HB 284: Minors; creation of the Georgia Baby Bond Savings Plan

House Bill 284

By: Representatives Schofield of the 63rd, Hugley of the 141st, Park of the 107th, Davis of the 87th, Scott of the 76th, and others

A BILL TO BE ENTITLED

AN ACT

To amend Title 39 of the Official Code of Georgia Annotated, relating to minors, so as to provide for the creation of the Georgia Baby Bond Savings Plan; to provide for the administration of such plan; to provide for a board of directors; to authorize the board of directors to invest plan funds; to provide for the creation of a fund in the state treasury; to provide the authority for establishing a comprehensive investment plan; to provide for furnishing annual financial statements to savings trust account owners; to provide for eligibility requirements for the plan; to authorize the General Assembly to contribute to the plan; to provide for minimum contributions by the General Assembly to the plan; to provide for definitions; to provide for related matters; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.

Title 39 of the Official Code of Georgia Annotated, relating to minors, is amended by adding a new chapter to read as follows:

"CHAPTER 7

39-7-1.

The purpose of this chapter is to:

(1) Provide a program or programs of savings for the benefit of children under 18 to assist with building assets to help pay for financial needs;

(2) Provide for the creation of the Georgia Baby Bond Savings Plan as an instrumentality of the State of Georgia to assist children under 18 years of age with financial needs and establishing a foundation for their financial futures;

(3) Encourage timely financial planning by the creation of savings trust accounts; and

(4) Provide a savings program for those persons who wish to save to meet a variety of financial needs.

39-7-2.

As used in this chapter, the term:

(1) 'Account contributor' means a resident or nonresident person, corporation, trust, charitable organization, or other entity which contributes to or invests money in a savings trust account under the program on behalf of a beneficiary. For resident persons, the account contributor may also be the designated beneficiary of the account.

(2) 'Account owner' means a resident or nonresident person, corporation, trust, charitable organization, or other entity that establishes a savings trust account under the program on behalf of a beneficiary. For resident persons, the account owner may also be the designated beneficiary of the account.

(3) 'Beneficiary' means a resident beneficiary of a savings trust agreement.

(4) 'Board' means the board of directors of the Georgia Baby Bond Savings Plan.

(5) 'Financial organization' means an organization which is:

(A) A fiduciary authorized to act as a trustee pursuant to the provisions of the federal Employee Retirement Income Security Act of 1974, as amended, or an insurance company or affiliate; and

(B)(i) Licensed or chartered by the Department of Insurance;

(ii) Licensed or chartered by the Department of Banking and Finance;

(iii) Chartered by an agency of the federal government;

(iv) Subject to the jurisdiction and regulation of the federal Securities and Exchange Commission;

(v) Any other entity otherwise authorized to act in this state as a trustee pursuant to the provisions of the federal Employee Retirement Income Security Act of 1974, as amended; or

(vi) Any investment adviser registered with the federal Securities and Exchange Commission pursuant to the Investment Advisers Act of 1940.

(6) 'Internal Revenue Code' or 'Internal Revenue Code of 1986' shall have the same meaning as set forth in Code Section 48-1-2.

(7) 'Plan' means the Georgia Baby Bonds Savings Plan established under this chapter.

(8) 'Program' means a program of savings trust agreements and savings trust accounts provided by the plan, allowing for investment in stocks, bonds, and treasuries, among other financial instruments.

(9) 'Qualified expense' means expenses for the following:

(A) Education of the beneficiary at:

(i) An institution of higher education; or

(ii) An area career and technical education school;

(B) Ownership of a home by the beneficiary;

(C) Any expenses paid or incurred on or after the date on which the account holder attains age 59 and one-half years;

(D) Any other investment in financial assets or personal capital that provides long-term gains to wages and wealth, as established under regulations promulgated by the state treasurer, in consultation with the board; and

(E) Any other expense approved by the board.

(10) 'Qualified withdrawal' means a withdrawal by an account owner for qualified expenses of the beneficiary.

(11) 'Savings trust account' means an account established by an account owner pursuant to this chapter on behalf of a beneficiary in order to apply distributions from the account toward qualified expenses.

(12) 'Savings trust agreement' means the agreement entered into between the board and the account owner establishing a savings trust account.

(13) 'Trust fund' means the Georgia Baby Bond Savings Plan Trust Fund.

(14) 'Unqualified withdrawal' means a withdrawal by an account owner that is not:

(A) A qualified withdrawal; or

(B) A withdrawal by reason of the death or disability of the beneficiary.

39-7-3.

(a)(1) There is created the Georgia Baby Bond Savings Plan, as a body corporate and politic and an instrumentality of the state, for purposes of establishing and maintaining the Georgia Baby Bond Savings Plan as provided by this chapter. The plan shall be governed by a board of directors consisting of the Governor as chairperson, the state auditor, the director of the Office of Planning and Budget, the state revenue commissioner, three directors who shall be appointed by and serve at the pleasure of the Governor, and the state treasurer who shall act as administrative officer of the board. A majority of the board shall constitute a quorum and the acts of the majority shall be the acts of the board.

(2) Members of the board who are state officials or employees shall receive no compensation for their service on the board but may be reimbursed for expenses incurred by them in the performance of their duties as members of the board. Any members of the board who are not state officials or employees shall receive a daily expense allowance in the amount specified in subsection (b) of Code Section 45-7-21 for each day such member is in attendance at a meeting of the board. Expense allowances and other costs authorized in this paragraph shall be paid from moneys in the trust fund.

(b) The board shall have the authority necessary or convenient to carry out the purposes and provisions of this chapter and the purposes and objectives of the trust fund, including, but not limited to, the authority to:

(1) Have a seal and alter the same at its pleasure; bring and defend actions; make, execute, and deliver contracts, conveyances, and other instruments necessary or convenient to the exercise of its powers; and make and amend bylaws;

(2) Adopt such rules and regulations as are necessary to implement this chapter, subject to applicable federal laws and regulations, including rules regarding transfers of funds between savings trust agreements;

(3) Contract for necessary goods and services, employ necessary personnel, and engage the services of consultants and other qualified persons and entities for administrative and technical assistance in carrying out the responsibilities of the trust fund under terms and conditions that the board deems reasonable; and any and all state departments or agencies are authorized to contract with the board and the board is authorized to contract with such departments or agencies, upon such terms, for such consideration, and for such purposes as it deems advisable;

(4) Solicit and accept gifts, including bequests or other testamentary gifts made by will, trust, or other disposition grants, loans, and other aids from any personal source or participate in any other way in any federal, state, or local government program in carrying out the purposes of this chapter;

(5) Define the terms and conditions under which payments may be withdrawn or refunded from the trust fund established under this chapter and impose reasonable charges for a withdrawal or refund;

(6) Impose reasonable time limits on the use of savings trust account distributions provided by the program;

(7) Regulate the receipt of contributions or payments to the trust fund;

(8) Require and collect fees and charges to cover the reasonable costs of administering savings trust accounts and impose penalties on an unqualified withdrawal of funds or for entering into a savings trust agreement on a fraudulent basis;

(9) Procure insurance against any loss in connection with the property, assets, and activities of the trust fund or plan;

(10) Require that account owners of savings trust agreements verify in writing, before a person authorized to administer oaths, any requests for contract conversions, substitutions, transfers, cancellations, refund requests, or contract changes of any nature;

(11) Solicit proposals and contract for the marketing of the program, provided that any materials produced by a marketing contractor for the purpose of marketing the program must be approved by the board before being made available to the public, unless otherwise directed by the board; establish a name for the program; and adopt and use marketing names, brands, logos, or other descriptions or representations of the program as may be deemed desirable or convenient for promoting, publicizing, or otherwise marketing the program within this state;

(12) Delegate responsibility for administration of any program to a financial organization that the board determines is qualified;

(13) Make all necessary and appropriate arrangements with colleges and universities or other entities in order to fulfill its obligations under savings trust agreements;

(14) Establish other policies, procedures, and criteria and perform such other acts as necessary or appropriate to implement and administer this chapter; and

(15) Authorize the state treasurer to carry out any or all of the powers and duties enumerated in this subsection for efficient and effective administration of the plan, program, and trust fund.

(c) The plan is assigned to the Department of Administrative Services for administrative purposes only.

39-7-4.

(a) The plan, through one or more programs, shall make savings trust agreements and savings trust accounts available to the public, under which account owners or account contributors may make contributions on behalf of qualified beneficiaries. Contributions to a savings trust account shall be exempt from state taxation. Contributions and investment earnings on the contributions may be used for any qualified expenses of a designated beneficiary. The state shall not guarantee that such contributions together with the investment return on such contributions, if any, will be adequate to pay for qualified expenses in full. Savings trust agreements shall be available to residents of the State of Georgia. One or more savings trust accounts may be established for any qualified beneficiary, subject to the limitations of this chapter.

(b) Each savings trust agreement made pursuant to this chapter shall include the following terms and provisions:

(1) The maximum and minimum contribution allowed on behalf of each beneficiary for the payment of qualified expenses, provided that the contribution limit shall correspond with the maximum contribution allowed for the payment of qualified higher education expenses under Section 529 of the Internal Revenue Code of 1986 or other applicable law;

(2) Provisions for assessment and collection of reasonable fees which shall be charged to cover the administration of the account;

(3) Provisions for a benchmark rate of annual return corresponding with the legal rate of interest, as defined under Code Section 7-4-2;

(4) Provisions for withdrawals, refunds, rollovers, transfers, and any penalties. An account owner may roll over all or part of any balance in an account to an account established on behalf of a different beneficiary to the extent allowed by law. Unqualified withdrawals of contributions and earnings shall be subject to such penalties or taxation as may be imposed by the Internal Revenue Code. At its discretion, the board may impose additional penalties on unqualified withdrawals to be used by the plan to defray expenses; provided, however, that no such penalty shall apply to any withdrawal that does not require a penalty or tax surcharge under the Internal Revenue Code of 1986;

(5) The name, address, and date of birth of the beneficiary on whose behalf the savings trust account is opened;

(6) Terms and conditions for a substitution of the beneficiary originally named;

(7) Terms and conditions for termination of the account, including any refunds, withdrawals, or transfers, applicable penalties, and the name of the person or persons entitled to terminate the account;

(8) All other rights and obligations of the account owner or account contributor and the trust fund; and

(9) Any other terms and conditions that the board deems necessary or appropriate, including without limitation those necessary to conform the savings trust account with applicable federal law.

39-7-5.

(a)(1) There is created the Georgia Baby Bond Savings Plan Trust Fund as a separate fund in the state treasury. The trust fund shall be administered by the state treasurer. The state treasurer shall credit to the trust fund all amounts transferred to such fund. The trust fund shall consist of money remitted in accordance with savings trust agreements and any moneys acquired from other governmental or private sources and shall receive and hold all payments, contributions, and deposits intended for it as well as gifts, bequests, or endowments; grants; any other public or private source of funds; and all earnings on the fund until disbursed as provided under this Code section. The amounts on deposit in the trust fund shall not constitute property of the state. Amounts on deposit in the trust fund shall not be commingled with state funds, and the state shall have no claim to or interest in such funds other than the amount of reasonable fees and charges assessed to cover administration costs. Savings trust agreements or any other contract entered into by or on behalf of the trust fund shall not constitute a debt or obligation of the state, and no account owner or account contributor shall be entitled to any amounts except for those amounts on deposit in or accrued to the account of such contributor.

(2) The trust fund shall continue in existence so long as it holds any funds belonging to an account owner or otherwise has any obligations to any person or entity and until its existence is terminated by law and remaining assets on deposit in the trust fund are returned to account owners or transferred to the state in accordance with unclaimed property laws.

(b)(1) The following three separate accounts are created within the trust fund:

(A) The administrative account;

(B) The endowment account; and

(C) The program account.

(2) The administrative account shall accept, deposit, and disburse funds for the purpose of administering and marketing the program. The endowment account shall accept, deposit, and disburse amounts received in connection with the sales of interests in the trust fund or other contributions, other than amounts for the administrative account and other than amounts received pursuant to a savings trust agreement. Amounts on deposit in the endowment account may be applied as specified by the board for any purpose related to the program. The program account shall receive, invest, and disburse amounts pursuant to savings trust agreements.

(c) The official location of the trust fund shall be the Office of the State Treasurer, and the facilities of the Office of the State Treasurer shall be used and employed in the administration of the fund, including without limitation the keeping of records, the management of bank accounts and other investments, the transfer of funds, and the safekeeping of securities evidencing investments. These functions may be administered pursuant to a management agreement with a qualified entity or entities.

(d) Payments received by the board on behalf of beneficiaries from account contributors, other payors, or from any other source, public or private, shall be placed in the trust fund, and the board shall cause there to be maintained separate records and accounts for individual beneficiaries as may be required by federal law.

(e) Account contributors shall be permitted only to contribute cash or any other form of payment or contribution as is permitted by the board. The board shall cause the program to maintain adequate safeguards against contributions in excess of what may be required for qualified expenses. The trust fund, through the state treasurer, may receive and deposit into the trust fund any gift of any nature, real or personal property, made by an individual testamentary disposition, including without limitation any specific gift or bequest made by will, trust, or other disposition to the extent permitted under the Internal Revenue Code of 1986. The trust fund may receive amounts transferred under Article 5 of Chapter 5 of Title 44, 'The Georgia Transfers to Minors Act'; under the Uniform Transfers to Minors Act, Uniform Gift to Minors Act, or other substantially similar act of another state, subject to the provisions of subsection (c) of Code Section 44-5-112; or from some other account established for the benefit of a minor if the trust beneficiary of such account is identified as the legal owner of the trust fund account upon attaining majority age.

(f) Earnings derived from investment of the contributions shall be considered to be held in trust in the same manner as contributions, except as applied for purposes of the designated beneficiary and for purposes of maintaining and administering the program as provided in this chapter. Amounts on deposit in an account owner's account shall be available for administrative fees and expenses and penalties imposed by the board for the plan as disclosed in the savings trust agreement.

(g) The assets of the trust fund shall be preserved, invested, and expended solely pursuant to and for the purposes of this chapter and shall not be loaned or otherwise transferred or used by the state for any other purpose.

39-7-6.

The trust fund property and income shall be subject to taxation by the state only as provided by Code Section 48-7-27 and shall not be subject to taxation by any of the state's political subdivisions.

39-7-7.

(a) The board shall have authority to establish a comprehensive investment plan for the purposes of this chapter and to invest any funds of the trust fund through the state treasurer. The state treasurer shall invest the trust fund moneys pursuant to an investment policy adopted by the board. Notwithstanding any state law to the contrary, the board, through the state treasurer shall invest or cause to be invested amounts on deposit in the trust fund, including the program account, in a manner reasonable and appropriate to achieve the objectives of the plan, exercising the discretion and care of a prudent person in similar circumstances with similar objectives. The board shall give due consideration to the risk of, expected rate of return of, term or maturity of, diversification of total investments of, liquidity of, and anticipated investments in and withdrawals from the trust fund.

(b) All contractors, vendors, or other service providers, including, but not limited to, financial organizations, investments, and investment options, shall be selected by competitive solicitation, unless otherwise directed by the board.

(c) All investments shall be marked clearly to indicate ownership by the plan and, to the extent possible, shall be registered in the name of the plan.

(d) Subject to the terms, conditions, limitations, and restrictions set forth in this Code section, the board may sell, assign, transfer, and dispose of any of the securities and investments of the plan if the sale, assignment, or transfer has the majority approval of the entire board. The board may employ or contract with financial organizations, investment managers, evaluation services, or other such services as determined by the board to be necessary for the effective and efficient operation of the program.

(e) Members and employees of the board shall be subject to the provisions of Chapter 10 of Title 45, relating to codes of ethics and conflicts of interest.

(f) The board shall establish criteria for financial organizations, investment managers, mutual funds, or other such entities to act as contractors or consultants to the board. The board may contract, either directly or through such contractors or consultants, to provide such services as may be a part of the comprehensive investment plan or as may be deemed necessary or proper by the board, including without limitation providing consolidated billing, individual and collective record keeping and accounting, and asset purchase, control, and safekeeping.

(g) No account owner, account contributor, or beneficiary shall directly or indirectly direct the investment of any account except as may be permitted under applicable federal law.

(h) The board may approve different investment plans and options to be offered to participants to the extent permitted under applicable federal law and consistent with the objectives of this chapter, and the board may require the assistance of investment counseling before participation in different options.

(i) No account owner or designated beneficiary shall pledge any interest in the program or any portion thereof as security for a loan.

39-7-8.

(a) The board shall furnish, subject to reasonable administrative fees and charges, to each account owner an annual statement of the following:

(1) The amount contributed under the savings trust agreement;

(2) The annual earnings and accumulated earnings on the savings trust account; and

(3) Any other terms and conditions that the board deems by rule are necessary or appropriate, including without limitation those necessary to conform the savings trust account with the requirements of applicable federal law.

(b) The board shall furnish an additional statement complying with subsection (a) of this Code section to an account owner or beneficiary on written request. The board may charge a reasonable fee for each statement furnished under this subsection.

(c) The board shall prepare or cause to be prepared an annual report setting forth in appropriate detail an accounting of the funds and a description of the financial condition of the plan at the close of each fiscal year. Such report shall be submitted to the Governor, the President of the Senate, and the Speaker of the House of Representatives. In addition, the board shall make the report available to account owners or account contributors of savings trust agreements. The accounts of the trust fund shall be subject to annual audits by the state auditor or his or her designee.

39-7-9.

Notwithstanding any state law to the contrary, no moneys on deposit in any savings trust account shall be considered an asset of the parent, guardian, or child for purposes of determining an individual's eligibility for need based aid programs.

39-7-10.

(a) The provisions of Article 4 of Chapter 18 of Title 50 notwithstanding, the following records, or portions thereof, shall not constitute public records and shall not be open to inspection by the general public:

(1) Completed savings trust account applications, executed savings trust account agreements, and savings trust account numbers;

(2) All wiring or automated clearing house transfer of funds instructions;

(3) Records of savings trust account transactions and savings trust account analysis statements received or prepared by or for the plan;

(4) All bank account numbers in the possession of the plan and any record or document containing such numbers;

(5) All proprietary computer software in the possession or under the control of the plan; and

(6) All security codes and procedures related to physical, electronic, or other access to any savings trust account or the trust fund, its systems, and its software.

(b) For a period from the date of creation of the record until the end of the calendar quarter in which the record is created, the following records, or portions thereof, of the trust fund shall not constitute public records and shall not be open to inspection by the general public:

(1) Investment trade tickets; and

(2) Bank statements.

(c) The restrictions of subsections (a) and (b) of this Code section shall not apply to access:

(1) Required by subpoena or other legal process of a court or administrative agency having competent jurisdiction in legal proceedings where the State of Georgia or the plan is a party;

(2) In prosecutions or other court actions to which the State of Georgia or the plan is a party;

(3) Given to federal or state regulatory or law enforcement agencies;

(4) Given to any person or entity in connection with a savings trust account to which such person or entity is the account owner or given to any person in connection with a savings trust account of which such person is the beneficiary; or

(5) Given to the board or any member, employee, or contractor thereof for use and public disclosure in the ordinary performance of its duties pursuant to this chapter.

39-7-11.

(a) All Georgia residents under the age of 18 years are eligible to be beneficiaries. Any individual enrolled in the plan shall be the beneficiary of a maximum of one savings trust account.

(b) Georgia residents born on or after July 1, 2025, shall automatically be enrolled in the plan.

(c) Georgia residents born before July 1, 2025, but who are otherwise under the age of 18 years as of such date may request the Office of the State Treasurer to be enrolled in the plan. The board shall promulgate guidelines for the Office of the State Treasurer to certify such residents as eligible for the plan.

(d) Upon reaching 18 years of age, savings trust account beneficiaries shall retain their interests in such accounts, including investment returns and interest earned after said beneficiaries have reached 18 years of age, so long as they remain residents of the State of Georgia.

39-7-12.

(a) The General Assembly is authorized to contribute funds to each savings trust account from the undesignated surplus in the state treasury.

(b) The General Assembly shall provide an initial contribution to each savings trust account in the amount of:

(1) A minimum of $250.00; or

(2) A minimum of $1000.00 for a beneficiary whose family is receiving benefits from a federal assistance program, including but not limited to Medicaid, Temporary Assistance for Needy Families, or the Supplemental Nutrition Assistance Program.

(c) The General Assembly shall provide recurring annual contributions to each savings trust account, until the account beneficiary reaches 18 years of age, in the amount of:

(1) A minimum of $250.00; or

(2) A minimum of $500.00 for a beneficiary whose family is receiving benefits from a federal assistance program, including but not limited to Medicaid, Temporary Assistance for Needy Families, or the Supplemental Nutrition Assistance Program."

SECTION 2.

All laws and parts of laws in conflict with this Act are repealed.