S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5795

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                            February 20, 2009
                               ___________

Introduced  by  M.  of  A.  HAYES,  TEDISCO, FINCH, FITZPATRICK, HAWLEY,
  RABBITT, WALKER -- Multi-Sponsored by -- M. of  A.  ALFANO,  BACALLES,
  BARCLAY, BARRA, BURLING, BUTLER, CALHOUN, CONTE, CROUCH, DUPREY, ERRI-
  GO,  GIGLIO,  KOLB,  McDONOUGH, MILLER, MOLINARO, OAKS, O'MARA, QUINN,
  RAIA, REILICH, SALADINO, SAYWARD, SCOZZAFAVA, THIELE, TOWNSEND -- read
  once and referred to the Committee on Higher Education

AN ACT to amend the education law, in relation to  mandating  more  than
  one manager to administer the college choice savings program

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivisions 2, 3, 4 and 5 of section 695-d of  the  educa-
tion  law,  subdivisions  2 and 5 as added by chapter 546 of the laws of
1997 and subdivisions 3 and 4 as amended by chapter 535 of the  laws  of
2000, are amended to read as follows:
  2.  The comptroller may solicit proposals from financial organizations
to act as depositories and managers of the program. Financial  organiza-
tions  submitting  proposals  shall  describe  the investment instrument
which will be held in accounts. The comptroller shall  select  AT  LEAST
TWO  FINANCIAL  ORGANIZATIONS  as program depositories and managers [the
financial organization], from among the bidding financial  organizations
that demonstrates [the most] AN advantageous combination, both to poten-
tial program participants and this state, of the following factors:
  a. Financial stability and integrity of the financial organization;
  b. The safety of the investment instrument being offered;
  c.  The ability of the investment instrument to track increasing costs
of higher education;
  d. The ability of the financial organization to satisfy  recordkeeping
and reporting requirements;
  e. The financial organization's plan for promoting the program and the
investment it is willing to make to promote the program;

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06842-01-9

              

A. 5795                             2

  f.  The  fees,  if  any, proposed to be charged to persons for opening
accounts;
  g.  The  minimum  initial  deposit  and minimum contributions that the
financial organization will require;
  h. The ability of banking organizations  to  accept  electronic  with-
drawals, including payroll deduction plans; [and]
  i.  Other  benefits  to  the  state  or  its residents included in the
proposal, including fees payable to the state to cover expenses of oper-
ation of the program[.]; AND
  J. AT THE CONCLUSION OF SUCH CONTRACTS ENTERED INTO PURSUANT TO SUBDI-
VISION THREE OF THIS SECTION, THE COMPTROLLER SHALL  ANALYZE  ALL  OTHER
COLLEGE  CHOICE  SAVINGS  PROGRAMS  AUTHORIZED  PURSUANT TO THE INTERNAL
REVENUE CODE AND ENSURE THAT NEW YORK STATE OFFERS THE MAXIMUM AMOUNT OF
INVESTMENT OPTIONS AUTHORIZED BY FEDERAL LAW.
  3. The comptroller [may] SHALL enter into [a contract] CONTRACTS  with
[a]  financial  [organization] ORGANIZATIONS.  Such financial [organiza-
tion] ORGANIZATIONS management may provide one or more types of  invest-
ment instrument.
  4.  The  comptroller  [may]  SHALL  select  [more  than one] financial
[organization] ORGANIZATIONS for the program, SO LONG AS THEY  MEET  THE
CRITERIA OF SUBDIVISION TWO OF THIS SECTION.
  5.  A management contract shall include, at a minimum, terms requiring
the financial organization to:
  a. Take any action required to keep the  program  in  compliance  with
requirements  of  section  six hundred ninety-five-e of this article and
any actions not contrary to its contract to manage the program to quali-
fy as a "qualified state tuition plan" under section 529 of the Internal
Revenue Code of 1986, as amended;
  b. Keep adequate records of each account, keep each account segregated
from each other account, and provide the comptroller with  the  informa-
tion necessary to prepare the statements required by section six hundred
ninety-five-e of this article;
  c.  Compile  and total information contained in statements required to
be prepared under section six hundred ninety-five-e of this article  and
provide such compilations to the comptroller;
  d.  [If  there  is more than one program manager, provide] PROVIDE the
comptroller with such information necessary to determine compliance with
section six hundred ninety-five-e of this article;
  e. Provide the comptroller or his OR HER designee access to the  books
and  records  of  the  program manager to the extent needed to determine
compliance with the contract;
  f. Hold all accounts for the benefit of the account owner;
  g. Be audited at least annually by a firm of certified public account-
ants selected by the program manager and that the results of such  audit
be provided to the comptroller;
  h.  Provide  the comptroller with copies of all regulatory filings and
reports made by it during the term of the management contract  or  while
it  is  holding any accounts, other than confidential filings or reports
that will not become part of the program. The program manager shall make
available for review by the comptroller  the  results  of  any  periodic
examination  of such manager by any state or federal banking, insurance,
or securities commission, except to  the  extent  that  such  report  or
reports  may  not be disclosed under applicable law or the rules of such
commission; and
  i. Ensure that any description of the program, whether in  writing  or
through  the  use  of  any  media, is consistent with the marketing plan

A. 5795                             3

developed in the memorandum of understanding pursuant to the  provisions
of section six hundred ninety-five-c of this article.
  S  2.  This  act shall take effect on the ninetieth day after it shall
have become a law; provided, however, that  any  rules  and  regulations
necessary  for  the  timely  implementation of this act on its effective
date shall be promulgated on or before such date.