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



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



(c)  The director of finance may implement the
program through the use of financial organizations as account depositories and
managers.  Under the program, individuals may establish accounts directly with
an account depository.



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



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



(2)  The safety of the investment instruments being
offered;



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



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



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



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



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



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



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



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



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



(2)  Keep adequate records of each account, keep each
account segregated from each other account, and provide the director of finance
with the information necessary to prepare the statements required by section
256-4;



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



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



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



(6)  Hold all accounts for the benefit of the account
owner;



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



(8)  Provide the director of finance with copies of
all regulatory filings and reports related to the program 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 director of finance, the
results of any periodic examination of the manager by any state or federal
banking, insurance, or securities commission, except to the extent that the
report or reports may not be disclosed under applicable law or the rules of the
commission; and



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



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



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



(h)  During the term of any contract with a
program manager, the director of finance shall conduct an examination of the
manager and its handling of accounts.  The examination shall be conducted at
least biennially if the manager is not otherwise subject to periodic
examination by the commissioner of financial institutions, the Federal Deposit
Insurance Corporation, or other similar entity.



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



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



(k)  The director of finance may adopt rules to
implement the program pursuant to chapter 91. [L 1999, c 81, pt of §2; am L
2000, c 90, §2]