OLR Research Report


September 17, 2008

 

2008-R-0513

TRUSTEE ACCOUNTS

By: Sandra Norman-Eady, Chief Attorney

You asked for an explanation of the wording in CGS 4-52 and 4-54 on trustee accounts at institutions of higher education and policy options for expanding the use of and managing these accounts.

SUMMARY

State educational institutions and welfare and medical agencies operate trustee accounts for their students or employees, respectively. The accounts consist of proceeds from canteens, vending machines, and recitals. They also consist of student activity fees, membership fees, deposits, gifts, donations, bequests, and other legal sources compatible with the good government of the institutions or agencies. The head of the institution or agency establishes the trustee account with the comptroller's approval.

The administrative head of the institution or agency supervises the account but student government at a public college or university may assume and maintain full control over student activity funds under certain circumstances.

With one exception, the trustee account laws (CGS 4-52 through 4-56) were first enacted in 1943 ( 3-50g to 3-53g, supplement) and there is no legislative history to aid us in determining why the laws were written as they are. The exception is for the provisions establishing a procedure for student governments at colleges and universities to assume full control over student activity funds. These provisions were enacted in 1977 (PA 77-414) following reports of illegal use of the funds at Central Connecticut State College (CCSC) in New Britain and Hartford State Technical College.

Legislation could be proposed to clarify how student activity fees may be used and to either give one body control over the trustee account or establish a different procedure for determining who maintains it.

TRUSTEE ACCOUNTS DEFINED

Trustee accounts at state educational institutions are accounts operated for the benefit of the students that attend the institution (CGS 4-52). The definition generally dates back to 1943, except student activity fees were specifically included in 1978 (PA 78-298) and the accounts were designated “trustee accounts” instead of “activity funds” in 2002 (PA 02-107).

The law requires that these trustee accounts be operated for the benefit of students but it does not require student activity fees be used for the exclusive benefit of students. It also does not require that students derive a direct benefit from trust account expenditures. Thus, it appears possible for student account fees to be used to benefit non-students and students alike. If this were not the case activities that are often supported by these accounts would be unable to hire experienced people from the community to assist students. For example, college newspapers, which are typically supported by these accounts, would be unable to hire journalists as managers or editors to help students hone their communication skills.

Legislation could be introduced that specifies how trustee accounts are used. This legislation could require that (1) the account expenditures benefit students exclusively, (2) a certain percentage of the fund be used exclusively to benefit students, (3) institutions of higher education articulate how funds will be expended each year, or (4) students vote on how funds are expended.

TRUSTEE ACCOUNT MANAGEMENT

The law allows student governments at public colleges and universities to assume and maintain full control over student activity funds if:

1. a referendum is held by secret ballot after 14 days' notice based on the desire of student government or a petition signed by at least 5% of the students enrolled and paying activity fees and

2. a majority of at least 40% of the students enrolled and paying activity fees approve the referendum.

If the referendum is approved, the student government must establish a finance committee to hold hearings on budget requests and expenditures and make recommendations to the student government on allocations from the trustee account. The student government must have an elected, bonded treasurer as one of its officers.

A referendum on whether to continue student control of the account must be held at least every four years. Thresholds for conducting and improving the subsequent referenda are the same as those for the initial referendum. If any such referendum fails, control over the account reverts to the administrative head of the college or university (CGS 4-54 (b) – (d)).

When explaining the bill (HB 6114) that became PA 77-414, Representative David Smith stated that it achieved the objectives of proponents and opponents of student controls over trustee accounts. In an Education Committee public hearing, proponents argued that college students who were old enough to vote and fight wars were mature and responsible enough to manage and control their own funds. Opponents argued that the student population was highly transitory and, as such, could not be counted on to properly manage the account.

Instead of quadrennial referenda, legislation could be proposed that:

1. requires student governments to determine control over the trustee account with final confirmation by the board of trustees;

2. gives student governments control over the account and establishes safeguards against misuse;

3. grandfathers existing management control practices and requires compliance with existing law by the beginning of the 2009 school term;

4. gives school administration control over the account and establishes safeguards against misuse;

5. requires control over the account to alternate between school administration and student government biennially.

EVENTS IMMEDIATELY PRECEDING THE PASSAGE OF PA 77-414

Several allegations of misuse of student activity funds preceded the passage of PA 77-414. A chronology of events follows:

1. In mid-April of 1976, the state auditors charged that CCSC violated state law by financing a mini park and a pub through the student activity fund;

2. A few days later, a CCSC student charged that the student newspaper, the Recorder, misused student activity funds and falsified records;

3. In May, the state auditors stated that the books of the Hartford State Technical College student activity fund were in generally poor condition and urged immediate corrective action;

4. In May, CCSC's president took control of the student activity fund in alleged violation of the student government constitution;

5. In late 1976, UConn and CCSC student governments attempted to hire legal counsel to represent them in actions against their administrations; and

6. The attorney general's office stated that a student government is part of the school administration and thus cannot bring a legal action against it because there are not two sides to the dispute.

SNE:ts