Revision: Jan. 25, 2017, 2:29 p.m.
HB 609-FN-A - AS INTRODUCED
HOUSE BILL 609-FN-A
SPONSORS: Rep. Gile, Merr. 27; Rep. Lovejoy, Rock. 36; Rep. Gargasz, Hills. 27; Rep. Wallner, Merr. 10; Rep. Ladd, Graf. 4; Sen. Feltes, Dist 15; Sen. Woodburn, Dist 1
I. Establishes a children's savings account program which will be available to any student enrolled in a public school or chartered public school and who completes a financial literacy program in the second grade or later.
II. Increases the registration fee on mutual funds offered for sale in the state and requires the fee increase to be used to fund deposits into the children's savings accounts.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Seventeen
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Findings. The general court finds that New Hampshire has a critical workforce shortage and supports the attainment of a postsecondary degree or high quality credential by 65 percent of the state's working age population by the year 2025. The projections of New Hampshire's demographic future are clear; declining numbers of high school graduates and a rapidly increasing proportion of that population are eligible for the free and reduced price lunch program. Students from families where no one has earned a college degree and/or low income have lower college attendance rates and lower college graduation rates. Moreover, such families have much higher reliance on government assistance programs. Purposeful intervention is required to break these cycles and create a culture of savings and investment, and attainment of postsecondary credentials. Children's savings accounts are a proven vehicle for achieving these goals.
195-J:7 Definitions. In this chapter:
I. "Account provider" means an entity that has been procured by the state treasurer and approved by the governor and council to hold children's savings accounts, based upon a finding that the entity is subject to sufficient governmental or regulatory oversight, and possesses suitable internal controls to ensure the safety and soundness of amounts held in accounts.
II. "Children's savings account" or "account" means an account established with an account provider on behalf of an eligible child in accordance with this chapter.
III. "Commission" means the children's savings account program commission established in RSA 195-J:2.
IV. "Department" means department of education.
V. "Eligible child" means a child who is a resident of this state, who is enrolled in a public school or chartered public school in this state, and who complies with the requirements of RSA 195-J:8.
VI. "Responsible individual" means a parent or legal guardian of an eligible child.
I. Beginning in the 2018-2019 academic year, a child shall be eligible to participate in the children's savings account program upon completion of a financial literacy program, approved by the department of education, and offered at the child's school of attendance, in the second grade or later. If a financial literacy program is not offered at a child's school of attendance, the department shall provide alternate access to an approved program. School districts shall maintain a record of each child who has completed a financial literacy program and shall provide that information to the department. The responsible individual shall grant permission for the department to transmit information and documentation evidencing completion of the financial literacy program to the account provider.
II. The responsible individual shall also grant permission to the department of education to collect educational, savings, and demographic data to evaluate the effectiveness of the program and disseminate the results in the form of aggregated data. No personally identifiable information shall be disseminated, collected, or retained in accordance with RSA 189:65-68.
III. Participation in the children's savings account program pursuant to this chapter shall not result in the loss or suspension of any federally-funded state-administered income-sensitive benefits, assistance, or subsidies received by a family participating in the program or for which such family may qualify.
195-J:9 Establishment of Account.
I. Beginning with the 2018-2019 academic year, a responsible individual, on behalf of an eligible child, may establish an account in the New Hampshire college tuition savings plan pursuant to RSA 195-H, that complies with the requirements of section 529 of the Internal Revenue Code of 1986, as amended, and any related federal law applicable to the savings plan with the eligible child listed as the beneficiary. The account shall be established in the responsible individual's name and through the account provider. No funds shall be required to establish the account. The department shall furnish the information necessary to establish the account to the account provider.
II. Upon establishment of the account and verification of eligibility of each student by the account provider, the state treasurer shall transfer $250 from the children's savings account trust fund, established in RSA 195-J:5, to the account provider for deposit into the account. The commission shall ensure the proper recordkeeping and reporting procedures regarding the status of the children's savings accounts, including records of beginning balances, contributions, earnings, bonuses, and matches earned by each program participant during the fiscal year.
III. When the principal balance of an account reaches $500, the state treasurer shall transfer an amount, to be determined annually by the commission based on the availability of funds, from the children's savings account trust fund established in RSA 195-J:5 to the account provider for deposit into the account.
I. The commission shall administer the program, in cooperation with the department of education and the higher education commission.
II. The commission may adopt rules, pursuant to RSA 541-A, relative to the development of financial literacy materials, promotion and marketing of the children's savings account program, data collection and related research, privacy and reporting requirements related to the program.
195-J:5 Children's Savings Account Trust Fund.
I. There is established in the office of the state treasurer the children's savings account trust fund which shall be kept separate and distinct from all other funds. The fund is established to meet the requirements of the children's savings account program established in this chapter.
II. The treasurer shall deposit in the children's savings account trust fund all moneys appropriated to the fund, and all moneys received under state or federal law, and any gifts, grants, or donations to the state or to the children's savings account program commission, established in RSA 195-J:2, by private parties, for the purpose of establishing and administering the children's savings account program, and shall credit any interest or income earned on moneys on deposit to the fund.
III. The children's savings account program commission shall include requests for appropriations in the budget submitted pursuant to RSA 9:4.
IV. The children's savings account commission may accept, budget, and expend moneys in the trust fund received from any party for the purposes established in RSA 195-J.
V. All moneys in the trust fund shall be continually appropriated to the children's savings account program commission and shall not lapse.
VI. The treasurer shall, upon request of the children's savings account program commission, establish separate accounts within the trust fund in order to segregate funds according to funding source.
VII. The children's savings account program shall include requests for appropriations in their budget submitted pursuant to RSA 9:4.
(3) Annual non-refundable registration fee for each class of an issuer of open end mutual funds, due on or before May 1 of each year, if required to register under RSA 421-B:3-301 [$1,000] $1,100, from which the secretary of state shall transfer $100 to the children's savings account trust fund established in RSA 195-J:3.
5 Appropriation. The sum of $2,500,000 for the fiscal year ending June 30, 2018 and the sum of $2,500,000 for the fiscal year ending June 30, 2019 are hereby appropriated to the children's savings account trust fund established in RSA 195-J:5. The governor is authorized to draw a warrant for said sums out of any money in the treasury not otherwise appropriated.
HB 609-FN-A- FISCAL NOTE
FISCAL IMPACT: [ X ] State [ ] County [ ] Local [ ] None
Estimated Increase / (Decrease)
[ X ] General [ ] Education [ ] Highway [ X ] Children's Savings Account Trust Fund
This bill amends the Children's Savings Account Program under RSA 195-J by making the program eligible to children who participate in a financial literacy program approved by the Department of Education. This bill also makes a general fund appropriation of $2,500,000 in FY 2018 and $2,500,000 in FY 2019 to the Children's Savings Account Trust Fund, as well as increases the mutual fund registration fee under RSA 421-B:6 from $1,000 to $1,100, with the $100 increase credited to the fund. Additionally, the account of an eligible child would initially receive $250 from the Children's Savings Account Trust Fund and receive another fund deposit, at an amount to be determined by the Children's Savings Account Commission annually, once the principal amount in the account reaches $500.
The Bureau of Securities Regulation states there were approximately 26,000 mutual fund filings which would have been applicable to the proposed legislation in FY 2016. The Bureau estimates this number will increase 2.21 percent annually resulting in revenue of $2,718,400 (27,184 X $100) in FY 2018, $2,778,500 (27,785 X $100) in FY 2019, $2,839,900 (28,399 X $100) in FY 2020 $2,902,700 (29,027 X $100) in FY 2021 to the fund, which would be in addition to the general fund appropriation of $2,500,000 in each FY 2018 and FY 2019.
The Department of Education estimates start-up costs for the program would be $50,000 in FY 2018 to develop the initial literacy module ($30,000), communication materials ($5,000), and various forms and agreements to be used throughout the enrollment process ($15,000). The Department also estimates that 8,000 eligible students in FY 2019 resulting in $2,000,000 (8,000 X $250) of expenditures related to initial account deposits from the Children's Savings Account Trust Fund for that fiscal year. Ongoing costs of $100,000 for administrative expenses and one full-time position to handle technical data management and associated program coordination are anticipated in fiscal years thereafter.
Department of Education, Bureau of Securities Regulations, and Department of Treasury