OLR Bill Analysis
sSB 870 (File 371, as amended by Senate "A")*
AN ACT IMPLEMENTING THE RECOMMENDATIONS OF THE BOARD OF REGENTS FOR HIGHER EDUCATION.
Beginning in FY 18, this bill authorizes the UConn and Connecticut State University System (CSUS) foundations to invest state funds deposited in the Office of Higher Education's (OHE) Endowed Chair Investment Fund to benefit endowed chairs at their respective institutions (§ 7). Under current law, the state treasurer invests these funds.
The bill also reassigns the following duties from the Board of Regents for Higher Education (BOR) to OHE:
1. administering various grant and loan forgiveness programs (§§ 2-4),
2. publishing information about academic programs offered at public technical high schools and higher education institutions related to green jobs (§ 5), and
3. gathering information about and developing new programs and methods for academic fields relating to public education (§ 1).
It also relieves the boards of trustees for the regional community-technical colleges (now BOR) and UConn of an annual reporting requirement on a joint use plan for Naugatuck Valley Community College (§ 6).
Additionally, the bill repeals a requirement that BOR, which is not a state agency, promulgate regulations for determining financial need for tuition waivers (§ 9) and transfers from BOR to the UConn board of trustees the requirement to establish an endowed chair in infectious diseases at the UConn Health Center (§ 8).
The bill also makes technical and conforming changes.
*Senate Amendment “A” adds to the underlying bill provisions that (1) allow foundations to invest state funds to benefit endowed chairs and (2) transfers from BOR to the UConn board of trustees the requirement to establish an endowed chair in infectious diseases.
EFFECTIVE DATE: Upon passage, except the provisions affecting the Endowed Chair Investment Fund and the endowed chair in infectious diseases take effect July 1, 2017.
ENDOWED CHAIR INVESTMENT FUND
By law, OHE may establish and administer the Endowed Chair Investment Fund, which contains $500,000 to $1 million in state funds for each matching non-state contribution privately raised by UConn or CSUS for an endowed chair. OHE must approve applications for these endowed chair positions in order for state grants to be awarded. Under current law, interest earned from the investment of the state and private funds supports the endowed chair.
Transfer and Investment of Funds (§ 7)
Beginning in FY 18, the bill allows the foundations to use an alternative investment method for these state funds. Under the bill, either:
1. OHE may transfer these state funds to the foundations upon request for each approved endowed chair, which the foundations must invest themselves, or
2. as required under current law, the state treasurer invests these state funds and allocates the interest earned on them to the foundations upon request. (The bill specifies that this is an annual allocation.)
Under either investment method, the bill requires the foundations to use any interest income earned on the state funds to support their respective endowed chairs.
Under the bill, foundations that request a transfer of state funds from OHE for the purpose of their own investment must do the following:
1. account for these state funds separately from the private contributions,
2. hold them as a permanently restricted asset for the endowed chair, and
3. manage them in accordance with the Connecticut UPMIFA (see BACKGROUND) and in a manner consistent with their own investment and expenditure policies.
Under the bill, in any fiscal year when the market value of the state funds is less than the principal value, the foundation (1) may not use any interest income earned to support an endowed chair and (2) must restore the principal balance to its original amount. (It is unclear whether this restoration must occur at the close of the fiscal year or at the beginning of the following fiscal year.)
Reporting Requirements (§ 7)
The bill requires the boards of trustees to submit an annual report to OHE and the Higher Education Committee about their management of their endowed chair funds.
For foundations that choose to receive only the interest from state funds invested by the State Treasurer, the report must include endowed chair expenditures.
For foundations that choose to receive state funds to invest themselves, the report must include (1) expenditures, (2) the balance of state funds and non-state matching contributions in each of the two previous fiscal years, and (3) the amount of interest income earned for the state funds and non-state matching contributions for the previous fiscal year.
DUTIES REASSIGNED FROM BOR TO OHE
Grant and Loan Forgiveness Program Administration (§§ 2-4)
The bill reassigns administration of the following grant and loan forgiveness programs from BOR to OHE: (1) Engineering Connecticut; (2) You Belong; and (3) the Connecticut green technology, life science, and health information technology loan reimbursement program (see BACKGROUND).
Green Jobs Requirements (§ 5)
The bill also requires OHE, rather than BOR, in consultation with the State Department of Education, to annually prepare and publish the following on its website: (1) a list of every green jobs course, certificate, and degree program offered by technical high schools and public higher education institutions and (2) an inventory of green jobs-related equipment used by such schools and institutions.
Public Education Information and Program Development (§ 1)
The bill transfers from BOR to OHE the responsibility for gathering information on new programs and education methods being developed in public schools and colleges in Connecticut and nationwide. Under the bill, OHE must keep records of this information current and publicize it, as well as use the information to encourage and help develop new and improved programs and education methods in order to recruit, prepare, and train or retrain personnel for these programs.
Connecticut Uniform Prudent Management of Institutional Funds Act (UPMIFA)
State law requires state college- or university-affiliated foundations to establish and adhere to an investment and spending policy that is consistent with the Connecticut UPMIFA (CGS § 4-37f(9)(D)).
UPMIFA applies to institutions, which are defined as entities organized and operated exclusively for charitable purposes; government or governmental subdivisions, agencies, or instrumentalities, to the extent that they hold funds exclusively for a charitable purpose; and trusts that had both charitable and non-charitable interests, after all non-charitable interests have terminated. The term “charitable purpose” includes purposes related to relieving poverty, advancing education or religion, promoting health, and other purposes that are communally beneficial (CGS §§ 45a-535 to 45a-535i).
This program provides student loan reimbursement grants to individuals who graduated from higher education institutions with undergraduate or graduate degrees in engineering, are employed in Connecticut as engineers, and satisfy certain other eligibility requirements (CGS § 10a-19e).
This program provides student loan reimbursements to doctoral program graduates employed in Connecticut in economically valuable fields, as determined by the Department of Economic and Community Development (CGS § 10a-19f).
Connecticut Green Technology, Life Science, and Health Information Technology Loan Reimbursement Program
For individuals who graduated on or after May 1, 2010, and have been employed in Connecticut in one of these fields for at least two years after graduation, this program reimburses federal and state loans of (1) up to $2,500 per year or 5% of the amount of such loans, whichever is less, for up to four years for individuals with a bachelor's degree in these fields and (2) up to $2,500 per year or 5% of the amount of such loans, whichever is less, for up to two years for individuals with an associate degree in these fields. Additionally, an income limit of $150,000 also applies for the year prior to the first year of reimbursement (CGS § 10a-19i).
sSB 871, (File 412) as amended by Senate “A,” authorizes the UConn and CSUS foundations, upon request, to invest state funds deposited in OHE's Endowed Chair Investment Fund to benefit endowed chairs at their respective institutions. The bill removes from current law the practice of allocating to the foundations only the interest earned on the state funds in the Endowed Chair Investment Fund invested by the State Treasurer.
Higher Education and Employment Advancement Committee
Joint Favorable Substitute