2023 Hawaii Revised Statutes › Title 14. Taxation › 256. College Savings Program › 256-3 Functions and powers of the director of finance.

§256-3 Functions and powers of the director of finance.
(a) The director of finance shall implement the program under the terms and conditions established by this chapter. The director of finance may make changes to the program as required for participants to obtain or maintain the federal tax benefits or treatment provided by section 529 of the Internal Revenue Code of 1986, as amended, or successor legislation.
(b) The director of finance may enter into tuition savings agreements with account owners pursuant to this chapter.
(c) The director of finance may implement the program through the use of financial organizations as account depositories and managers. Under the program, individuals may establish accounts directly with an account depository.
(d) The director of finance may solicit proposals from financial organizations to act as program managers. Financial organizations submitting proposals shall describe the investment instruments that will be held in accounts. The director of finance shall select as program managers the financial organizations from among the bidding financial organizations that demonstrate the most advantageous combination, both to potential program participants and this State, based on the following factors:
(1) The financial stability and integrity of the financial organization;
(2) The safety of the investment instruments being offered;
(3) The ability of the investment instruments to track the expected increasing costs of higher education;
(4) The ability of the financial organization to satisfy recordkeeping and reporting requirements;
(5) The financial organization's plan for promoting the program and the resources it is willing to allocate to promote the program;
(6) The fees, if any, proposed to be charged to persons for opening accounts;
(7) The minimum initial deposit and minimum contributions that the financial organization will require;
(8) The ability of financial organizations to accept electronic withdrawals, including payroll deduction plans; and
(9) Other benefits to the State or its residents included in the proposal, including fees payable to the State to cover expenses to operate the program.
(e) The director of finance may enter into a management contract of up to ten years with a financial organization. The management contract shall include, at a minimum, terms requiring the financial organization to:
(1) Take any action required to keep the program in compliance with requirements of section 256-4 and to manage the program to qualify it as a qualified state tuition plan under section 529 of the Internal Revenue Code of 1986, as amended, or successor legislation;
(2) Keep adequate records of each account, keep each account segregated from each other account, and provide the director of finance with the information necessary to prepare the statements required by section 256-4;
(3) Compile information contained in statements required to be prepared under section 256-4 and provide the compilations to the director of finance;
(4) If there is more than one program manager, provide the director of finance with the information necessary to determine compliance with section 256-4;
(5) Provide the director of finance or designee access to the books and records of the program manager to the extent needed to determine compliance with the contract;
(6) Hold all accounts for the benefit of the account owner;
(7) Be audited at least annually by a firm of independent certified public accountants selected by the program manager, and provide the results of the audit to the director of finance;
(8) Provide the director of finance with copies of all regulatory filings and reports related to the program made by it during the term of the management contract or while it is holding any accounts, other than confidential filings or reports that will not become part of the program. The program manager shall make available for review by the director of finance, the results of any periodic examination of the manager by any state or federal banking, insurance, or securities commission, except to the extent that the report or reports may not be disclosed under applicable law or the rules of the commission; and
(9) Undertake to provide the information required by rule 15c2-12(b)(5) under the Securities Exchange Act of 1934 pursuant to a continuing disclosure certificate for the benefit of the account owners.
(f) The director of finance may select more than one financial organization and investment instrument for the program.
(g) The director of finance may require an audit to be conducted of the operations and financial position of the program manager at any time if the director of finance has any reason to be concerned about the financial position, the recordkeeping practices, or the status of accounts of the program manager.
(h) During the term of any contract with a program manager, the director of finance shall conduct an examination of the manager and its handling of accounts. The examination shall be conducted at least biennially if the manager is not otherwise subject to periodic examination by the commissioner of financial institutions, the Federal Deposit Insurance Corporation, or other similar entity.
(i) The director of finance may establish a nominal fee for an application for a college account.
(j) The director of finance may enter into contracts for the services of consultants for rendering professional and technical assistance and advice and any other contracts that are necessary and proper for the implementation of the program.
(k) The director of finance may adopt rules to implement the program pursuant to chapter 91. [L 1999, c 81, pt of §2; am L 2000, c 90, §2]