SB534: SB534 Georgia Baby Bond Savings Plan; provide for creation

26 LC 59 0330 Senate Bill 534 By: Senators Merritt of the 9th, Parkes of the 7th, Jackson of the 41st, Kemp of the 38th, Jones II of the 22nd and others A BILL TO BE ENTITLED AN ACT To amend Title 39 of the Official Code of Georgia Annotated, re lating to minors, so as to1 provide for the creation of the Georgia Baby Bond Savings Plan; to provide for the2 administration of such plan; to provide for a board of director s; to authorize the board of3 directors to invest plan funds; to provide for the creation of a fund in the state treasury; to4 provide the authority for establishing a comprehensive investme nt plan; to provide for5 furnishing annual financial statements to savings trust account owners; to provide for6 eligibility requirements for the plan; to authorize the General Assembly to contribute to the7 plan; to provide for minimum contributions by the General Assembly to the plan; to provide8 for statutory construction; to provide for legislative purpose; to provide for definitions; to9 provide for related matters; to repeal conflicting laws; and for other purposes.10 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:11 SECTION 1.12 Title 39 of the Official Code of Georgia Annotated, relating to minors, is amended by adding13 a new chapter to read as follows:14 S. B. 534 - 1 - 26 LC 59 0330 "CHAPTER 715 39-7-1.16 The purpose of this chapter is to:17 (1) Enhance the financial well-being of Georgians by allocatin g resources to enable18 Georgia children to pursue higher education, home ownership, en trepreneurship, and19 long-term financial success;20 (2) Provide a program or programs of savings for the benefit of children under 18 to assist21 with building assets to help pay for financial needs;22 (3) Provide for the creation of the Georgia Baby Bond Savings Plan as an instrumentality23 of the State of Georgia to assist children under 18 years of age with financial needs and24 establishing a foundation for their financial futures;25 (4) Encourage timely financial planning by the creation of savings trust accounts; and26 (5) Provide a savings program for those persons who wish to save to meet a variety of27 financial needs.28 39-7-2.29 As used in this chapter, the term:30 (1) 'Account contributor' means a resident or nonresident pers on, corporation, trust,31 charitable organization, or other entity which contributes to or invests money in a savings32 trust account under the program on behalf of a beneficiary. Fo r resident persons, the33 account contributor may also be the designated beneficiary of the account.34 (2) 'Account owner' means a resident or nonresident person, corporation, trust, charitable35 organization, or other entity that establishes a savings trust account under the program on36 behalf of a beneficiary. For resident persons, the account own e r m a y a l s o b e t h e37 designated beneficiary of the account.38 (3) 'Beneficiary' means a resident beneficiary of a savings trust agreement.39 S. B. 534 - 2 - 26 LC 59 0330 (4) 'Board' means the board of directors of the Georgia Baby Bond Savings Plan.40 (5) 'Financial organization' means an organization which is:41 (A) A fiduciary authorized to act as a trustee pursuant to the provisions of the federal42 Employee Retirement Income Security Act of 1974, as amended, or an insurance43 company or affiliate; and44 (B)(i) Licensed or chartered by the Department of Insurance;45 (ii) Licensed or chartered by the Department of Banking and Finance;46 (iii) Chartered by an agency of the federal government;47 (iv) Subject to the jurisdiction and regulation of the federal Securities and Exchange48 Commission;49 (v) Any other entity otherwise authorized to act in this state as a trustee pursuant to50 the provisions of the federal Employee Retirement Income Security Act of 1974, as51 amended; or52 (vi) Any investment adviser registered with the federal Securi ties and Exchange53 Commission pursuant to the Investment Advisers Act of 1940.54 (6) 'Internal Revenue Code' or 'Internal Revenue Code of 1986' shall have the same55 meaning as set forth in Code Section 48-1-2.56 (7) 'Plan' means the Georgia Baby Bonds Savings Plan established under this chapter.57 (8) 'Program' means a program of savings trust agreements and savings trust accounts58 provided by the plan, allowing for investment in stocks, bonds, and treasuries, among59 other financial instruments.60 (9) 'Qualified expense' means expenses for the following:61 (A) Education of the beneficiary at:62 (i) An institution of higher education; or63 (ii) An area career and technical education school;64 (B) Ownership of a home by the beneficiary;65 S. B. 534 - 3 - 26 LC 59 0330 (C) Any expenses paid or incurred on or after the date on whic h the account holder66 attains age 59 and one-half years;67 (D) Any other investment in financial assets or personal capital that provides long-term68 gains to wages and wealth, as established under regulations promulgated by the state69 treasurer, in consultation with the board; and70 (E) Any other expense approved by the board.71 (10) 'Qualified withdrawal' means a withdrawal by an account o wner for qualified72 expenses of the beneficiary.73 (11) 'Savings trust account' means an account established by an account owner pursuant74 to this chapter on behalf of a beneficiary in order to apply distributions from the account75 toward qualified expenses.76 (12) 'Savings trust agreement' means the agreement entered into between the board and77 the account owner establishing a savings trust account.78 (13) 'Trust fund' means the Georgia Baby Bond Savings Plan Trust Fund.79 (14) 'Unqualified withdrawal' means a withdrawal by an account owner that is not:80 (A) A qualified withdrawal; or81 (B) A withdrawal by reason of the death or disability of the beneficiary.82 39-7-3.83 (a)(1) There is created the Georgia Baby Bond Savings Plan, as a body corporate and84 politic and an instrumentality of the state, for purposes of establishing and maintaining85 the Georgia Baby Bond Savings Plan as provided by this chapter. The plan shall be86 governed by a board of directors consisting of the Governor as chairperson, the state87 auditor, the director of the Office of Planning and Budget, the state revenue88 commissioner, three directors who shall be appointed by and serve at the pleasure of the89 Governor, and the state treasurer who shall act as administrative officer of the board. A90 S. B. 534 - 4 - 26 LC 59 0330 majority of the board shall constitute a quorum and the acts of the majority shall be the91 acts of the board.92 (2) Members of the board who are state officials or employees shall receive no93 compensation for their service on the board but may be reimbursed for expenses incurred94 by them in the performance of their duties as members of the board. Any members of the95 board who are not state officials or employees shall receive a daily expense allowance in96 the amount specified in subsection (b) of Code Section 45-7-21 for each day such97 member is in attendance at a meeting of the board. Expense allowances and other costs98 authorized in this paragraph shall be paid from moneys in the trust fund.99 (b) The board shall have the authority necessary or convenient to carry out the purposes100 and provisions of this chapter and the purposes and objectives of the trust fund, including,101 but not limited to, the authority to:102 (1) Have a seal and alter the same at its pleasure; bring and defend actions; make,103 execute, and deliver contracts, conveyances, and other instrume nts necessary or104 convenient to the exercise of its powers; and make and amend bylaws;105 (2) Adopt such rules and regulations as are necessary to implement this chapter, subject106 to applicable federal laws and regulations, including rules reg arding transfers of funds107 between savings trust agreements;108 (3) Contract for necessary goods and services, employ necessary personnel, and engage109 the services of consultants and other qualified persons and entities for administrative and110 technical assistance in carrying out the responsibilities of the trust fund under terms and111 conditions that the board deems reasonable; and any and all state departments or agencies112 are authorized to contract with the board and the board is authorized to contract with such113 departments or agencies, upon such terms, for such consideration, and for such purposes114 as it deems advisable;115 (4) Solicit and accept gifts, including bequests or other testamentary gifts made by will,116 trust, or other disposition grants, loans, and other aids from any personal source or117 S. B. 534 - 5 - 26 LC 59 0330 participate in any other way in any federal, state, or local government program in carrying118 out the purposes of this chapter;119 (5) Define the terms and conditions under which payments may b e withdrawn or120 refunded from the trust fund established under this chapter and impose reasonable121 charges for a withdrawal or refund;122 (6) Impose reasonable time limits on the use of savings trust account distributions123 provided by the program;124 (7) Regulate the receipt of contributions or payments to the trust fund;125 (8) Require and collect fees and charges to cover the reasonable costs of administering126 savings trust accounts and impose penalties on an unqualified withdrawal of funds or for127 entering into a savings trust agreement on a fraudulent basis;128 (9) Procure insurance against any loss in connection with the property, assets, and129 activities of the trust fund or plan;130 (10) Require that account owners of savings trust agreements verify in writing, before131 a person authorized to administer oaths, any requests for contr act conversions,132 substitutions, transfers, cancellations, refund requests, or contract changes of any nature;133 (11) Solicit proposals and contract for the marketing of the program, provided that any134 materials produced by a marketing contractor for the purpose of marketing the program135 must be approved by the board before being made available to th e public, unless136 otherwise directed by the board; establish a name for the progr am; and adopt and use137 marketing names, brands, logos, or other descriptions or representations of the program138 as may be deemed desirable or convenient for promoting, publici zing, or otherwise139 marketing the program within this state;140 (12) Delegate responsibility for administration of any program to a financial organization141 that the board determines is qualified;142 (13) Make all necessary and appropriate arrangements with colleges and universities or143 other entities in order to fulfill its obligations under savings trust agreements;144 S. B. 534 - 6 - 26 LC 59 0330 (14) Establish other policies, procedures, and criteria and pe rform such other acts as145 necessary or appropriate to implement and administer this chapter; and146 (15) Authorize the state treasurer to carry out any or all of the powers and duties147 enumerated in this subsection for efficient and effective admin istration of the plan,148 program, and trust fund.149 (c) The plan is assigned to the Department of Administrative Services for administrative150 purposes only.151 39-7-4.152 (a) The plan, through one or more programs, shall make savings trust agreements and153 savings trust accounts available to the public, under which acc ount owners or account154 contributors may make contributions on behalf of qualified beneficiaries. Contributions155 to a savings trust account shall be exempt from state taxation. Contributions and156 investment earnings on the contributions may be used for any qu alified expenses of a157 designated beneficiary. The state shall not guarantee that such contributions together with158 the investment return on such contributions, if any, will be ad equate to pay for qualified159 expenses in full. Savings trust agreements shall be available to residents of the State of160 Georgia. One or more savings trust accounts may be established for any qualified161 beneficiary, subject to the limitations of this chapter.162 (b) Each savings trust agreement made pursuant to this chapter shall include the following163 terms and provisions:164 (1) The maximum and minimum contribution allowed on behalf of each beneficiary for165 the payment of qualified expenses, provided that the contribution limit shall correspond166 with the maximum contribution allowed for the payment of qualif ied higher education167 expenses under Section 529 of the Internal Revenue Code of 1986 or other applicable168 law;169 S. B. 534 - 7 - 26 LC 59 0330 (2) Provisions for assessment and collection of reasonable fees which shall be charged170 to cover the administration of the account;171 (3) Provisions for a benchmark rate of annual return correspon ding with the legal rate172 of interest, as defined under Code Section 7-4-2;173 (4) Provisions for withdrawals, refunds, rollovers, transfers, and any penalties. An174 account owner may roll over all or part of any balance in an ac count to an account175 established on behalf of a different beneficiary to the extent allowed by law. Unqualified176 withdrawals of contributions and earnings shall be subject to such penalties or taxation177 as may be imposed by the Internal Revenue Code. At its discret ion, the board may178 impose additional penalties on unqualified withdrawals to be used by the plan to defray179 expenses; provided, however, that no such penalty shall apply t o any withdrawal that180 does not require a penalty or tax surcharge under the Internal Revenue Code of 1986;181 (5) The name, address, and date of birth of the beneficiary on whose behalf the savings182 trust account is opened;183 (6) Terms and conditions for a substitution of the beneficiary originally named;184 (7) Terms and conditions for termination of the account, inclu ding any refunds,185 withdrawals, or transfers, applicable penalties, and the name o f the person or persons186 entitled to terminate the account;187 (8) All other rights and obligations of the account owner or account contributor and the188 trust fund; and189 (9) Any other terms and conditions that the board deems necess ary or appropriate,190 including without limitation those necessary to conform the sav ings trust account with191 applicable federal law.192 39-7-5.193 (a)(1) There is created the Georgia Baby Bond Savings Plan Tru st Fund as a separate194 fund in the state treasury. The trust fund shall be administered by the state treasurer. The195 S. B. 534 - 8 - 26 LC 59 0330 state treasurer shall credit to the trust fund all amounts transferred to such fund. The trust196 fund shall consist of money remitted in accordance with savings trust agreements and any197 moneys acquired from other governmental or private sources and shall receive and hold198 all payments, contributions, and deposits intended for it as we ll as gifts, bequests, or199 endowments; grants; any other public or private source of funds; and all earnings on the200 fund until disbursed as provided under this Code section. The amounts on deposit in the201 trust fund shall not constitute property of the state. Amounts on deposit in the trust fund202 shall not be commingled with state funds, and the state shall have no claim to or interest203 in such funds other than the amount of reasonable fees and char ges assessed to cover204 administration costs. Savings trust agreements or any other contract entered into by or205 on behalf of the trust fund shall not constitute a debt or obli gation of the state, and no206 account owner or account contributor shall be entitled to any amounts except for those207 amounts on deposit in or accrued to the account of such contributor.208 (2) The trust fund shall continue in existence so long as it holds any funds belonging to209 an account owner or otherwise has any obligations to any person or entity and until its210 existence is terminated by law and remaining assets on deposit in the trust fund are211 returned to account owners or transferred to the state in accor dance with unclaimed212 property laws.213 (b)(1) The following three separate accounts are created within the trust fund:214 (A) The administrative account;215 (B) The endowment account; and216 (C) The program account.217 (2) The administrative account shall accept, deposit, and disburse funds for the purpose218 of administering and marketing the program. The endowment acco unt shall accept,219 deposit, and disburse amounts received in connection with the s ales of interests in the220 trust fund or other contributions, other than amounts for the administrative account and221 other than amounts received pursuant to a savings trust agreement. Amounts on deposit222 S. B. 534 - 9 - 26 LC 59 0330 in the endowment account may be applied as specified by the boa rd for any purpose223 related to the program. The program account shall receive, invest, and disburse amounts224 pursuant to savings trust agreements.225 (c) The official location of the trust fund shall be the Office of the State Treasurer, and the226 facilities of the Office of the State Treasurer shall be used a nd employed in the227 administration of the fund, incl uding without limitation the ke eping of records, the228 management of bank accounts and other investments, the transfer of funds, and the229 safekeeping of securities evidencing investments. These functions may be administered230 pursuant to a management agreement with a qualified entity or entities.231 (d) Payments received by the board on behalf of beneficiaries from account contributors,232 other payors, or from any other source, public or private, shall be placed in the trust fund,233 and the board shall cause there to be maintained separate recor ds and accounts for234 individual beneficiaries as may be required by federal law.235 (e) Account contributors shall be permitted only to contribute cash or any other form of236 payment or contribution as is permitted by the board. The board shall cause the program237 to maintain adequate safeguards against contributions in excess of what may be required238 for qualified expenses. The trust fund, through the state treasurer, may receive and deposit239 into the trust fund any gift of any nature, real or personal property, made by an individual240 testamentary disposition, including without limitation any specific gift or bequest made by241 will, trust, or other disposition to the extent permitted under the Internal Revenue Code242 of 1986. The trust fund may receive amounts transferred under Article 5 of Chapter 5 of243 Title 44, 'The Georgia Transfers to Minors Act'; under the Unif orm Transfers to Minors244 Act, Uniform Gift to Minors Act, or other substantially similar act of another state, subject245 to the provisions of subsection (c) of Code Section 44-5-112; or from some other account246 established for the benefit of a minor if the trust beneficiary of such account is identified247 as the legal owner of the trust fund account upon attaining majority age.248 S. B. 534 - 10 - 26 LC 59 0330 (f) Earnings derived from investment of the contributions shall be considered to be held249 in trust in the same manner as contributions, except as applied for purposes of the250 designated beneficiary and for purposes of maintaining and administering the program as251 provided in this chapter. Amounts on deposit in an account own er's account shall be252 available for administrative fees and expenses and penalties imposed by the board for the253 plan as disclosed in the savings trust agreement.254 (g) The assets of the trust fund shall be preserved, invested, and expended solely pursuant255 to and for the purposes of this chapter and shall not be loaned or otherwise transferred or256 used by the state for any other purpose.257 39-7-6.258 The trust fund property and income shall be subject to taxation by the state only as259 provided by Code Section 48-7-27 and shall not be subject to taxation by any of the state's260 political subdivisions.261 39-7-7.262 (a) The board shall have authority to establish a comprehensiv e investment plan for the263 purposes of this chapter and to invest any funds of the trust fund through the state treasurer. 264 The state treasurer shall invest the trust fund moneys pursuant to an investment policy265 adopted by the board. Notwithstanding any state law to the contrary, the board, through266 the state treasurer shall invest or cause to be invested amounts on deposit in the trust fund,267 including the program account, in a manner reasonable and appro priate to achieve the268 objectives of the plan, exercising the discretion and care of a prudent person in similar269 circumstances with similar objectives. The board shall give due consideration to the risk270 of, expected rate of return of, term or maturity of, diversification of total investments of,271 liquidity of, and anticipated investments in and withdrawals from the trust fund.272 S. B. 534 - 11 - 26 LC 59 0330 (b) All contractors, vendors, or other service providers, incl uding, but not limited to,273 financial organizations, investments, and investment options, s hall be selected by274 competitive solicitation, unless otherwise directed by the board.275 (c) All investments shall be marked clearly to indicate ownership by the plan and, to the276 extent possible, shall be registered in the name of the plan.277 (d) Subject to the terms, conditions, limitations, and restric tions set forth in this Code278 section, the board may sell, assign, transfer, and dispose of a ny of the securities and279 investments of the plan if the sale, assignment, or transfer has the majority approval of the280 entire board. The board may employ or contract with financial organizations, investment281 managers, evaluation services, or other such services as determ ined by the board to be282 necessary for the effective and efficient operation of the program.283 (e) Members and employees of the board shall be subject to the provisions of Chapter 10284 of Title 45, relating to codes of ethics and conflicts of interest.285 (f) The board shall establish criteria for financial organizat ions, investment managers,286 mutual funds, or other such entities to act as contractors or consultants to the board. The287 board may contract, either directly or through such contractors or consultants, to provide288 such services as may be a part of the comprehensive investment plan or as may be deemed289 necessary or proper by the board, including without limitation providing consolidated290 billing, individual and collective record keeping and accountin g, and asset purchase,291 control, and safekeeping.292 (g) No account owner, account contributor, or beneficiary shall directly or indirectly direct293 the investment of any account except as may be permitted under applicable federal law.294 (h) The board may approve different investment plans and optio ns to be offered to295 participants to the extent permitted under applicable federal l aw and consistent with the296 objectives of this chapter, and the board may require the assis tance of investment297 counseling before participation in different options.298 S. B. 534 - 12 - 26 LC 59 0330 (i) No account owner or designated beneficiary shall pledge any interest in the program299 or any portion thereof as security for a loan.300 39-7-8.301 (a) The board shall furnish, subject to reasonable administrative fees and charges, to each302 account owner an annual statement of the following:303 (1) The amount contributed under the savings trust agreement;304 (2) The annual earnings and accumulated earnings on the savings trust account; and305 (3) Any other terms and conditions that the board deems by rul e are necessary or306 appropriate, including without limitation those necessary to co nform the savings trust307 account with the requirements of applicable federal law.308 (b) The board shall furnish an additional statement complying with subsection (a) of this309 Code section to an account owner or beneficiary on written request. The board may charge310 a reasonable fee for each statement furnished under this subsection.311 (c) The board shall prepare or cause to be prepared an annual report setting forth in312 appropriate detail an accounting of the funds and a description of the financial condition313 of the plan at the close of each fiscal year. Such report shall be submitted to the Governor,314 the President of the Senate, and the Speaker of the House of Representatives. In addition,315 the board shall make the report available to account owners or account contributors of316 savings trust agreements. The accounts of the trust fund shall be subject to annual audits317 by the state auditor or his or her designee.318 39-7-9.319 Notwithstanding any state law to the contrary, no moneys on deposit in any savings trust320 account shall be considered an asset of the parent, guardian, o r child for purposes of321 determining an individual's eligibility for need based aid programs.322 S. B. 534 - 13 - 26 LC 59 0330 39-7-10.323 (a) The provisions of Article 4 of Chapter 18 of Title 50 notwithstanding, the following324 records, or portions thereof, shall not constitute public recor ds and shall not be open to325 inspection by the general public:326 (1) Completed savings trust account applications, executed sav ings trust account327 agreements, and savings trust account numbers;328 (2) All wiring or automated clearing house transfer of funds instructions;329 (3) Records of savings trust account transactions and savings trust account analysis330 statements received or prepared by or for the plan;331 (4) All bank account numbers in the possession of the plan and any record or document332 containing such numbers;333 (5) All proprietary computer software in the possession or under the control of the plan;334 and335 (6) All security codes and procedures related to physical, electronic, or other access to336 any savings trust account or the trust fund, its systems, and its software.337 (b) For a period from the date of creation of the record until the end of the calendar quarter338 in which the record is created, the following records, or portions thereof, of the trust fund339 shall not constitute public records and shall not be open to inspection by the general public:340 (1) Investment trade tickets; and341 (2) Bank statements.342 (c) The restrictions of subsections (a) and (b) of this Code section shall not apply to access:343 (1) Required by subpoena or other legal process of a court or administrative agency344 having competent jurisdiction in legal proceedings where the State of Georgia or the plan345 is a party;346 (2) In prosecutions or other court actions to which the State of Georgia or the plan is a347 party;348 (3) Given to federal or state regulatory or law enforcement agencies;349 S. B. 534 - 14 - 26 LC 59 0330 (4) Given to any person or entity in connection with a savings trust account to which350 such person or entity is the account owner or given to any pers on in connection with a351 savings trust account of which such person is the beneficiary; or352 (5) Given to the board or any member, employee, or contractor thereof for use and public353 disclosure in the ordinary performance of its duties pursuant to this chapter.354 39-7-11.355 (a) All Georgia residents born on or after July 1, 2023, are eligible to be beneficiaries and356 shall automatically be enrolled in the plan. Any individual enrolled in the plan shall be the357 beneficiary of a maximum of one savings trust account.358 (b) Upon reaching 18 years of age, savings trust account benef iciaries shall retain their359 interests in such accounts, including investment returns and in terest earned after said360 beneficiaries have reached 18 years of age, so long as they remain residents of the State of361 Georgia.362 (c) No provision of this chapter shall be construed to confer a donation or gratuity in363 violation of Article III, Section VI, Paragraph VI of the Constitution of Georgia.364 39-7-12.365 (a) The General Assembly is authorized to contribute funds to each savings trust account366 from the undesignated surplus in the state treasury.367 (b) The General Assembly shall provide an initial contribution to each savings trust368 account upon the opening of each such account in the amount of:369 (1) A minimum of $1,000.00; or370 (2) A minimum of $2,000.00 for a beneficiary whose family is receiving benefits from371 a federal assistance program, including but not limited to Medi caid, Temporary372 Assistance for Needy Families, or the Supplemental Nutrition Assistance Program.373 S. B. 534 - 15 - 26 LC 59 0330 (c) The General Assembly shall provide recurring annual contri butions to each savings374 trust account, until the account beneficiary reaches 18 years of age, in the amount of:375 (1) A minimum of $250.00; or376 (2) A minimum of $1,000.00 for a beneficiary whose family is receiving benefits from377 a federal assistance program, including but not limited to Medi caid, Temporary378 Assistance for Needy Families, or the Supplemental Nutrition Assistance Program."379 SECTION 2.380 All laws and parts of laws in conflict with this Act are repealed.381 S. B. 534 - 16 -