§256-3  Functions and powers of the directorof finance.  (a)  The director of finance shall implement the program underthe terms and conditions established by this chapter.  The director of financemay make changes to the program as required for participants to obtain ormaintain the federal tax benefits or treatment provided by section 529 of theInternal Revenue Code of 1986, as amended, or successor legislation.

(b)  The director of finance may enter intotuition savings agreements with account owners pursuant to this chapter.

(c)  The director of finance may implement theprogram through the use of financial organizations as account depositories andmanagers.  Under the program, individuals may establish accounts directly withan account depository.

(d)  The director of finance may solicitproposals from financial organizations to act as program managers.  Financialorganizations submitting proposals shall describe the investment instrumentsthat will be held in accounts.  The director of finance shall select as programmanagers the financial organizations from among the bidding financialorganizations that demonstrate the most advantageous combination, both topotential program participants and this State, based on the following factors:

(1)  The financial stability and integrity of thefinancial organization;

(2)  The safety of the investment instruments beingoffered;

(3)  The ability of the investment instruments totrack the expected increasing costs of higher education;

(4)  The ability of the financial organization tosatisfy recordkeeping and reporting requirements;

(5)  The financial organization's plan for promotingthe program and the resources it is willing to allocate to promote the program;

(6)  The fees, if any, proposed to be charged topersons for opening accounts;

(7)  The minimum initial deposit and minimumcontributions that the financial organization will require;

(8)  The ability of financial organizations to acceptelectronic withdrawals, including payroll deduction plans; and

(9)  Other benefits to the State or its residentsincluded in the proposal, including fees payable to the State to cover expensesto operate the program.

(e)  The director of finance may enter into amanagement contract of up to ten years with a financial organization.  Themanagement contract shall include, at a minimum, terms requiring the financialorganization to:

(1)  Take any action required to keep the program incompliance with requirements of section 256-4 and to manage the program toqualify it as a qualified state tuition plan under section 529 of the InternalRevenue Code of 1986, as amended, or successor legislation;

(2)  Keep adequate records of each account, keep eachaccount segregated from each other account, and provide the director of financewith the information necessary to prepare the statements required by section256-4;

(3)  Compile information contained in statementsrequired to be prepared under section 256-4 and provide the compilations to thedirector of finance;

(4)  If there is more than one program manager,provide the director of finance with the information necessary to determinecompliance with section 256-4;

(5)  Provide the director of finance or designeeaccess to the books and records of the program manager to the extent needed todetermine compliance with the contract;

(6)  Hold all accounts for the benefit of the accountowner;

(7)  Be audited at least annually by a firm ofindependent certified public accountants selected by the program manager, andprovide the results of the audit to the director of finance;

(8)  Provide the director of finance with copies ofall regulatory filings and reports related to the program made by it during theterm of the management contract or while it is holding any accounts, other thanconfidential filings or reports that will not become part of the program.  Theprogram manager shall make available for review by the director of finance, theresults of any periodic examination of the manager by any state or federalbanking, insurance, or securities commission, except to the extent that thereport or reports may not be disclosed under applicable law or the rules of thecommission; and

(9)  Undertake to provide the information required byrule 15c2-12(b)(5) under the Securities Exchange Act of 1934 pursuant to acontinuing disclosure certificate for the benefit of the account owners.

(f)  The director of finance may select morethan one financial organization and investment instrument for the program.

(g)  The director of finance may require an auditto be conducted of the operations and financial position of the program managerat any time if the director of finance has any reason to be concerned about thefinancial position, the recordkeeping practices, or the status of accounts ofthe program manager.

(h)  During the term of any contract with aprogram manager, the director of finance shall conduct an examination of themanager and its handling of accounts.  The examination shall be conducted atleast biennially if the manager is not otherwise subject to periodicexamination by the commissioner of financial institutions, the Federal DepositInsurance Corporation, or other similar entity.

(i)  The director of finance may establish anominal fee for an application for a college account.

(j)  The director of finance may enter intocontracts for the services of consultants for rendering professional andtechnical assistance and advice and any other contracts that are necessary andproper for the implementation of the program.

(k)  The director of finance may adopt rules toimplement the program pursuant to chapter 91. [L 1999, c 81, pt of §2; am L2000, c 90, §2]