beneficiary 
        and the eligible educational institution; or. 
           (3) to an account owner with a receipt verifying the 
        payment of qualified higher education expenses. 
           (b) When administratively feasible, distributions may be 
        made when the account owner and beneficiary certify prior to the 
        distribution that the distribution will be expended for 
        qualified higher education expenses a reasonable time after the 
        distribution.  The plan administrator may retain a penalty on 
        the earnings portion of the nonqualified distribution until 
        payment of qualified higher education expenses are 
        substantiated.  A payment receipt showing payment for qualified 
        higher education expenses must be submitted to the program 
        administrator within 30 days of distribution. 
           (c) Qualified distributions must be withdrawn 
        proportionally from contributions and earnings in an account 
        owner's account on the date of distribution as provided in 
        section 529 of the Internal Revenue Code. 
           Sec. 23.  Minnesota Statutes 2002, section 136G.13, 
        subdivision 3, is amended to read: 
           Subd. 3.  [NONQUALIFIED DISTRIBUTION.] An account owner may 
        request a nonqualified distribution from an account at any 
        time.  Nonqualified distributions are based on the total account 
        balances in an account owner's account and must be withdrawn 
        proportionally from contributions and earnings as provided in 
        section 529 of the Internal Revenue Code.  The earnings portion 
        of a nonqualified distribution is subject to a penalty federal 
        additional tax pursuant to section 529 of the Internal Revenue 
        Code.  For purposes of this subdivision, "earnings portion" 
        means the ratio of the earnings in the account to the total 
        account balance, immediately prior to the distribution, 
        multiplied by the distribution.  The penalty must be withheld 
        from the total amount of any distribution.  
           Sec. 24.  [136G.14] [MINOR TRUST ACCOUNTS.] 
           (a) This section applies to a plan account in which funds 
        of a minor trust account are invested. 
           (b) The account owner may not be changed to any person 
        other than a successor custodian or the beneficiary unless a 
        court order directing the change of ownership is provided to the 
        plan administrator.  The custodian must sign all forms and 
        requests submitted to the plan administrator in the custodian's 
        representative capacity.  The custodian must notify the plan 
        administrator in writing when the beneficiary becomes legally 
        entitled to be the account owner.  An account owner under this 
        section may not select a contingent account owner. 
           (c) The beneficiary of an account under this section may 
        not be changed.  If the beneficiary dies, assets in a plan 
        account become the property of the beneficiary's estate.  Funds 
        in an account must not be transferred or rolled over to another 
        account owner or to an account for another beneficiary.  A 
        nonqualified distribution from an account, or a distribution due 
        to the disability or scholarship award to the beneficiary, must 
        be used for the benefit of the beneficiary. 
           Sec. 25.  Minnesota Statutes 2002, section 137.0245, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MEMBERSHIP.] The regent candidate advisory 
        council shall consist of 24 members.  Twelve members shall be 
        appointed by the subcommittee on committees of the committee on 
        rules and administration of the senate.  Twelve members shall be 
        appointed by the speaker of the house of representatives.  Each 
        appointing authority must appoint one member who is a student 
        enrolled in a degree program at the University of Minnesota at 
        the time of appointment.  No more than one-third of the members 
        appointed by each appointing authority may be current or former 
        legislators.  No more than two-thirds of the members appointed 
        by each appointing authority may belong to the same political 
        party; however, political activity or affiliation is not 
        required for the appointment of any member.  Geographical 
        representation must be taken into consideration when making 
        appointments.  Section 15.0575 shall govern the advisory 
        council, except that: 
           (1) the members shall be appointed to six-year terms with 
        one-third appointed each even-numbered year; and 
           (2) student members are appointed to two-year terms with 
        two students appointed each even-numbered year. 
           Sec. 26.  Minnesota Statutes 2002, section 299A.45, 
        subdivision 2, is amended to read: 
           Subd. 2.  [AWARD AMOUNT.] (a) The amount of the award 
        is the lesser of: 
           (1) for public institutions, the actual tuition and fees 
        charged by the institution; or 
           (2) for private institutions the lesser of (i) the 
        actual average tuition and fees charged by the institution; or 
        (ii) the highest tuition and fees charged by a public 
        institution in Minnesota 
           (2) the tuition maximums established by law for the state 
        grant program under section 136A.121. 
           (b) An award under this subdivision must not affect a 
        recipient's eligibility for a state grant under section 136A.121.
           (c) For the purposes of this subdivision, "fees" include 
        only those fees that are mandatory and charged to all students 
        attending the institution.  
           Sec. 27.  [LEARN AND EARN PROGRAM; POSTSECONDARY 
        OPPORTUNITIES ACCOUNT.] 
           The higher education services office shall maintain a 
        postsecondary opportunities account for students who earned 
        stipends and bonuses that were deposited in the account through 
        the learn and earn graduation achievement program under 
        Minnesota Statutes 2000, section 124D.32.  A participating 
        student may, upon graduation from high school, use the funds 
        accumulated for the student toward the costs of attending a 
        Minnesota postsecondary institution or a career-training 
        program, including the costs of tuition, books, and lab fees.  
        Funds accumulated for a student must be available to the student 
        from the time a student graduates from high school until ten 
        years after the date the student entered the learn and earn 
        graduation achievement program.  After ten years, the office 
        shall close the account and any remaining money in the account 
        must cancel to the general fund. 
           Sec. 28.  [REPEALER.] 
           Minnesota Statutes 2002, section 136G.03, subdivision 25, 
        is repealed. 

                                   ARTICLE 4
                          MNSCU ADMINISTRATIVE CHANGES
           Section 1.  Minnesota Statutes 2002, section 136F.40, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CONTRACTS.] (a) The board may enter into a 
        contract with the chancellor, a vice-chancellor, or a president, 
        containing terms and conditions of employment.  The terms of the 
        contract must be authorized under a plan approved under section 
        43A.18, subdivision 3a. 
           (b) Notwithstanding section 43A.17, subdivision 11, or 
        other law to the contrary, a contract under this section may 
        provide a liquidated salary amount or other compensation if a 
        contract is terminated by the board prior to its expiration.  
           (c) Notwithstanding section 356.24 or other law to the 
        contrary, a contract under this section may contain a deferred 
        compensation plan made in conformance with section 457(f) of the 
        Internal Revenue Code. 
           Sec. 2.  Minnesota Statutes 2002, section 136F.45, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PURCHASE.] (a) At the request of an 
        employee, the board may negotiate and purchase an individual 
        annuity contract custodial account under section 403(b)(7) of 
        the Internal Revenue Code, for an employee for retirement or 
        other purposes from a company licensed to do business in 
        Minnesota, and may allocate a portion of the compensation 
        otherwise payable to the employee as salary for the purpose of 
        paying the entire premium contribution due or to become due 
        under the contract account.  The allocation shall be made in a 
        manner that will qualify the annuity premiums custodial account 
        contributions, or a portion portions thereof, for the benefit 
        afforded under section 403(b)(7) of the current federal Internal 
        Revenue Code or any equivalent provision of subsequent federal 
        income tax law.  The employee shall own the contract account and 
        the employee's rights thereunder shall be nonforfeitable except 
        for failure to pay premiums contributions.  
           (b) At its discretion, and in the same manner provided in 
        paragraph (a), the board may negotiate and purchase individual 
        custodial accounts under section 403(b)(7) of the Internal 
        Revenue Code, for employees of the higher education services 
        office as defined in section 136A.03.  Participation under this 
        paragraph must be in accordance with any applicable federal law. 
           Sec. 3.  Minnesota Statutes 2002, section 136F.45, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DEPOSITS; PAYMENT.] All amounts so allocated 
        shall be deposited in an annuity account established by the 
        board.  Payment of annuity premiums custodial account 
        contributions shall be made when due or in accordance with the 
        salary agreement entered into between the employee and the 
        board.  The money in the annuity account is not subject to the 
        budget, allotment, and incumbrance system provided for in 
        chapter 16A. 
           Sec. 4.  Minnesota Statutes 2002, section 136F.581, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CONDITIONS AUTHORITY FOR PURCHASES AND 
        CONTRACTS.] The board and the colleges and universities are 
        subject to the provisions of section 471.345.  In addition to 
        the contracting authority under this chapter, the board of 
        trustees may utilize any contracting options available to the 
        commissioner of administration under chapter 16A, 16B, or 16C. 
           Sec. 5.  Minnesota Statutes 2002, section 136F.581, 
        subdivision 2, is amended to read: 
           Subd. 2.  [POLICIES AND PROCEDURES.] The board shall 
        develop policies, and each college and university shall develop 
        procedures, for purchases and contracts that are consistent with 
        the authority granted in subdivision 1.  The policies and 
        procedures shall be developed through the system and campus 
        labor management committees and shall include provisions 
        requiring the system and campuses to determine that they cannot 
        use available staff before contracting with additional outside 
        consultants or services.  In addition, each college and 
        university, in consultation with the system office of the 
        chancellor, shall develop procedures for those purchases and 
        contracts that can be accomplished by a college and university 
        without board approval.  The board policies must allow each 
        college and university the local authority to enter into 
        contracts for construction projects of up to $250,000 and to 
        make other purchases of up to $50,000, without receiving board 
        approval.  The board may allow a college or university local 
        authority to make purchases over $50,000 without receiving board 
        approval. 
           Sec. 6.  Minnesota Statutes 2002, section 136F.59, 
        subdivision 3, is amended to read: 
           Subd. 3.  [OFFICE OF TECHNOLOGY.] The system office of the 
        chancellor and the campuses shall cooperate with the office of 
        technology in its responsibility to coordinate information and 
        communications technology development throughout the state.  The 
        system and campuses shall consult with the office of technology 
        throughout any efforts to plan or implement information and 
        communication systems to ensure that the systems are effective, 
        efficient, and, where appropriate, compatible with other state 
        systems. 
           Sec. 7.  Minnesota Statutes 2002, section 136F.60, 
        subdivision 3, is amended to read: 
           Subd. 3.  [EASEMENTS.] (a) The board may grant permanent or 
        temporary easements over, under, or across any land under its 
        jurisdiction for reasonable purposes determined by the board as 
        provided in paragraphs (b) and (c).  
           (b) The board may grant a revocable easement or permit 
        under this paragraph.  An easement or permit is revocable by 
        written notice given by the board if at any time its continuance 
        will conflict with a public use of the land over, under, or upon 
        which it is granted, or for any other reason.  The notice must 
        be in writing and is effective 90 days after the notice is sent 
        by certified mail to the last known address of the holder of 
        record of the easement.  If the address of the holder of the 
        easement or permit is not known, it expires 90 days after the 
        notice is recorded in the office of the county recorder of the 
        county in which the land is located.  Upon revocation of an 
        easement or permit, the board may allow a reasonable time to 
        vacate the premises affected. 
           (c) State land subject to an easement or permit granted by 
        the board remains subject to sale or lease, and the sale or 
        lease does not revoke the permit or easement granted. 
           Sec. 8.  [136F.65] [ACCEPTANCE OF FEDERAL MONEY.] 
           The board of trustees is hereby designated the state agency 
        empowered to accept any and all money provided for or made 
        available to this state by the United States of America or any 
        department or agency thereof for the construction and equipping 
        of any building under the control of the board of trustees in 
        accordance with the provisions of federal law and any rules or 
        regulations promulgated thereunder and are further authorized to 
        do any and all things required of this state by such federal law 
        and the rules and regulations promulgated thereunder in order to 
        obtain such federal money. 
           Sec. 9.  [REPEALER.] 
           Minnesota Statutes 2002, sections 136F.13; 136F.56; 
        136F.582; and 136F.59, subdivision 2, are repealed. 
           Presented to the governor May 24, 2003 
           Signed by the governor May 28, 2003, 1:30 p.m.