Section 49C: College savings programs; issuance and sale of bonds; powers and duties of state treasurer
Section 49C. (a) In issuing bonds of the commonwealth, under the law applicable thereto, the state treasurer may, under the conditions in this section, set aside and issue portions of said bonds in such form as shall be appropriate for the purposes of the college opportunity program, as defined in section 5A of chapter 15C, or for the purposes of such other college savings programs as may be established under paragraph (f1/2) of section 5 of said chapter 15C.
(b) Before issuing any bonds in a fiscal year for the use of a college savings program, the state treasurer shall prepare a report establishing the maximum amount of bonds to be issued in that year for use of such programs. Said report, and any subsequent amendment thereto which revises said maximum amount, shall include the state treasurer's reasons for determining that it is prudent for the commonwealth to authorize use of such bonds to the stated extent, in light of the anticipated future interest and principal payments on such bonds, as compared to the anticipated interest and principal payments on commonwealth bonds not issued in connection with such programs, and in light of available financial arrangements to limit or control the commonwealth's potential costs of meeting its obligations on such bonds, and in light of such other considerations as the state treasurer shall deem relevant. The state) treasurer shall file copies of said report, and of any amendments thereto, with the Educational Financing Authority, the secretary of administration and finance, and the house and senate committees on ways and means.
(c) For the purposes of issuing bonds to support college savings programs, the state treasurer shall have, in addition to the state treasurer's other powers and duties, the following additional powers and duties:
(i) To employ financial, marketing, legal and other consultants and advisors for the purpose of consulting with the commonwealth on the implementation and ongoing administration of the savings programs and to enter into contracts and agreements necessary in connection therewith;
(ii) To enter into appropriate agreements or arrangements with banks or other financial institutions or with other departments or agencies of the commonwealth or other public entities to provide protection for the commonwealth from risks associated with the variable interest rate on such bonds, and to provide liquidity for purchasers of such bonds in the event of extraordinary circumstances which require them to have access to their capital, including but not limited to interest rate swap agreements, interest rate caps, liquidity facilities, futures agreements, letters of credit and similar arrangements, including provisions regarding the custody of 1 commonwealth funds and the maintenance of collateral and other security for the commonwealth's obligations thereunder;
(iii) To establish procedures to ensure that interest on such bonds is and remains excludable from the gross income of the owners thereof for federal income tax purposes;
(iv) To establish a schedule of fees and charges, including premiums in connection with the sale of such bonds, sufficient to provide for the estimated costs of the program incurred by the commonwealth, including the costs of any agreements or arrangements entered into under paragraph (ii) and reasonable amounts to allow the commonwealth to self-insure against possible variations in interest rates on such bonds; provided that the difference in anticipated future interest and principal payments on such bonds as compared to the anticipated interest and principal payments on commonwealth bonds not issued in connection with such programs shall not exceed $5,000,000 per year. Any such fees or charges shall be received by the state treasurer impressed with a trust on behalf of the participants in such college savings programs and shall be deposited in a separate fund. The amounts in said fund, including any income earned on amounts therein, shall be expended by the state treasurer, without appropriation, solely for the commonwealth's cost of operating such college savings programs, including without limitation the costs of agreements or arrangements entered into under paragraph (ii) and the costs of self-insuring against variations in interest rates on such bonds; and
(v) To take such further actions and establish such further procedures as shall be appropriate to carry out the purposes of the savings programs.
(d) All bonds, or units of participation therein, issued under this section shall be subject to the following provisions:
(i) Any payment received by a purchaser of such bonds or units of participation under this section and chapter 15C and the interest or other income earned in connection therewith shall be exempt from all taxation by the commonwealth and any of its political subdivisions, including income, commonwealth, transfer, inheritance, death and personal property taxes.
(ii) The bonds and units of participation are hereby made securities in which administrators, guardians, executors, trustees, fiduciaries, and others authorized to invest in bonds of the commonwealth may properly and legally invest funds and shall be exempt from qualification and registration under the securities laws of the commonwealth.
(iii) The commonwealth hereby covenants and agrees to take all steps reasonably necessary to provide that interest on said bonds and units of participation whenever paid or accrued shall be excluded from the gross income of any person having an interest therein under the Internal Revenue Code of 1986 as amended from time to time.
(e) Section 53 shall not apply to the sale of any bonds issued in 1 connection with college savings programs.