Missouri Revised Statutes

Chapter 166
Permanent Funds and Trusts

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Public school fund--source--disposition.

166.011. A state public school fund is created which shall consist of all moneys, bonds, lands and other properties belonging to or donated to any state fund for public school purposes and the net proceeds of all sales of lands and other property and effects that accrue to the state by escheat. All such funds shall be paid into the state treasury and securely invested by the state board of education, and sacredly preserved as a public school fund, the annual income of which shall be faithfully appropriated for establishing and maintaining free public schools and for no other uses or purposes whatsoever.

(L. 1963 p. 200 § 7-1)

(Source: RSMo 1959 § 161.180)

Investment of capital of public school fund--securities deposited withstate treasurer.

166.021. 1. All funds accruing to the state public school fund, except the interest on the fund, shall be invested by the state board of education in registered bonds of the United States or the state, bonds of school districts of the state, or bonds or other securities payment of which is fully guaranteed by the United States.

2. Whenever the state board of education contracts with the seller of any such bonds or securities, the board shall requisition and the commissioner of administration shall approve and forthwith issue a warrant upon the state treasurer for the purchase price agreed upon, payable out of the state public school fund, in favor of the seller.

3. All bonds or securities so purchased shall be made payable to, or be registered in the name of, the state treasurer as trustee of the state public school fund and shall be deposited as part of the state public school fund with the state treasurer who shall give his receipt therefor to the board of education.

(L. 1963 p. 200 § 7-2, A.L. 2007 H.B. 264)

(Source: RSMo 1959 § 161.201)

CROSS REFERENCE:

Multinational banks, securities and obligations of, investment in, when, 409.950

State treasurer to be custodian of fund--accounts--annual report.

166.031. 1. The state treasurer is the custodian of all bonds and securities in which the state public school fund is invested, and also of all moneys belonging to the state public school fund, and he and his sureties are responsible on his official bond for the performance of his duties in the safekeeping, disbursement and investment of all money or property of the fund in accordance with the provisions of sections 166.011 to 166.121.

2. The state treasurer shall keep an accurate account of all money, bonds and securities in the state public school fund, the maturities thereof, the rates of interest thereon and the dates when the interest is payable, and shall certify to the board of education quarterly-yearly the accounts and reports relating thereto that are required by the board.

3. The state treasurer and the director of revenue shall include in the annual report required by section 32.060 a full account of all receipts and expenditures on account of the state public school fund and the income therefrom and a report of all information in their possession which relates to the fund and property.

(L. 1963 p. 200 § 7-3)

(Source: RSMo 1959 § 161.211)

State board of education to keep account with treasurer--suitsto recover money due.

166.041. 1. The state board of education shall keep a regular account with the state treasurer and all other persons in relation to the state public school fund.

2. The state board of education shall require all persons who receive any money belonging to the fund or income to settle their accounts, and, in that name, may sue for and recover all moneys due from any person on account of the fund or income.

(L. 1963 p. 200 § 7-4)

(Source: RSMo 1959 § 161.221)

School moneys fund--interest from investments credited to.

166.051. All interest from the investment belonging to the state public school fund shall be paid into the state treasury and credited to the state school moneys fund, which is hereby created. All other funds for the support of free public schools shall be credited to the state school moneys fund and shall be paid out for such purposes on warrants as directed by the state board of education.

(L. 1963 p. 200 § 7-5)

(Source: RSMo 1959 § 161.225)

Gifts to public school fund.

166.061. Any person may grant, give or devise to the public school fund of the state any money, property, real or personal, choses in action of every kind and description. The property shall be turned over and delivered to the state director of revenue and the proceeds thereof shall be deposited in the state treasury to be disposed of in the manner provided in section 166.091.

(L. 1963 p. 200 § 7-6)

(Source: RSMo 1959 § 161.230, A.L. 1961 p. 345)

Receipts for gifts to public school fund.

166.071. For any money, property or choses in action delivered to the director of revenue under sections 166.061 to 166.121 he shall give duplicate receipts, one of which shall be filed in the office of the commissioner of administration, who shall charge the director of revenue therewith.

(L. 1963 p. 200 § 7-7)

(Source: RSMo 1959 § 161.240, A.L. 1961 p. 345)

Instrument of conveyance, when recorded.

166.081. A certified copy of the instrument of writing, evidencing the grant, gift or devise, shall also be delivered to the commissioner of administration and duly recorded by him in his office in a book to be kept specially for that purpose, and the original shall be recorded in the recorder's office of the county where the grantor, donor or devisor lives or resided at the time of his death.

(L. 1963 p. 200 § 7-8)

(Source: RSMo 1959 § 161.250, A.L. 1961 p. 345)

Disposition of property granted.

166.091. The director of revenue shall, as early as practicable, dispose of the property granted, given or devised, according to the terms specified in the written instrument granting or giving the same to the public school fund. If the property is money, or after the property is converted into money, it shall be deposited in the state treasury and securely invested and sacredly preserved as a part of the public school fund, as provided by the constitution of this state. The annual income from the grant, gift or devise shall be appropriated and disbursed and paid over, as near as may be, according to the terms of the writing making the grant, gift or devise, and for no other uses or purposes whatsoever.

(L. 1963 p. 200 § 7-9)

(Source: RSMo 1959 § 161.260, A.L. 1961 p. 345)

Gift for public education which cannot be executed placed in publicschool fund on order of circuit court.

166.101. In all cases where a grant, devise or bequest or gift has been made by any person for educational purposes, in aid of or connected with the free public school system, and from any cause cannot be executed or carried out according to its terms and conditions, the person having charge thereof or holding the same in trust, or any person interested therein, may file a petition in the circuit court of the county where the grantor, donor or testator died, setting forth all the facts connected therewith, and, in the discretion of the court in which the petition is filed, an order may be made directing that the amount of the grant, gift, devise or bequest shall be turned over to the director of revenue of the state as a part of the public school fund, according to the terms and conditions of sections 166.011 to 166.121. The annual income on the proceeds of the grant, devise, gift or bequest shall be faithfully appropriated, as near as may be, in meeting and carrying out the purposes and wishes of the grantor, donor, devisor or testator, according to the instrument of writing making the grant, gift, devise or bequest.

(L. 1963 p. 200 § 7-10)

(Source: RSMo 1959 § 161.280, A.L. 1961 p. 345)

Liability of director of revenue.

166.111. The director of revenue and his sureties shall be responsible on his official bond for the safekeeping of the property or money received under sections 166.061 to 166.121 while the property is in his possession and for its disposition in conformity with section 166.091.

(L. 1963 p. 200 § 7-11)

(Source: RSMo 1959 § 161.270, A.L. 1961 p. 345)

State, the trustee.

166.121. The state of Missouri is hereby constituted the custodian and trustee under sections 166.061 to 166.121 of all such funds, and pledges itself for the safekeeping, investment and due application of all funds, with the interest thereon, which may be received by the director of revenue or deposited in the treasury in pursuance of sections 166.061 to 166.121.

(L. 1963 p. 200 § 7-12)

(Source: RSMo 1959 § 161.290, A.L. 1961 p. 345)

County commission to administer county schoolfund--investments--distribution of income to schools.

166.131. The county commission in each county shall administer the county school fund of the county. In each county wherein the annual distribution of the liquidated capital of the county school fund has not been ordered by the voters pursuant to sections 166.151 to 166.161, the proceeds of the fund shall be invested by the county commission in registered bonds of the United States, or in bonds of the state or in approved bonds of any city or school district thereof, or in bonds or other securities the payment of which is fully guaranteed by the United States government and shall be preserved as a county school fund. Annually, on or before September thirtieth, in each county of the state all interest accruing from the investment of the capital of the county school fund, if any, the clear proceeds of all penalties and fines collected for any breach of the penal laws of the state, the net proceeds from the sale of estrays, and all other money lawfully coming into the fund, shall be collected and distributed to the school districts of the county by the county clerk in the same proportion that the September membership of a school district, determined as provided in (1) of subdivision (8) of section 163.011 bears to the sum of the September membership of all the districts in the county. He shall immediately after making the apportionments enter them in a book to be kept for that purpose, and shall furnish each district clerk a copy of the apportionment. The county treasurer shall pay over to the treasurer of the school board of every district in the county the amount due each respective district. The clear proceeds of all forfeitures collected for any breach of the penal laws of the state distributed for education shall be transferred to the school building revolving fund.

(L. 1963 p. 200 § 7-13 and p. 338 § 161.051, A.L. 1982 Adopted by Initiative, Proposition C, November 2, 1982, A.L. 1988 S.B. 789, A.L. 1998 H.B. 1265)

(Source: RSMo 1959 §§ 161.051, 171.010)

CROSS REFERENCE:

Multinational banks, securities and obligations of, investments in, when, 409.950

County treasurer to collect funds--receipts--penalty for violation.

166.141. The county treasurer shall collect and deposit in the county school fund all moneys payable to the fund and shall give the party paying duplicate receipts therefor. The party shall file one of the receipts with the county clerk, who shall charge the amount to the county treasurer. Any person violating the provisions of this section shall be deemed guilty of a misdemeanor and punished by a fine not to exceed five hundred dollars.

(L. 1963 p. 200 § 7-14)

(Source: RSMo 1959 § 171.070)

CROSS REFERENCES:

Fines, penalties and forfeitures into school fund, 271.370

Theatrical performances, shows and circuses tax, proceeds, 316.030

Petition to distribute county school fund.

166.151. Whenever there is presented to the body having in its charge the capital of the county school fund of any county or the city of St. Louis a petition, signed by qualified electors of the county or the city of St. Louis equal in number to five percent of the voters casting a ballot in the county or the city of St. Louis for the office of governor at the last preceding general election at which the office was voted upon, praying that the proposal be submitted to the qualified electors for making annual distribution of the capital of the liquidated school fund, the body shall cause an election to be held upon the proposal.

(L. 1963 p. 200 § 7-15)

(Source: RSMo 1959 § 171.020)

Election on proposal to distribute fund--annual apportionment ofbalance of fund--effect on state aid.

166.161. 1. The proposal shall be submitted to the voters of the county.

2. The question shall be submitted in substantially the following form:

Shall there be an annual distribution of the capital of the liquidated county school fund?

3. If the proposal to distribute annually the capital of the liquidated county school fund receives a majority of the votes cast, the body having control of the county school fund shall proceed thereafter to distribute annually the liquidated fund to the school districts. The accumulated balance of the fund shall be apportioned on or before August thirty-first, of each year, until the fund is liquidated and the apportionment shall be made in the manner provided in section 166.131. When the capital of the liquidated county school fund is distributed to the school districts the fund shall not be counted as a deduction in calculating the equalization quota as defined in section 163.031.

(L. 1963 p. 200 § 7-16, A.L. 1978 H.B. 971, A.L. 1982 Adopted by Initiative, Proposition C, November 2, 1982)

(Source: RSMo 1959 § 171.030)

Effective 1-1-83

Appropriations to satisfy certain judgments transferred to schoolmoneys fund--amount, distribution.

166.275. 1. Any amount of the difference by which the total amount appropriated by the state to school districts, in accordance with a judgment or order based on the equal protection clause of the fourteenth amendment to the Constitution of the United States, for fiscal year 1999 is less than the amount appropriated for the same purpose in fiscal year 1994 in addition to any unexpended appropriation for the 1998 fiscal year that results in additional unobligated resources for the state in fiscal year 1999 shall be transferred to the state school moneys fund and distributed in the manner provided in section 163.031.

2. If the total amount appropriated by the state to school districts, in accordance with a judgment or order based on the equal protection clause of the fourteenth amendment to the Constitution of the United States, for fiscal year 2000 or any subsequent fiscal year is less than the amount appropriated for the same purpose in fiscal year 1999, any amount of the difference in addition to any unexpended appropriation for the prior fiscal year that results in additional unobligated resources for the state beginning in fiscal year 2000 shall be distributed as follows:

(1) Up to the first seventy-five million dollars of such funds, or such lesser amount determined by appropriation to be sufficient to fully fund subsections 1 and 2 of section 163.031, shall be transferred to the state school moneys fund and distributed in the manner provided in section 163.031; and

(2) Beginning in fiscal year 2000, after distributing funds pursuant to subdivision (1) of this subsection, the next twenty-five million dollars, or such lesser amount determined by appropriation to be sufficient, of the remaining funds shall be transferred to fully fund increases in appropriations for transportation categorical aid provided pursuant to section 163.031, and any remainder of such twenty-five million dollars shall be transferred to fund other categorical state aid provided pursuant to section 163.031; provided that, for school year 1999-2000 only, such increase in transportation funding may be placed by districts in their capital projects fund and shall be placed as otherwise provided by law in all other years; and

(3) After distributing funds pursuant to subdivisions (1) and (2) of this subsection, any remaining funds, or such amount determined by appropriation to be sufficient to fully fund subsections 1 and 2 of section 163.031, shall be transferred to the state school moneys fund and distributed in the manner provided in section 163.031.

(L. 1993 S.B. 380 § 8 subsec. 2, A.L. 1995 S.B. 301, A.L. 1998 S.B. 781, A.L. 2005 S.B. 287)

Effective 7-01-06

Definitions--school building revolving fund created--lease purchasesfor projects, plan--eligibility for a lease purchase--ranking ofprojects--plan waived, when--repayment, interest--failure to makeannual payments, state to take possession of buildings, procedure.

166.300. 1. As used in this section, the following words and phrases shall mean:

(1) "Capital improvement projects", expenditures for lands or existing buildings, improvements of grounds, construction of buildings, additions to buildings, remodeling of buildings and initial equipment purchases;

(2) "School facility", a structure dedicated primarily to housing teachers and students in the instructional process, but shall not include buildings dedicated primarily to administrative and support functions within the school.

2. There is hereby created a revolving fund to be known as the "School Building Revolving Fund". All forfeitures of assets transferred pursuant to section 166.131, all gifts and bequests to such fund, and such moneys as may be appropriated to the fund shall be deposited into the school building revolving fund; except that no more than four hundred forty million dollars, in the aggregate, shall be transferred to the fund. After a fund balance has been established by prior years' deposits and interest, school districts may submit applications for lease purchases from the revolving fund for specific projects consistent with rules and regulations of the state board of education and subsection 3 of this section, except that no school district may be permitted to enter into a lease purchase from the school building revolving fund without first submitting a long-range capital improvements plan.

3. To be eligible for a lease purchase authorized by this section:

(1) A school district shall meet the minimum criteria for state aid and for increases in state aid established pursuant to section 163.021;

(2) A school district shall provide a program which is accredited by the state board of education for grades kindergarten through twelve or for grades kindergarten through eight; and

(3) A school district shall have an equalized, assessed valuation per eligible pupil for the preceding year which is less than the statewide average equalized, assessed valuation per eligible pupil for the preceding year; and

(4) A school district shall have a bonded indebtedness which is no less than ninety percent of the constitutional limitation on indebtedness pursuant to Section 26(b) of Article VI of the Constitution of Missouri.

4. Lease purchase applications shall be funded, as funds allow, first for all applications pursuant to subdivision (1) of this subsection and then for applications pursuant to subdivision (2) of this subsection and then for applications pursuant to subdivision (3) of this subsection, and for funding of applications pursuant to a particular subdivision, applications shall be funded in the order that the applications are received by the department. If two or more applications are received on the same day, the district with the lowest appraised valuation per pupil shall be given priority. Ranking of the applications for offering of lease purchases shall be done in the following order:

(1) Districts with capital replacement costs in excess of insurance proceeds due to facility destruction caused by fire or natural disaster shall be ranked on the basis of percentage of bonding capacity;

(2) Districts with a cumulative percentage growth in fall membership for the third through the fifth preceding years in excess of twelve percent and which have a bonded indebtedness which is no less than ninety percent of the constitutional limitation on indebtedness pursuant to Section 26(b) of Article VI of the Constitution of Missouri; and

(3) Districts with an equalized assessed valuation per pupil which is less than the statewide average equalized assessed valuation per pupil and which have a bonded indebtedness which is no less than ninety percent of the constitutional limitation on indebtedness pursuant to Section 26(b) of Article VI of the Constitution of Missouri.

5. When building replacement is caused by fire or natural disaster, the requirement for a school district to have a long-range capital improvements plan may be waived by the state board of education.

6. Each school district participating in a lease purchase from the school building revolving fund shall repay such lease purchase in no more than ten annual payments made on or before June thirtieth of each year. The first such payment shall be due and payable on June thirtieth of the first full fiscal year following receipt of lease purchase proceeds. Lease purchase repayments shall be immediately deposited to the school building revolving fund by the department. Interest charged to the school district shall not exceed three percent.

7. Any school district which fails to obligate the full amount of a loan from the school building revolving fund for the allowable lease purchase must return the unobligated amount plus interest earned to the department no later than June thirtieth of the second full fiscal year after receipt of loan proceeds.

8. If a school district fails to make an annual payment to the school building revolving fund after notice of nonpayment by the department, members of the board of education and the school district's superintendent shall have violated section 162.091 and the attorney general of the state of Missouri shall be notified by the state board of education to begin prosecution procedures.

9. All property purchased pursuant to a lease purchase from the school building revolving fund shall remain the property of the state until such time as the lease purchase has been fully repaid pursuant to this section. If a school district does not make an annual payment to the school building revolving fund after notice of nonpayment by the department, the state board of education may, if the delinquency exceeds one hundred eighty days, take possession of the property. As a part of the lease purchase agreement, the school district shall agree to assume all costs, obligations and liabilities for or arising out of establishment, operation and maintenance of the lease purchase property. Other provisions of law to the contrary notwithstanding, neither the state nor any state agency shall have any obligation for such costs, obligations or liabilities unless and until the state board of education takes possession of the property pursuant to this subsection upon a school district's failure to make annual payments as required in the lease purchase agreement.

10. Any unobligated cash balance in the school building revolving fund as of the effective date of this act*, shall be transferred to aid the public schools of this state pursuant to section 163.031. Any and all deposits made to the school building revolving fund after August 28, 2003, shall be immediately transferred to the state school moneys fund, pursuant to section 166.051.

(L. 1993 S.B. 380 § 12, A.L. 1995 S.B. 301, A.L. 1998 H.B. 1265, A.L. 2003 S.B. 675)

*This act (S.B. 675, 2003) contained an effective date of 1-1-04 for § 339.105; remainder of act became effective 8-28-03.

Citation.

166.400. Sections 166.400 to 166.455 shall be known and may be cited as the "Missouri Higher Education Savings Program".

(L. 1998 H.B. 1694, A.L. 1999 S.B. 460)

Definitions.

166.410. As used in sections 166.400 to 166.455, except where the context clearly requires another interpretation, the following terms mean:

(1) "Beneficiary", any individual designated by a participation agreement to benefit from payments for qualified higher education expenses at an eligible educational institution;

(2) "Benefits", the payment of qualified higher education expenses on behalf of a beneficiary from a savings account during the beneficiary's attendance at an eligible educational institution;

(3) "Board", the Missouri higher education savings program board established in section 166.415;

(4) "Eligible educational institution", an institution of postsecondary education as defined in Section 529(e)(5) of the Internal Revenue Code;

(5) "Financial institution", a bank, insurance company or registered investment company;

(6) "Internal Revenue Code", the Internal Revenue Code of 1986, as amended;

(7) "Missouri higher education savings program" or "savings program", the program created pursuant to sections 166.400 to 166.455;

(8) "Participant", a person who has entered into a participation agreement pursuant to sections 166.400 to 166.455 for the advance payment of qualified higher education expenses on behalf of a beneficiary;

(9) "Participation agreement", an agreement between a participant and the board pursuant to and conforming with the requirements of sections 166.400 to 166.455; and

(10) "Qualified higher education expenses", the qualified costs of tuition and fees and other expenses for attendance at an eligible educational institution, as defined in Section 529(e)(3) of the Internal Revenue Code, as amended.

(L. 1998 H.B. 1694, A.L. 1999 S.B. 460)

Missouri higher education savings program, created, board, members,proxies, powers and duties, investments.

166.415. 1. There is hereby created the "Missouri Higher Education Savings Program". The program shall be administered by the Missouri higher education savings program board which shall consist of the Missouri state treasurer who shall serve as chairman, the commissioner of the department of higher education, the commissioner of the office of administration, the director of the department of economic development, two persons having demonstrable experience and knowledge in the areas of finance or the investment and management of public funds, one of whom is selected by the president pro tem of the senate and one of whom is selected by the speaker of the house of representatives, and one person having demonstrable experience and knowledge in the area of banking or deposit rate determination and placement of depository certificates of deposit or other deposit investments. Such member shall be appointed by the governor with the advice and consent of the senate. The three appointed members shall be appointed to serve for terms of four years from the date of appointment, or until their successors shall have been appointed and shall have qualified. The members of the board shall be subject to the conflict of interest provisions of section 105.452. Any member who violates the conflict of interest provisions shall be removed from the board. In order to establish and administer the savings program, the board, in addition to its other powers and authority, shall have the power and authority to:

(1) Develop and implement the Missouri higher education savings program and, notwithstanding any provision of sections 166.400 to 166.455 to the contrary, the savings programs and services consistent with the purposes and objectives of sections 166.400 to 166.455;

(2) Promulgate reasonable rules and regulations and establish policies and procedures to implement sections 166.400 to 166.455, to permit the savings program to qualify as a "qualified state tuition program" pursuant to Section 529 of the Internal Revenue Code and to ensure the savings program's compliance with all applicable laws;

(3) Develop and implement educational programs and related informational materials for participants, either directly or through a contractual arrangement with a financial institution for investment services, and their families, including special programs and materials to inform families with young children regarding methods for financing education and training beyond high school;

(4) Enter into agreements with any financial institution, the state or any federal or other agency or entity as required for the operation of the savings program pursuant to sections 166.400 to 166.455;

(5) Enter into participation agreements with participants;

(6) Accept any grants, gifts, legislative appropriations, and other moneys from the state, any unit of federal, state, or local government or any other person, firm, partnership, or corporation for deposit to the account of the savings program;

(7) Invest the funds received from participants in appropriate investment instruments to achieve long-term total return through a combination of capital appreciation and current income;

(8) Make appropriate payments and distributions on behalf of beneficiaries pursuant to participation agreements;

(9) Make refunds to participants upon the termination of participation agreements pursuant to the provisions, limitations, and restrictions set forth in sections 166.400 to 166.455 and the rules adopted by the board;

(10) Make provision for the payment of costs of administration and operation of the savings program;

(11) Effectuate and carry out all the powers granted by sections 166.400 to 166.455, and have all other powers necessary to carry out and effectuate the purposes, objectives and provisions of sections 166.400 to 166.455 pertaining to the savings program; and

(12) Procure insurance, guarantees or other protections against any loss in connection with the assets or activities of the savings program.

2. Any member of the board may designate a proxy for that member who will enjoy the full voting privileges of that member for the one meeting so specified by that member. No more than three proxies shall be considered members of the board for the purpose of establishing a quorum.

3. Four members of the board shall constitute a quorum. No vacancy in the membership of the board shall impair the right of a quorum to exercise all the rights and perform all the duties of the board. No action shall be taken by the board except upon the affirmative vote of a majority of the members present.

4. The board shall meet within the state of Missouri at the time set at a previously scheduled meeting or by the request of any four members of the board. Notice of the meeting shall be delivered to all other trustees in person or by depositing notice in a United States post office in a properly stamped and addressed envelope not less than six days prior to the date fixed for the meeting. The board may meet at any time by unanimous mutual consent. There shall be at least one meeting in each quarter.

5. The funds shall be invested only in those investments which a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims, as provided in section 105.688. For new contracts entered into after August 28, 2012, board members shall study investment plans of other states and contract with or negotiate to provide benefit options the same as or similar to other states' qualified plans for the purpose of offering additional options for members of the plan. The board may delegate to duly appointed investment counselors authority to act in place of the board in the investment and reinvestment of all or part of the moneys and may also delegate to such counselors the authority to act in place of the board in the holding, purchasing, selling, assigning, transferring or disposing of any or all of the securities and investments in which such moneys shall have been invested, as well as the proceeds of such investments and such moneys. Such investment counselors shall be registered as investment advisors with the United States Securities and Exchange Commission. In exercising or delegating its investment powers and authority, members of the board shall exercise ordinary business care and prudence under the facts and circumstances prevailing at the time of the action or decision. No member of the board shall be liable for any action taken or omitted with respect to the exercise of, or delegation of, these powers and authority if such member shall have discharged the duties of his or her position in good faith and with that degree of diligence, care and skill which a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims.

6. No investment transaction authorized by the board shall be handled by any company or firm in which a member of the board has a substantial interest, nor shall any member of the board profit directly or indirectly from any such investment.

7. No trustee or employee of the savings program shall receive any gain or profit from any funds or transaction of the savings program. Any trustee, employee or agent of the savings program accepting any gratuity or compensation for the purpose of influencing such trustee's, employee's or agent's action with respect to the investment or management of the funds of the savings program shall thereby forfeit the office and in addition thereto be subject to the penalties prescribed for bribery.

(L. 1998 H.B. 1694, A.L. 1999 S.B. 460, A.L. 2002 S.B. 776, A.L. 2004 H.B. 959, A.L. 2012 S.B. 563, A.L. 2012 S.B. 563)

Participation agreements, terms and conditions--contributionlimitation--penalty.

166.420. 1. The board may enter into savings program participation agreements with participants on behalf of beneficiaries pursuant to the provisions of sections 166.400 to 166.455, including the following terms and conditions:

(1) A participation agreement shall stipulate the terms and conditions of the savings program in which the participant makes contributions;

(2) A participation agreement shall specify the method for calculating the return on the contribution made by the participant;

(3) The execution of a participation agreement by the board shall not guarantee that the beneficiary named in any participation agreement will be admitted to an eligible educational institution, be allowed to continue to attend an eligible educational institution after having been admitted or will graduate from an eligible educational institution;

(4) A participation agreement shall clearly and prominently disclose to participants the risk associated with depositing moneys with the board;

(5) Participation agreements shall be organized and presented in a way and with language that is easily understandable by the general public; and

(6) A participation agreement shall clearly and prominently disclose to participants the existence of any load charge or similar charge assessed against the accounts of the participants for administration or services.

2. The board shall establish the maximum amount which may be contributed annually by a participant with respect to a beneficiary.

3. The board shall establish a total contribution limit for savings accounts established under the savings program with respect to a beneficiary to permit the savings program to qualify as a "qualified state tuition program" pursuant to Section 529 of the Internal Revenue Code. No contribution may be made to a savings account for a beneficiary if it would cause the balance of all savings accounts of the beneficiary to exceed the total contribution limit established by the board. The board may establish other requirements that it deems appropriate to provide adequate safeguards to prevent contributions on behalf of a beneficiary from exceeding what is necessary to provide for the qualified higher education expenses of the beneficiary.

4. The board shall establish the minimum length of time that contributions and earnings must be held by the savings program to qualify pursuant to section 166.435. Any contributions or earnings that are withdrawn or distributed from a savings account prior to the expiration of the minimum length of time, as established by the board, shall be subject to a penalty pursuant to section 166.430.

(L. 1998 H.B. 1694, A.L. 1999 S.B. 460, A.L. 2006 S.B. 641, A.L. 2010 S.B. 772)

Income tax refund, contribution to education savingsaccount--election, how made.

166.421. 1. A participant may elect to contribute all or part of a refund of personal income tax to an account that has been established under sections 166.400 to 166.456 by direct deposit to the financial institution managing the account. The amount elected to be contributed by the participant shall be at least twenty-five dollars and shall be as a contribution only for the tax year in which the refund is issued. The election to contribute may not be changed or revoked.

2. The election shall be made on a form prescribed by the department of revenue and filed with the taxpayer's tax return for the tax year or at such other time and in such other manner as the department may prescribe. The department of revenue shall prescribe the maximum number of accounts to which a taxpayer may elect to contribute a portion of the refund. Notwithstanding the limit prescribed by the department, a parent or legal guardian shall be permitted to contribute a portion of his or her refund to accounts held by each of his or her children.

3. The election to contribute all or a portion of a refund shall be void, and no portion of the refund may be contributed to an account if the taxpayer's refund is offset to pay amounts owed by the taxpayer.

(L. 2015 S.B. 366)

Board to invest funds, use of funds--not deemed income, when.

166.425. All money paid by a participant in connection with participation agreements shall be deposited as received and shall be promptly invested by the board. Contributions and earnings thereon accumulated on behalf of participants in the savings program may be used, as provided in the participation agreement, for qualified higher education expenses. Such contributions and earnings shall not be considered income for purposes of determining a participant's eligibility for financial assistance under any state student aid program.

(L. 1998 H.B. 1694, A.L. 1999 S.B. 460, A.L. 2008 S.B. 863)

Cancellation of agreement, results--penalty.

166.430. Any participant may cancel a participation agreement at will. The board shall impose a penalty equal to or greater than ten percent of the earnings of an account for any distribution that is not:

(1) Used exclusively for qualified higher education expenses of the designated beneficiary;

(2) Made because of death or disability of the designated beneficiary;

(3) Made because of the receipt of scholarship by the designated beneficiary;

(4) A rollover distribution, as defined in Section 529(c)(3)(C)(i) of the Internal Revenue Code; or

(5) Held in the fund for the minimum length of time established by the board.

(L. 1998 H.B. 1694, A.L. 1999 S.B. 460)

State tax exemption.

166.435. 1. Notwithstanding any law to the contrary, the assets of the savings program held by the board, the assets of any deposit program authorized in section 166.500, and the assets of any qualified tuition savings program established pursuant to Section 529 of the Internal Revenue Code and any income therefrom shall be exempt from all taxation by the state or any of its political subdivisions. Income earned or received from the savings program, deposit, or other qualified tuition savings programs established under Section 529 of the Internal Revenue Code program, or refunds of qualified higher education expenses received by a beneficiary from an eligible educational institution in connection with withdrawal from enrollment at such institution which are contributed within sixty days of withdrawal to a qualified tuition savings program of which such individual is a beneficiary shall not be subject to state income tax imposed pursuant to chapter 143 and shall be eligible for any benefits provided in accordance with Section 529 of the Internal Revenue Code. The exemption from taxation pursuant to this section shall apply only to assets and income maintained, accrued, or expended pursuant to the requirements of the savings program established pursuant to sections 166.400 to 166.455, the deposit program established pursuant to sections 166.500 to 166.529, and other qualified tuition savings programs established under Section 529 of the Internal Revenue Code, and no exemption shall apply to assets and income expended for any other purposes. Annual contributions made to the savings program held by the board, the deposit program, and any qualified tuition savings program established under Section 529 of the Internal Revenue Code up to and including eight thousand dollars per participating taxpayer, and up to sixteen thousand dollars for married individuals filing a joint tax return, shall be subtracted in determining Missouri adjusted gross income pursuant to section 143.121.

2. If any deductible contributions to or earnings from any such program referred to in this section are distributed and not used to pay qualified higher education expenses or are not held for the minimum length of time established by the appropriate Missouri board, the amount so distributed shall be added to the Missouri adjusted gross income of the participant, or, if the participant is not living, the beneficiary.

3. The provisions of this section shall apply to tax years beginning on or after January 1, 2008, and the provisions of this section with regard to sections 166.500 to 166.529 shall apply to tax years beginning on or after January 1, 2004.

*4. The repeal and reenactment of this section shall become effective only upon notification by the State Treasurer to the Revisor of Statutes of the passage of H.R. 529 of the 114th United States Congress.

(L. 1998 H.B. 1694, A.L. 1999 S.B. 460, A.L. 2004 H.B. 959, A.L. 2008 S.B. 863, A.L. 2015 S.B. 366 §§ 166.435 and B)

*Contingent effective date.

*Revisor''s note: Section B of S.B. 366, 2015, contained a contingent effective date for this section upon the State Treasurer providing notice to the Revisor of Statutes of the passage of H.R. 529 of the 114th United States Congress. The Revisor of Statutes had not received notificaiton under this section as of the date of the general republication of the Revised Statutes of Missouri in 2016.

State tax exemption.

166.435. 1. Notwithstanding any law to the contrary, the assets of the savings program held by the board, the assets of any deposit program authorized in section 166.500, and the assets of any qualified tuition savings program established pursuant to Section 529 of the Internal Revenue Code and any income therefrom shall be exempt from all taxation by the state or any of its political subdivisions. Income earned or received from the savings program, deposit, or other qualified tuition savings programs established under Section 529 of the Internal Revenue Code program shall not be subject to state income tax imposed pursuant to chapter 143 and shall be eligible for any benefits provided in accordance with Section 529 of the Internal Revenue Code. The exemption from taxation pursuant to this section shall apply only to assets and income maintained, accrued, or expended pursuant to the requirements of the savings program established pursuant to sections 166.400 to 166.455, the deposit program established pursuant to sections 166.500 to 166.529, and other qualified tuition savings programs established under Section 529 of the Internal Revenue Code, and no exemption shall apply to assets and income expended for any other purposes. Annual contributions made to the savings program held by the board, the deposit program, and any qualified tuition savings program established under Section 529 of the Internal Revenue Code up to and including eight thousand dollars per participating taxpayer, and up to sixteen thousand dollars for married individuals filing a joint tax return, shall be subtracted in determining Missouri adjusted gross income pursuant to section 143.121.

2. If any deductible contributions to or earnings from any such program referred to in this section are distributed and not used to pay qualified higher education expenses or are not held for the minimum length of time established by the appropriate Missouri board, the amount so distributed shall be added to the Missouri adjusted gross income of the participant, or, if the participant is not living, the beneficiary.

3. The provisions of this section shall apply to tax years beginning on or after January 1, 2008, and the provisions of this section with regard to sections 166.500 to 166.529 shall apply to tax years beginning on or after January 1, 2004.

(L. 1998 H.B. 1694, A.L. 1999 S.B. 460, A.L. 2004 H.B. 959, A.L. 2008 S.B. 863)

*This section was amended by S.B. 366, 2015. Due to the contingent effective date, both versions of this section are printed.

Assets not state property.

166.440. The assets of the savings program shall at all times be preserved, invested and expended only for the purposes set forth in this section and in accordance with the participation agreements, and no property rights therein shall exist in favor of the state.

(L. 1998 H.B. 1694)

Rules, invalid, when.

166.445. Any rule or portion of a rule, as that term is defined in section 536.010, that is promulgated under the authority delegated in sections 166.400 to 166.455 shall become effective only if it has been promulgated pursuant to the provisions of chapter 536. All rulemaking authority delegated prior to August 28, 1998, is of no force and effect and repealed; however, nothing in this section shall be interpreted to repeal or affect the validity of any rule filed or adopted prior to August 28, 1998, if it fully complied with the provisions of chapter 536. Sections 166.400 to 166.455 and chapter 536 are nonseverable and if any of the powers vested with the general assembly pursuant to chapter 536 to review, to delay the effective date or to disapprove and annul a rule are subsequently held unconstitutional, then the grant of rulemaking authority and any rule proposed or adopted after August 28, 1998, shall be invalid and void.

(L. 1998 H.B. 1694)

Review of program.

166.450. The director of investment of the state treasurer's office shall, on a semiannual basis, review the financial status and investment policy of the program as well as the participation rate in the program. The director of investment shall also review the continued viability of the program and the administration of the program by the board. The director of investment shall report the findings annually to the board, which shall subsequently disclose such findings at a public meeting.

(L. 1998 H.B. 1694)

Funds not state revenues.

166.455. Money accruing to and deposited in individual savings accounts shall not be part of "total state revenues" as defined in Sections 17 and 18 of Article X of the Constitution of the State of Missouri and the expenditure of such revenues shall not be an expense of state government under Section 20 of Article X of the Constitution of the State of Missouri.

(L. 1998 H.B. 1694, A.L. 1999 S.B. 460)

Confidentiality of information.

166.456. All personally identifiable information concerning participants and beneficiaries of accounts established within the Missouri higher education savings program pursuant to sections 166.400 to 166.456 shall be confidential, and any disclosure of such information shall be restricted to purposes directly connected with the administration of the program.

(L. 2002 H.B. 1086 merged with S.B. 776)

Citation of law.

166.500. Sections 166.500 to 166.529 shall be known and may be cited as the "Missouri Higher Education Deposit Program".

(L. 2004 H.B. 959)

Program established as alternative to Missouri higher educationsavings program.

166.501. Notwithstanding the provisions of sections 166.400 to 166.456 to the contrary, the higher education deposit program is established as a nonexclusive alternative to the Missouri higher education savings program, and any participant may elect to participate in both programs subject to aggregate Missouri program limitations.

(L. 2004 H.B. 959 § 166.505)

Definitions.

166.502. As used in sections 166.500 to 166.529, except where the context clearly requires another interpretation, the following terms mean:

(1) "Beneficiary", any individual designated by a participation agreement to benefit from payments for qualified higher education expenses at an eligible educational institution;

(2) "Benefits", the payment of qualified higher education expenses on behalf of a beneficiary from a deposit account during the beneficiary's attendance at an eligible educational institution;

(3) "Board", the Missouri higher education savings program board established in section 166.415;

(4) "Eligible educational institution", an institution of postsecondary education as defined in Section 529(e)(5) of the Internal Revenue Code;

(5) "Financial institution", a depository institution and any intermediary that brokers certificates of deposits;

(6) "Internal Revenue Code", the Internal Revenue Code of 1986, as amended;

(7) "Missouri higher education deposit program" or "deposit program", the program created pursuant to sections 166.500 to 166.529;

(8) "Participant", a person who has entered into a participation agreement pursuant to sections 166.500 to 166.529 for the advance payment of qualified higher education expenses on behalf of a beneficiary;

(9) "Participation agreement", an agreement between a participant and the board pursuant to and conforming with the requirements of sections 166.500 to 166.529;

(10) "Qualified higher education expenses", the qualified costs of tuition and fees and other expenses for attendance at an eligible educational institution, as defined in Section 529(e)(3) of the Internal Revenue Code of 1986, as amended.

(L. 2004 H.B. 959 § 166.510)

Program created, Missouri higher education savings program board toadminister, powers and duties--investment of funds.

166.505. 1. There is hereby created the "Missouri Higher Education Deposit Program". The program shall be administered by the Missouri higher education savings program board.

2. In order to establish and administer the deposit program, the board, in addition to its other powers and authority, shall have the power and authority to:

(1) Develop and implement the Missouri higher education deposit program and, notwithstanding any provision of sections 166.500 to 166.529 to the contrary, the deposit programs and services consistent with the purposes and objectives of sections 166.500 to 166.529;

(2) Promulgate reasonable rules and regulations and establish policies and procedures to implement sections 166.500 to 166.529, to permit the deposit program to qualify as a qualified state tuition program pursuant to Section 529 of the Internal Revenue Code and to ensure the deposit program's compliance with all applicable laws;

(3) Develop and implement educational programs and related informational materials for participants, either directly or through a contractual arrangement with a financial institution or other entities for deposit educational services, and their families, including special programs and materials to inform families with children of various ages regarding methods for financing education and training beyond high school;

(4) Enter into an agreement with any financial institution, entity, or business clearinghouse for the operation of the deposit program pursuant to sections 166.500 to 166.529; providing however, that such institution, entity, or clearinghouse shall be a private for-profit or not-for-profit entity and not a government agency. No more than one board member may have a direct interest in such institution, entity, or clearinghouse. Such institution, entity, or clearinghouse shall implement the board's policies and administer the program for the board and with electing depository institutions and others;

(5) Enter into participation agreements with participants;

(6) Accept any grants, gifts, legislative appropriations, and other moneys from the state, any unit of federal, state, or local government or any other person, firm, partnership, or corporation for deposit to the account of the deposit program;

(7) Invest the funds received from participants in appropriate investment instruments to be held by depository institutions or directly deposit such funds in depository institutions as provided by the board and elected by the participants;

(8) Make appropriate payments and distributions on behalf of beneficiaries pursuant to participation agreements;

(9) Make refunds to participants upon the termination of participation agreements pursuant to the provisions, limitations, and restrictions set forth in sections 166.500 to 166.529 and the rules adopted by the board;

(10) Make provision for the payment of costs of administration and operation of the deposit program;

(11) Effectuate and carry out all the powers granted by sections 166.500 to 166.529, and have all other powers necessary to carry out and effectuate the purposes, objectives, and provisions of sections 166.500 to 166.529 pertaining to the deposit program;

(12) Procure insurance, guarantees, or other protections against any loss in connection with the assets or activities of the deposit program, as the members in their best judgment deem necessary;

(13) To both adopt and implement various methods of transferring money by electronic means to efficiently transfer funds to depository institutions for deposit, and in addition or in the alternative, to allow funds to be transferred by agent agreements, assignment, or otherwise, provided such transfer occurs within two business days;

(14) To both adopt and implement methods and policies designed to obtain the maximum insurance of such funds for each participant permitted and provided for by the Federal Deposit Insurance Corporation, or any other federal agency insuring deposits, and taking into consideration the law and regulation promulgated by such federal agencies for deposit insurance.

3. The funds shall be invested only in those investments which a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, as provided in section 105.688, as a means to hold funds until they are placed in a Missouri depository institution as a deposit. The board may delegate to duly appointed representatives of financial institutions authority to act in place of the board in the investment and reinvestment of all or part of the moneys and may also delegate to such representatives the authority to act in place of the board in the holding, purchasing, selling, assigning, transferring, or disposing of any or all of the investments in which such moneys shall have been invested, as well as the proceeds of such investments and such moneys, however, such investments shall be limited to certificates of deposit and other deposits in federally insured depository institutions. Such representatives shall be registered as "qualified student deposit advisors on Section 529 plans" with the board and such board shall, by rule, develop and administer qualification tests from time to time to provide representatives the opportunity to qualify for this program. In exercising or delegating its investment powers and authority, members of the board shall exercise ordinary business care and prudence under the facts and circumstances prevailing at the time of the action or decision. No member of the board shall be liable for any action taken or omitted with respect to the exercise of, or delegation of, these powers and authority if such member shall have discharged the duties of his or her position in good faith and with that degree of diligence, care, and skill which a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims.

4. No board member or employee of the deposit program shall personally receive any gain or profit from any funds or transaction of the deposit program as a result of his or her membership on the board. Any board member, employee, or agent of the deposit program accepting any gratuity or compensation for the purpose of influencing such board member's, employee's, or agent's action with respect to choice of intermediary, including any financial institution, entity, or clearinghouse, for the funds of the deposit program shall thereby forfeit the office and in addition thereto be subject to the penalties prescribed for bribery. However, a board member who is regularly employed directly or indirectly by a financial institution may state that institution's interest and absent himself or herself from voting.

5. Depository institutions originating the deposit program shall be the agent of the board and offer terms for certificates of deposit and other deposits in such program as permitted by the board, subject to a uniform interest rate disclosure as defined in federal regulations of the Board of Governors of the Federal Reserve System, specifically Federal Reserve Regulation DD, as amended from time to time. The board shall establish various deposit opportunities based on amounts deposited and length of time held that are uniformly available to all depository institutions that elect to participate in the program, and the various categories of fixed or variable rates shall be the only interest rates available under this program. A depository institution that originates the deposit as agent for the board and participates in the program shall receive back and continue to hold the certificate of deposit or other deposit, provided such depository institution continues to comply with requirements and regulations prescribed by the board. Such deposit and certificate of deposit shall be titled in the name of the clearing entity for the benefit of the participant, and shall be insured as permitted by any agency of the federal government that insures deposits in depository institutions. Any depository institution or intermediary that fails to comply with these provisions shall forfeit its right to participate in this program; provided however, the board shall be the sole and exclusive judge of compliance except as otherwise provided by provisions in Section 529 of the Internal Revenue Code and the Internal Revenue Service enforcement of such section.

(L. 2004 H.B. 959 § 166.515)

Deposit program participation agreements, terms andconditions--contribution limits--minimum holding time forcontributions.

166.508. 1. The board may enter into deposit program participation agreements with participants on behalf of beneficiaries pursuant to the provisions of sections 166.500 to 166.529, including the following terms and conditions:

(1) A participation agreement shall stipulate the terms and conditions of the deposit program in which the participant makes contributions;

(2) A participation agreement shall specify the method for calculating the return on the contribution made by the participant as otherwise provided in sections 166.500 to 166.529;

(3) The execution of a participation agreement by the board shall not guarantee that the beneficiary named in any participation agreement will be admitted to an eligible educational institution, be allowed to continue to attend an eligible educational institution after having been admitted or will graduate from an eligible educational institution;

(4) A participation agreement shall disclose to participants the risk associated with depositing moneys with the board, including information on federal insured deposit availability and coverage and penalties for withdrawal before the deposit has matured;

(5) Participation agreements shall be organized and presented in a way and with language that is easily understandable by the general public; and

(6) A participation agreement shall clearly and prominently disclose to participants the existence of any fee or similar charge assessed against the accounts of the participants for administration or services.

2. The board shall establish the maximum amount which may be contributed annually by a participant with respect to a beneficiary.

3. The board shall establish a total contribution limit for deposit accounts established under the deposit program with respect to a beneficiary to permit the deposit program to qualify as a qualified state tuition program pursuant to Section 529 of the Internal Revenue Code. No contribution may be made to a deposit account for a beneficiary if it would cause the balance of all deposit accounts of the beneficiary to exceed the total contribution limit established by the board. The board may establish other requirements that it deems appropriate to provide adequate safeguards to prevent contributions on behalf of a beneficiary from exceeding what is necessary to provide for the qualified higher education expenses of the beneficiary.

4. The board shall establish the minimum length of time that contributions and earnings must be held by the deposit program to qualify pursuant to section 166.435. Any contributions or earnings that are withdrawn or distributed from a deposit account prior to the expiration of the minimum length of time, as established by the board, shall be subject to a penalty pursuant to section 166.514.

(L. 2004 H.B. 959 § 166.520)

Prompt investment of moneys paid by participation agreements, useof moneys.

166.511. All money paid by a participant in connection with participation agreements shall be deposited as received and shall be promptly invested by the board or may be directly deposited by the board's agents. Contributions and earnings thereon accumulated on behalf of participants in the deposit program may be used, as provided in the participation agreement, for qualified higher education expenses.

(L. 2004 H.B. 959 § 166.525)

Cancellation of agreements, penalty.

166.514. Any participant may cancel a participation agreement at will. The board shall impose a penalty equal to or greater than ten percent of the earnings of an account for any distribution that is not:

(1) Used exclusively for qualified higher education expenses of the designated beneficiary;

(2) Made because of death or disability of the designated beneficiary;

(3) Made because of the receipt of scholarship by the designated beneficiary;

(4) A rollover distribution, as defined in Section 529(c)(3)(C)(i) of the Internal Revenue Code; or

(5) Held in the fund for the minimum length of time established by the board.

(L. 2004 H.B. 959 § 166.530)

Assets used for program purposes only.

166.517. The assets of the deposit program shall at all times be preserved, invested, and expended only for the purposes set forth in this section and in accordance with the participation agreements, and no property rights therein shall exist in favor of the state.

(L. 2004 H.B. 959 § 166.540)

Rulemaking authority.

166.520. Any rule or portion of a rule, as that term is defined in section 536.010, that is promulgated pursuant to sections 166.500 to 166.529 shall become effective only if it has been promulgated pursuant to the provisions of chapter 536. All rulemaking authority delegated prior to August 28, 2004, is of no force and effect and repealed; however, nothing in this section shall be interpreted to repeal or affect the validity of any rule filed or adopted prior to August 28, 2004, if it fully complied with the provisions of chapter 536. Sections 166.500 to 166.529 and chapter 536 are nonseverable and if any of the powers vested with the general assembly pursuant to chapter 536 to review, to delay the effective date, or to disapprove and annul a rule are subsequently held unconstitutional, then the grant of rulemaking authority and any rule proposed or adopted after August 28, 2004, shall be invalid and void.

(L. 2004 H.B. 959 § 166.545)

Review of program by state auditor, when.

166.523. The Missouri state auditor shall, on a semiannual basis, review the financial status and investment policy of the program as well as the participation rate in the program. The auditor shall also review the continued viability of the program and the administration of the program by the board. The auditor shall report the findings annually to the board, which shall subsequently disclose such findings at a public meeting.

(L. 2004 H.B. 959 § 166.550)

Program moneys not part of total state revenues.

166.526. Money accruing to and deposited in individual deposit accounts shall not be part of total state revenues as defined in Sections 17 and 18, Article X, Constitution of Missouri, and the expenditure of such revenues shall not be an expense of state government under Section 20, Article X, Constitution of Missouri.

(L. 2004 H.B. 959 § 166.555)

Confidentiality requirements.

166.529. All personally identifiable information concerning participants and beneficiaries of accounts established within the Missouri higher education deposit program pursuant to sections 166.500 to 166.529 shall be confidential, and any disclosure of such information shall be restricted to purposes directly connected with the administration of the program.

(L. 2004 H.B. 959 § 166.556)


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