Chapter 44 of the General Laws is hereby amended by inserting after Section 53A ½ the following section:-

Section 53A ¾.  (a) Any grants or funds received pursuant to section 53A that have not been expended pursuant to said section 53A as provided therein or otherwise designated for expenditure at the close of the fiscal year 2 years after the fiscal year in which the grants or funds were received may thereafter be expended to establish and fund a scholarship fund in accordance with this section.

(b) A scholarship fund may be established upon: (1) the recommendation of the officer or department of any city or town or of any regional school or other district that originally received the grants or funds pursuant to section 53A; and (2) the approval of the city manager and city council in cities having a Plan D or Plan E form of government, the approval of the mayor and city council in all other cities, the approval of the board of selectmen in towns, or the approval of the prudential committee, if any, otherwise the commissioners in districts.

(c) Any amounts approved for expenditure to the scholarship fund shall be deposited into a special account in the general treasury and shall be in the custody of the treasurer.  The treasurer shall invest said funds at the direction of the city manager and city council, mayor and city council, board of selectmen, prudential committee or commissioners, as applicable as provided in subsection (b).  Interest earned upon the scholarship fund shall remain therewith and shall be used for the purpose of said fund without further appropriation.

(d) In any city or town that has accepted the provisions of section 3C of chapter 60 and established a scholarship committee pursuant to said section 3C of said chapter 60, a scholarship fund established pursuant to this section shall be administered by the existing scholarship committee in accordance with the requirements of said section 3C of said chapter 60.

(e)  In any city or town for which subsection (d) does not apply, and in any regional school or other district, a scholarship fund shall be administered by the city manager and city council, mayor and city council, board of selectmen, prudential committee or commissioners, as applicable as provided in subsection (b).  The distribution of financial aid from the scholarship fund shall be in accordance with the criteria of the third and fourth paragraphs of section 3C of chapter 60 and any additional criteria established by the governing body identified in the previous sentence.