1.1                          A bill for an act 
  1.2             relating to education; abolishing the higher education 
  1.3             services office; establishing an office in the 
  1.4             department of children, families, and learning to 
  1.5             assume limited responsibilities; transferring certain 
  1.6             responsibilities of the higher education services 
  1.7             office to the department of finance and the 
  1.8             post-secondary governing boards; appropriating money; 
  1.9             amending Minnesota Statutes 1998, sections 136A.01; 
  1.10            136A.06; 136A.08; 136A.101, subdivisions 2 and 4; 
  1.11            136A.121, subdivisions 2, 6, 7, 9, and 9a; 136A.122; 
  1.12            136A.131, subdivision 1; 136A.1359; 136A.15, 
  1.13            subdivision 3; 136A.16, subdivision 1; 136A.162; 
  1.14            136A.1701, subdivision 1; 136A.171; 136A.232; 
  1.15            136A.233, subdivision 1, and by adding a subdivision; 
  1.16            136A.242, subdivisions 5 and 8; 136A.243; 136A.244, 
  1.17            subdivision 3; 136A.26; 136A.29, subdivision 4; and 
  1.18            136A.62, subdivision 2; proposing coding for new law 
  1.19            in Minnesota Statutes, chapters 136A; and 137; 
  1.20            repealing Minnesota Statutes 1998, sections 136A.011; 
  1.21            136A.03; 136A.031; 136A.0411; 136A.05; 136A.07; 
  1.22            136A.101, subdivision 3; 136A.121, subdivision 17; 
  1.23            136A.136; 136A.15, subdivision 4; 136A.18; 136A.23; 
  1.24            and 136A.87. 
  1.25  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.26     Section 1.  Minnesota Statutes 1998, section 136A.01, is 
  1.27  amended to read: 
  1.28     136A.01 [HIGHER EDUCATION POST-SECONDARY STUDENT SERVICES 
  1.29  OFFICE.] 
  1.30     Subdivision 1.  [CREATION.] An office for higher 
  1.31  education post-secondary student services in the state of 
  1.32  Minnesota, to be known as the Minnesota higher education 
  1.33  services office or HESO, department of children, families, and 
  1.34  learning is created. 
  1.35     Subd. 2.  [RESPONSIBILITIES.] The higher education 
  2.1   post-secondary student services office is responsible for: 
  2.2      (1) necessary state level administration of financial aid 
  2.3   programs, including accounting, auditing, and disbursing state 
  2.4   and federal financial aid funds, and reporting on financial aid 
  2.5   programs to the governor and the legislature disbursing state 
  2.6   financial aid funds to eligible private institutions; 
  2.7      (2) approval, registration, licensing, and financial aid 
  2.8   eligibility of private collegiate and career schools, under 
  2.9   sections 136A.61 to 136A.71 and chapter 141; and 
  2.10     (3) administering the telecommunications council under Laws 
  2.11  1993, First Special Session chapter 2, article 5, section 2, the 
  2.12  Learning Network of Minnesota, and the statewide library task 
  2.13  force; 
  2.14     (4) negotiating and administering reciprocity agreements;. 
  2.15     (5) publishing and distributing financial aid information 
  2.16  and materials, and other information and materials under section 
  2.17  136A.87, to students and parents; 
  2.18     (6) collecting and maintaining student enrollment and 
  2.19  financial aid data; 
  2.20     (7) administering the federal programs that affect students 
  2.21  and institutions on a statewide basis; and 
  2.22     (8) prescribing policies, procedures, and rules under 
  2.23  chapter 14 necessary to administer the programs under its 
  2.24  supervision. 
  2.25     Sec. 2.  Minnesota Statutes 1998, section 136A.06, is 
  2.26  amended to read: 
  2.27     136A.06 [FEDERAL FUNDS.] 
  2.28     The higher education post-secondary student services office 
  2.29  is designated the state agency to apply for, receive, accept, 
  2.30  and disburse to both public and private institutions of higher 
  2.31  education all federal funds which are allocated to the state of 
  2.32  Minnesota to support higher education programs, construction, or 
  2.33  other activities and which require administration by a state 
  2.34  higher education agency under the Higher Education Facilities 
  2.35  Act of 1963, and any amendments thereof, the Higher Education 
  2.36  Act of 1965, and any amendments thereof, and any other law which 
  3.1   provides funds for higher education and requires administration 
  3.2   by a state higher education agency as enacted or may be enacted 
  3.3   by the Congress of the United States; provided that no 
  3.4   commitment shall be made that shall bind the legislature to make 
  3.5   appropriations beyond current allocations of funds.  The office 
  3.6   may apply for, receive, accept, and disburse all administrative 
  3.7   funds available to the office for administering federal funds to 
  3.8   support higher education programs, construction, or other 
  3.9   activities.  The office also may apply for, receive, accept, and 
  3.10  disburse any research, planning, or program funds which are 
  3.11  available for purposes consistent with the provisions of this 
  3.12  chapter.  In making application for and administering federal 
  3.13  funds the office may comply with any and all requirements of 
  3.14  federal law and federal rules and regulations to enable it to 
  3.15  receive and accept such funds.  The expenditure of any such 
  3.16  funds received shall be governed by the laws of the state, 
  3.17  except insofar as federal regulations may otherwise provide.  
  3.18  The office may contract with both public and private 
  3.19  institutions in administering federal funds, and such contracts 
  3.20  shall not be subject to the provisions of chapter 16C.  All such 
  3.21  money received by the office shall be deposited in the state 
  3.22  treasury and are hereby appropriated to it annually for the 
  3.23  purpose for which such funds are received.  None of such moneys 
  3.24  shall cancel but shall be available until expended. 
  3.25     Sec. 3.  Minnesota Statutes 1998, section 136A.08, is 
  3.26  amended to read: 
  3.27     136A.08 [RECIPROCAL AGREEMENTS RELATING TO NONRESIDENT 
  3.28  TUITION WITH OTHER STATES OR PROVINCES.] 
  3.29     Subdivision 1.  [DEFINITIONS.] For the purposes of this 
  3.30  section, the terms "province" and "provincial" mean the Canadian 
  3.31  province of Manitoba. 
  3.32     Subd. 2.  [AUTHORIZATION.] The higher education services 
  3.33  office board of regents and the board of trustees, in 
  3.34  consultation with the commissioner of finance and each affected 
  3.35  public post-secondary board, may jointly enter into agreements, 
  3.36  on subjects that include remission of nonresident tuition for 
  4.1   designated categories of students at public post-secondary 
  4.2   institutions, with appropriate state or provincial agencies and 
  4.3   public post-secondary institutions in other states or 
  4.4   provinces.  The agreements shall be for the purpose of the 
  4.5   mutual improvement of educational advantages for residents of 
  4.6   this state and other states or provinces with whom agreements 
  4.7   are made.  
  4.8      Subd. 3.  [WISCONSIN.] A higher education reciprocity 
  4.9   agreement with the state of Wisconsin may include provision for 
  4.10  the transfer of funds between Minnesota and Wisconsin provided 
  4.11  that an income tax reciprocity agreement between Minnesota and 
  4.12  Wisconsin is in effect for the period of time included under the 
  4.13  higher education reciprocity agreement.  If this provision is 
  4.14  included, the amount of funds to be transferred shall be 
  4.15  determined according to a formula which is mutually acceptable 
  4.16  to the office governing boards and a duly designated agency 
  4.17  representing Wisconsin.  The formula shall recognize differences 
  4.18  in tuition rates between the two states and the number of 
  4.19  students attending institutions in each state under the 
  4.20  agreement.  Any payments to Minnesota by Wisconsin shall be 
  4.21  deposited by the office in the general fund of the state 
  4.22  treasury.  The amount required for the payments shall be 
  4.23  certified by the director of the office to the commissioner of 
  4.24  finance annually. 
  4.25     Subd. 4.  [NORTH DAKOTA; SOUTH DAKOTA.] A reciprocity 
  4.26  agreement with North Dakota may include provision for the 
  4.27  transfer of funds between Minnesota and North Dakota.  If 
  4.28  provision for transfer of funds between the two states is 
  4.29  included, the amount of funds to be transferred shall be 
  4.30  determined according to a formula which is mutually acceptable 
  4.31  to the office governing boards and a duly designated agency 
  4.32  representing North Dakota.  In adopting a formula, the office 
  4.33  boards shall consider tuition rates in the two states and the 
  4.34  number of students attending institutions in each state under 
  4.35  the agreement.  Any payment to Minnesota by North Dakota shall 
  4.36  be deposited by the office in the general fund.  The amount 
  5.1   required for the payments shall be certified by the director of 
  5.2   the office to the commissioner of finance annually.  All 
  5.3   provisions in this subdivision pertaining to North Dakota shall 
  5.4   also be applied to South Dakota, and all authority and 
  5.5   conditions granted for higher education reciprocity with North 
  5.6   Dakota are also granted for higher education reciprocity with 
  5.7   South Dakota. 
  5.8      Subd. 5.  [FINANCIAL AID.] The office may enter into an 
  5.9   agreement, with a state or province with which it has negotiated 
  5.10  a reciprocity agreement for tuition, to permit students to 
  5.11  receive student aid awards from the student's state or province 
  5.12  of residence for attending an eligible institution in the other 
  5.13  state or province. 
  5.14     Subd. 6.  [APPROVAL.] An agreement made by the office under 
  5.15  this section is not valid as to a particular institution without 
  5.16  the approval of that institution's state or provincial governing 
  5.17  board.  A valid agreement under this subdivision that incurs 
  5.18  additional financial liability to the state or to any of the 
  5.19  Minnesota public post-secondary boards, beyond enrollment 
  5.20  funding adjustments, must be submitted to the commissioner of 
  5.21  finance and to the chairs of the higher education finance 
  5.22  divisions of the senate and house for review.  The agreement 
  5.23  remains valid unless it is disapproved in law. 
  5.24     Sec. 4.  [136A.096] [DISTRIBUTION OF GRANTS.] 
  5.25     Appropriations for state grant awards shall be provided 
  5.26  directly to the board of regents and the board of trustees for 
  5.27  allocation to their respective institutions.  Public 
  5.28  post-secondary institutions must abide by provisions in sections 
  5.29  136A.101 and 136A.121 in awarding grants to their students. 
  5.30     Sec. 5.  Minnesota Statutes 1998, section 136A.101, 
  5.31  subdivision 2, is amended to read: 
  5.32     Subd. 2.  [OFFICE.] "Office" means the Minnesota higher 
  5.33  education post-secondary student services office. 
  5.34     Sec. 6.  Minnesota Statutes 1998, section 136A.101, 
  5.35  subdivision 4, is amended to read: 
  5.36     Subd. 4.  [ELIGIBLE INSTITUTION.] "Eligible institution" 
  6.1   means a post-secondary educational institution located in this 
  6.2   state or in a state with which the office has entered into a 
  6.3   higher education reciprocity agreement on state student aid 
  6.4   programs that either (1) is operated by this state, or (2) is 
  6.5   operated publicly or privately and, as determined by the office, 
  6.6   maintains academic standards substantially equivalent to those 
  6.7   of comparable public institutions operated in this state. 
  6.8      Sec. 7.  Minnesota Statutes 1998, section 136A.121, 
  6.9   subdivision 2, is amended to read: 
  6.10     Subd. 2.  [ELIGIBILITY FOR GRANTS.] An applicant is 
  6.11  eligible to be considered for a grant, regardless of the 
  6.12  applicant's sex, creed, race, color, national origin, or 
  6.13  ancestry, under sections 136A.095 to 136A.131 if the office 
  6.14  finds that the applicant: 
  6.15     (1) is a resident of the state of Minnesota; 
  6.16     (2) is a graduate of a secondary school or its equivalent, 
  6.17  or is 17 years of age or over, and has met all requirements for 
  6.18  admission as a student to an eligible college or technical 
  6.19  college of choice as defined in sections 136A.095 to 136A.131; 
  6.20     (3) has met the financial need criteria established in 
  6.21  Minnesota Rules; 
  6.22     (4) is not in default, as defined by the office, of any 
  6.23  federal or state student educational loan; and 
  6.24     (5) is not more than 30 days in arrears for any child 
  6.25  support payments owed to a public agency responsible for child 
  6.26  support enforcement or, if the applicant is more than 30 days in 
  6.27  arrears, is complying with a written payment agreement or order 
  6.28  for arrearages.  An agreement must provide for a repayment of 
  6.29  arrearages at no less than 20 percent per month of the amount of 
  6.30  the monthly child support obligation or no less than $30 per 
  6.31  month if there is no current monthly child support obligation.  
  6.32  Compliance means that payments are made by the payment date. 
  6.33     The director Representatives of the public post-secondary 
  6.34  systems and of the office and the commissioner of human services 
  6.35  shall develop procedures to implement clause (5).  
  6.36     Sec. 8.  Minnesota Statutes 1998, section 136A.121, 
  7.1   subdivision 6, is amended to read: 
  7.2      Subd. 6.  [COST OF ATTENDANCE.] (a) The recognized cost of 
  7.3   attendance consists of allowances specified in law for room and 
  7.4   board and miscellaneous expenses, and 
  7.5      (1) for public institutions, tuition and fees charged by 
  7.6   the institution; or 
  7.7      (2) for private institutions, an allowance for tuition and 
  7.8   fees equal to the lesser of the actual tuition and fees charged 
  7.9   by the institution, or the private institution tuition maximums 
  7.10  established in law. 
  7.11     (b) For the purpose of paragraph (a), clause (2), the 
  7.12  private institution tuition maximum for two- and four-year, 
  7.13  private, residential, liberal arts, degree-granting colleges and 
  7.14  universities must be the same. 
  7.15     (c) For a student attending less than full time, the campus 
  7.16  financial aid director or, in the case of private institutions, 
  7.17  the office shall prorate the recognized cost of attendance to 
  7.18  the actual number of credits for which the student is enrolled. 
  7.19     The recognized cost of attendance for a student who is 
  7.20  confined to a Minnesota correctional institution shall consist 
  7.21  of the tuition and fee component in paragraph (a), clause (1) or 
  7.22  (2), with no allowance for living expenses. 
  7.23     Sec. 9.  Minnesota Statutes 1998, section 136A.121, 
  7.24  subdivision 7, is amended to read: 
  7.25     Subd. 7.  [INSUFFICIENT APPROPRIATION.] If the amount 
  7.26  appropriated to the office is determined by the office to be 
  7.27  insufficient to make full awards to private college applicants 
  7.28  under subdivision 5, before any award for that year has been 
  7.29  disbursed, awards must be reduced by 
  7.30     (1) adding a surcharge to the contribution of the 
  7.31  applicant's parents, and 
  7.32     (2) a percentage increase in the applicant's contribution.  
  7.33     Sec. 10.  Minnesota Statutes 1998, section 136A.121, 
  7.34  subdivision 9, is amended to read: 
  7.35     Subd. 9.  [AWARDS.] An undergraduate student who meets the 
  7.36  office's requirements is eligible to apply for and receive a 
  8.1   grant in any year of undergraduate study unless the student has 
  8.2   obtained a baccalaureate degree or previously has been enrolled 
  8.3   full time or the equivalent for eight semesters or 12 quarters, 
  8.4   excluding courses taken from a Minnesota school or 
  8.5   post-secondary institution which is not participating in the 
  8.6   state grant program and from which a student transferred no 
  8.7   credit. 
  8.8      Sec. 11.  Minnesota Statutes 1998, section 136A.121, 
  8.9   subdivision 9a, is amended to read: 
  8.10     Subd. 9a.  [FULL-YEAR GRANTS.] Students may receive state 
  8.11  grants for four consecutive quarters or three consecutive 
  8.12  semesters during the course of a single fiscal year.  In 
  8.13  calculating a state grant for the fourth quarter or third 
  8.14  semester, the office must use the same calculation must be used 
  8.15  as it would for any other term.  
  8.16     Sec. 12.  Minnesota Statutes 1998, section 136A.122, is 
  8.17  amended to read: 
  8.18     136A.122 [STATE UNIVERSITIES; AKITA CAMPUS GRANTS.] 
  8.19     The higher education services office may provide grants to 
  8.20  Minnesota resident students participating in the Akita 
  8.21  program may be eligible for grants.  Grants must be awarded on 
  8.22  the same basis as other state grants, except that the cost of 
  8.23  attendance must be adjusted to incorporate the state university 
  8.24  tuition level and the Akita fee level.  An individual grant must 
  8.25  not exceed the state grant maximum award for a student at a 
  8.26  four-year private college. 
  8.27     Sec. 13.  Minnesota Statutes 1998, section 136A.131, 
  8.28  subdivision 1, is amended to read: 
  8.29     Subdivision 1.  [ACCOUNTS.] The office shall establish and 
  8.30  maintain appropriate accounts and related records of each 
  8.31  recipient of a grant at a private institution.  
  8.32     Sec. 14.  Minnesota Statutes 1998, section 136A.1359, is 
  8.33  amended to read: 
  8.34     136A.1359 [GRANTS FOR NURSING STUDENTS WHO ARE PERSONS OF 
  8.35  COLOR.] 
  8.36     Subdivision 1.  [ESTABLISHMENT.] A nursing grant program is 
  9.1   established under the authority of the higher education services 
  9.2   office to provide grants to students who are persons of color 
  9.3   who are entering or enrolled in an educational program that 
  9.4   leads to licensure as a registered nurse, or advanced nursing 
  9.5   education. 
  9.6      Subd. 2.  [ELIGIBILITY.] To be eligible to receive a grant, 
  9.7   a student shall be:  
  9.8      (1) a citizen of the United States or permanent resident of 
  9.9   the United States; 
  9.10     (2) a resident of the state of Minnesota; 
  9.11     (3) an Asian Pacific-American, African-American, American 
  9.12  Indian, or Hispanic-American (Latino, Chicano, or Puerto Rican); 
  9.13     (4) entering or enrolled in a nursing program in Minnesota 
  9.14  that leads to licensure as a registered nurse, a baccalaureate 
  9.15  degree in nursing, a master's degree in nursing, or program of 
  9.16  advanced nursing education; and 
  9.17     (5) eligible under any additional criteria established by 
  9.18  the school, college, or program of nursing in which the student 
  9.19  is enrolled.  
  9.20     The grant must be awarded for one academic year but is 
  9.21  renewable for a maximum of six semesters or nine quarters of 
  9.22  full-time study, or their equivalent.  
  9.23     Subd. 3.  [RESPONSIBILITY OF NURSING PROGRAMS.] Each 
  9.24  school, college, or program of nursing that wishes to 
  9.25  participate in the student nursing grant program shall apply to 
  9.26  the higher education services office for grant money, according 
  9.27  to policies established by the office.  A school, college, or 
  9.28  program of nursing shall establish criteria to use in awarding 
  9.29  the grants.  The criteria must include consideration of the 
  9.30  likelihood of a student's success in completing the nursing 
  9.31  educational program and must give priority to students with the 
  9.32  greatest financial need.  Each grant must be for a minimum of 
  9.33  $2,000 but not exceed $4,000.  Each school, college, or program 
  9.34  of nursing shall agree that the money awarded through this grant 
  9.35  program must not be used to replace any other grant or 
  9.36  scholarship money for which the student would be otherwise 
 10.1   eligible. 
 10.2      Subd. 4.  [RESPONSIBILITIES OF THE HIGHER EDUCATION 
 10.3   POST-SECONDARY STUDENT SERVICES OFFICE.] The higher education 
 10.4   services office shall distribute money each year to Minnesota 
 10.5   schools, colleges, or programs of nursing that lead to licensure 
 10.6   as a registered nurse.  Money not used by a recipient nursing 
 10.7   program must be returned to the higher education services office 
 10.8   for redistribution under this section.  The office shall 
 10.9   establish an application process for interested schools, 
 10.10  colleges, or programs of nursing. 
 10.11     Sec. 15.  Minnesota Statutes 1998, section 136A.15, 
 10.12  subdivision 3, is amended to read: 
 10.13     Subd. 3.  "Office" means the Minnesota higher education 
 10.14  post-secondary student services office. 
 10.15     Sec. 16.  Minnesota Statutes 1998, section 136A.16, 
 10.16  subdivision 1, is amended to read: 
 10.17     Subdivision 1.  Notwithstanding chapter 16C, the Minnesota 
 10.18  higher education post-secondary student services office is 
 10.19  designated as the administrative agency office for carrying out 
 10.20  the purposes and terms of sections 136A.15 to 136A.1702.  The 
 10.21  office may establish one or more loan programs. 
 10.22     Sec. 17.  Minnesota Statutes 1998, section 136A.162, is 
 10.23  amended to read: 
 10.24     136A.162 [CLASSIFICATION OF DATA.] 
 10.25     All data on private college applicants for financial 
 10.26  assistance collected and used by the higher education services 
 10.27  office for student financial aid programs administered by that 
 10.28  office shall be classified as private data on individuals under 
 10.29  section 13.02, subdivision 12.  Exceptions to this 
 10.30  classification are that:  
 10.31     (a) the names and addresses of program recipients or 
 10.32  participants are public data; 
 10.33     (b) data on applicants may be disclosed to the commissioner 
 10.34  of human services to the extent necessary to determine 
 10.35  eligibility under section 136A.121, subdivision 2, clause (5); 
 10.36  and 
 11.1      (c) the following data collected in the Minnesota 
 11.2   supplemental loan program under section 136A.1701 may be 
 11.3   disclosed to a consumer credit reporting agency only if the 
 11.4   borrower and the cosigner give informed consent, according to 
 11.5   section 13.05, subdivision 4, at the time of application for a 
 11.6   loan: 
 11.7      (1) the lender-assigned borrower identification number; 
 11.8      (2) the name and address of borrower; 
 11.9      (3) the name and address of cosigner; 
 11.10     (4) the date the account is opened; 
 11.11     (5) the outstanding account balance; 
 11.12     (6) the dollar amount past due; 
 11.13     (7) the number of payments past due; 
 11.14     (8) the number of late payments in previous 12 months; 
 11.15     (9) the type of account; 
 11.16     (10) the responsibility for the account; and 
 11.17     (11) the status or remarks code. 
 11.18     Sec. 18.  Minnesota Statutes 1998, section 136A.1701, 
 11.19  subdivision 1, is amended to read: 
 11.20     Subdivision 1.  [ESTABLISHMENT OF PROGRAM.] The higher 
 11.21  education services office may provide for programs of loans 
 11.22  which may be made in lieu of or in addition to loans authorized 
 11.23  under sections 136A.15 to 136A.1702 and applicable provisions of 
 11.24  federal law as provided in this section. 
 11.25     Sec. 19.  Minnesota Statutes 1998, section 136A.171, is 
 11.26  amended to read: 
 11.27     136A.171 [REVENUE BONDS; ISSUANCE; PROCEEDS.] 
 11.28     The higher education services office may issue revenue 
 11.29  bonds to obtain funds for loans made in accordance with the 
 11.30  provisions of this chapter.  The aggregate amount of revenue 
 11.31  bonds, issued directly by the office, outstanding at any one 
 11.32  time, not including refunded bonds or otherwise defeased or 
 11.33  discharged bonds, shall not exceed $550,000,000.  Proceeds from 
 11.34  the issuance of bonds may be held and invested by the office 
 11.35  pending disbursement in the form of loans.  All interest and 
 11.36  profits from the investments shall inure to the benefit of the 
 12.1   office and shall be available to the office for the same 
 12.2   purposes as the proceeds from the sale of revenue bonds 
 12.3   including, but not limited to, costs incurred in administering 
 12.4   loans under this chapter and loan reserve funds. 
 12.5      Sec. 20.  Minnesota Statutes 1998, section 136A.232, is 
 12.6   amended to read: 
 12.7      136A.232 [ADMINISTRATION; AGREEMENTS WITH EDUCATIONAL 
 12.8   FACILITIES.] 
 12.9      The higher education services office shall develop and 
 12.10  administer a work-study program.  The office shall enter into 
 12.11  agreements with institutions of post-secondary education. 
 12.12     Sec. 21.  Minnesota Statutes 1998, section 136A.233, 
 12.13  subdivision 1, is amended to read: 
 12.14     Subdivision 1.  [ALLOCATION TO INSTITUTIONS.] The higher 
 12.15  education post-secondary student services office shall allocate 
 12.16  work-study money to eligible private post-secondary institutions 
 12.17  according to the resident full-time equivalent enrollment of all 
 12.18  eligible post-secondary institutions that apply to participate 
 12.19  in the program, and the amount of the allocation that an 
 12.20  institution spent during the previous academic year.  Each 
 12.21  institution wishing to participate in the work-study program 
 12.22  must submit, in accordance with policies and procedures 
 12.23  established by the office, an estimate of the amount of funds 
 12.24  needed by the institution.  Any funds allocated to an 
 12.25  institution that exceed the actual need of the institution shall 
 12.26  be reallocated by the office to other institutions.  An 
 12.27  institution may carry forward or backward the same percentage of 
 12.28  its initial allocation that is authorized under federal 
 12.29  work-study provisions.  
 12.30     Sec. 22.  Minnesota Statutes 1998, section 136A.233, is 
 12.31  amended by adding a subdivision to read: 
 12.32     Subd. 1a.  [PUBLIC INSTITUTIONS.] Appropriations for work 
 12.33  study awards shall be provided directly to the board of regents 
 12.34  and the board of trustees for allocation to their respective 
 12.35  institutions.  Public post-secondary institutions must abide by 
 12.36  provisions in this section in awards to their students. 
 13.1      Sec. 23.  Minnesota Statutes 1998, section 136A.242, 
 13.2   subdivision 5, is amended to read: 
 13.3      Subd. 5.  [DIRECTOR COMMISSIONER.] "Director" means the 
 13.4   director of the higher education services office "Commissioner" 
 13.5   means the commissioner of finance. 
 13.6      Sec. 24.  Minnesota Statutes 1998, section 136A.242, 
 13.7   subdivision 8, is amended to read: 
 13.8      Subd. 8.  [OFFICE DEPARTMENT.] "Office" means the higher 
 13.9   education services office "Department" means the department of 
 13.10  finance. 
 13.11     Sec. 25.  Minnesota Statutes 1998, section 136A.243, is 
 13.12  amended to read: 
 13.13     136A.243 [HIGHER EDUCATION SERVICES OFFICE DEPARTMENT OF 
 13.14  FINANCE.] 
 13.15     Subdivision 1.  [RESPONSIBILITIES.] (a) The director 
 13.16  commissioner shall establish the rules, terms, and conditions 
 13.17  for the program, subject to the requirements of sections 
 13.18  136A.241 to 136A.245. 
 13.19     (b) The director commissioner shall prescribe the 
 13.20  application forms, procedures, and other requirements that apply 
 13.21  to the program. 
 13.22     Subd. 2.  [ACCOUNTS-TYPE PROGRAM.] The office department 
 13.23  must establish the program and the program must be operated as 
 13.24  an accounts-type program that permits individuals to save for 
 13.25  qualified higher education costs incurred at any institution, 
 13.26  regardless of whether it is private or public or whether it is 
 13.27  located within or outside of this state.  A separate account 
 13.28  must be maintained for each beneficiary for whom contributions 
 13.29  are made. 
 13.30     Subd. 3.  [CONSULTATION WITH STATE BOARD OF INVESTMENT.] In 
 13.31  designing and establishing the program's requirements and in 
 13.32  negotiating or entering contracts with third parties under 
 13.33  subdivision 8, the director commissioner shall consult with the 
 13.34  executive director. 
 13.35     Subd. 4.  [PROGRAM TO COMPLY WITH FEDERAL LAW.] The 
 13.36  director commissioner shall take steps to ensure that the 
 14.1   program meets the requirements for a qualified state tuition 
 14.2   program under section 529 of the Internal Revenue Code.  
 14.3   The director commissioner may request a private letter ruling or 
 14.4   rulings from the Internal Revenue Service or take any other 
 14.5   steps to ensure that the program qualifies under section 529 of 
 14.6   the Internal Revenue Code or other relevant provisions of 
 14.7   federal law. 
 14.8      Subd. 5.  [MINIMUM PENALTY.] In establishing the terms of 
 14.9   the program, the office department must provide that refunds of 
 14.10  amounts in an account are subject to a minimum penalty, as 
 14.11  required by section 529(b)(3) of the Internal Revenue Code.  If 
 14.12  the refunds or payments are not used for qualified higher 
 14.13  education expenses of the designated beneficiary, this penalty 
 14.14  must equal, at least, the proportionate amount of any matching 
 14.15  grants deposited in the account under section 136A.245 and the 
 14.16  investment return on the grants, plus an additional penalty that 
 14.17  meets the requirement of federal law. 
 14.18     Subd. 6.  [THREE-YEAR PERIOD FOR WITHDRAWAL OF GRANTS.] A 
 14.19  matching grant deposited in the account under section 136A.245 
 14.20  may not be withdrawn within three years of the establishment of 
 14.21  the account of the beneficiary.  In calculating the three-year 
 14.22  period, the period held in another account is included, if the 
 14.23  account includes a rollover from another account under section 
 14.24  529(c)(3)(C) of the Internal Revenue Code. 
 14.25     Subd. 7.  [MARKETING.] The director commissioner shall make 
 14.26  parents and other interested individuals aware of the 
 14.27  availability and advantages of the program as a way to save for 
 14.28  higher education costs.  The cost of these promotional efforts 
 14.29  must be paid entirely from state general fund appropriations and 
 14.30  may not be funded with fees imposed on participants. 
 14.31     Subd. 8.  [ADMINISTRATION.] The director commissioner shall 
 14.32  administer the program, including accepting and processing 
 14.33  applications, maintaining account records, making payments, 
 14.34  making matching grants under section 136A.245, and undertaking 
 14.35  any other necessary tasks to administer the program.  The office 
 14.36  department may contract with one or more third parties to carry 
 15.1   out some or all of these administrative duties, including 
 15.2   promotion and marketing of the program.  The office and the 
 15.3   board commissioner may jointly contract with third-party 
 15.4   providers, if the office and board determine commissioner 
 15.5   determines that it is desirable to contract with the same entity 
 15.6   or entities for administration and investment management. 
 15.7      Subd. 9.  [AUTHORITY TO IMPOSE FEES.] The office department 
 15.8   may impose fees on participants in the program to recover the 
 15.9   costs of administration.  The office department must use its 
 15.10  best efforts to keep these fees as low as possible, consistent 
 15.11  with efficient administration, so that the returns on savings 
 15.12  invested in the program will be as high as possible. 
 15.13     Sec. 26.  Minnesota Statutes 1998, section 136A.244, 
 15.14  subdivision 3, is amended to read: 
 15.15     Subd. 3.  [CONTRACTING AUTHORITY.] The board may contract 
 15.16  with one or more third parties for investment management, 
 15.17  recordkeeping, or other services in connection with investing 
 15.18  the accounts.  The board and office may jointly contract with 
 15.19  third-party providers, if the office and board 
 15.20  determine determines that it is desirable to contract with the 
 15.21  same entity or entities for administration and investment 
 15.22  management. 
 15.23     Sec. 27.  Minnesota Statutes 1998, section 136A.26, is 
 15.24  amended to read: 
 15.25     136A.26 [MEMBERSHIPS; OFFICERS; COMPENSATION; REMOVAL.] 
 15.26     Subdivision 1.  [MEMBERSHIP.] The Minnesota higher 
 15.27  education facilities authority shall consist of eight members 
 15.28  appointed by the governor with the advice and consent of the 
 15.29  senate, and a representative of the higher education services 
 15.30  office.  
 15.31     All members to be appointed by the governor shall be 
 15.32  residents of the state.  At least two members must reside 
 15.33  outside the metropolitan area as defined in section 473.121, 
 15.34  subdivision 2.  At least one of the members shall be a person 
 15.35  having a favorable reputation for skill, knowledge, and 
 15.36  experience in the field of state and municipal finance; and at 
 16.1   least one shall be a person having a favorable reputation for 
 16.2   skill, knowledge, and experience in the building construction 
 16.3   field; and at least one of the members shall be a trustee, 
 16.4   director, officer, or employee of an institution of higher 
 16.5   education. 
 16.6      Subd. 1a.  [PRIVATE COLLEGE COUNCIL MEMBER.] The president 
 16.7   of the Minnesota private college council, or the president's 
 16.8   designee, shall serve without compensation as an advisory, 
 16.9   nonvoting member of the authority. 
 16.10     Subd. 2.  [TERM; COMPENSATION; REMOVAL.] The membership 
 16.11  terms, compensation, removal of members, and filling of 
 16.12  vacancies for authority members other than the representative of 
 16.13  the higher education services office, and the president of the 
 16.14  private college council, shall be as provided in section 15.0575.
 16.15     Sec. 28.  Minnesota Statutes 1998, section 136A.29, 
 16.16  subdivision 4, is amended to read: 
 16.17     Subd. 4.  By mutual agreement between the authority and the 
 16.18  higher education services office, authority staff employees may 
 16.19  also be members of the office staff.  By mutual agreement, 
 16.20  between the authority and the commissioner of children, 
 16.21  families, and learning, authority employees may be provided 
 16.22  office space in the office of the higher education services 
 16.23  office department, and said the employees may make use of 
 16.24  equipment, supplies, and office space, provided that the 
 16.25  authority fully reimburses the higher education services office 
 16.26  department for salaries and for space, equipment, supplies, and 
 16.27  materials used.  In the absence of such a mutual agreement 
 16.28  between the authority and the higher education services office, 
 16.29  the authority may maintain an office at such a place or places 
 16.30  as it may designate. 
 16.31     Sec. 29.  Minnesota Statutes 1998, section 136A.62, 
 16.32  subdivision 2, is amended to read: 
 16.33     Subd. 2.  [OFFICE.] "Office" means the Minnesota higher 
 16.34  education post-secondary student services office. 
 16.35     Sec. 30.  [137.042] [STATEWIDE STUDENT DATA COLLECTION.] 
 16.36     The board of regents is requested to establish a center for 
 17.1   the collection, analysis, and dissemination of statewide data 
 17.2   regarding Minnesota post-secondary students.  The center should 
 17.3   assume the management of the student record database formerly 
 17.4   maintained by the higher education services office.  The center 
 17.5   should continue to collect similar data to maintain records for 
 17.6   ongoing analysis.  Additionally, the center should enhance and 
 17.7   improve the collection of statewide student and institutional 
 17.8   data relevant to state policy analysis and development.  All 
 17.9   public and private post-secondary institutions in the state are 
 17.10  encouraged to fully cooperate in providing information to the 
 17.11  center. 
 17.12     Sec. 31.  [TRANSITION.] 
 17.13     All personnel, materials, unexpended funds, and other items 
 17.14  relating to the powers and duties of the higher education 
 17.15  services office that are continued in this act are transferred 
 17.16  to the department of children, families, and learning as 
 17.17  provided in Minnesota Statutes, section 15.039. 
 17.18     Sec. 32.  [APPROPRIATION.] 
 17.19     Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES, AND 
 17.20  LEARNING.] $....... is appropriated in fiscal year 2001 from the 
 17.21  general fund to the department of children, families, and 
 17.22  learning to establish and operate an office of post-secondary 
 17.23  student services for the purposes of necessary financial aid 
 17.24  administration, registration, and licensing of private colleges 
 17.25  and trade schools, and administration of reciprocity agreements 
 17.26  as provided in this act. 
 17.27     Subd. 2.  [BOARD OF REGENTS OF THE UNIVERSITY OF 
 17.28  MINNESOTA.] (a) $....... is appropriated in fiscal year 2001 
 17.29  from the general fund to establish a statewide student data 
 17.30  center. 
 17.31     (b) $....... is appropriated in fiscal year 2001 from the 
 17.32  general fund for state grants to University of Minnesota 
 17.33  students under Minnesota Statutes, sections 136A.101 and 
 17.34  136A.121. 
 17.35     (c) $....... is appropriated in fiscal year 2001 from the 
 17.36  general fund for work study awards to University of Minnesota 
 18.1   students under Minnesota Statutes, section 136A.233. 
 18.2      Subd. 3.  [BOARD OF TRUSTEES OF MINNESOTA STATE COLLEGES 
 18.3   AND UNIVERSITIES.] (a) $....... is appropriated in fiscal year 
 18.4   2001 from the general fund for state grants to state college and 
 18.5   university students under Minnesota Statutes, sections 136A.101 
 18.6   and 136A.121. 
 18.7      (b) $....... is appropriated in fiscal year 2001 from the 
 18.8   general fund for work study awards to state college and 
 18.9   university students under Minnesota Statutes, section 136A.233. 
 18.10     Sec. 33.  [REVISOR INSTRUCTION.] 
 18.11     In the next and subsequent editions of Minnesota Statutes, 
 18.12  the revisor of statutes shall change all references to the 
 18.13  "higher education services office" to the "post-secondary 
 18.14  student services office." 
 18.15     Sec. 34.  [REPEALER.] 
 18.16     Minnesota Statutes 1998, sections 136A.011; 136A.03; 
 18.17  136A.031; 136A.0411; 136A.05; 136A.07; 136A.101, subdivision 3; 
 18.18  136A.121, subdivision 17; 136A.136; 136A.15, subdivision 4; 
 18.19  136A.18; 136A.23; and 136A.87, are repealed. 
 18.20     Sec. 35.  [EFFECTIVE DATE.] 
 18.21     Sections 1 to 34 are effective July 1, 2000.