STAND. COM. REP. NO. 336

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 307
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Higher Education, to which was referred
H.B. No. 307 entitled: 

     "A BILL FOR AN ACT RELATING TO HIGHER EDUCATION,"

begs leave to report as follows:

     The purpose of this bill is to establish a college savings
program that provides both federal and state income tax benefits.
The program would give tax benefits, for example, to parents who
save for their children's college tuition and other higher
education expenses.

     Testimony in support of the bill was submitted by the Hawaii
State Teachers Association, the Department of Education, TIAA-
CREF, a college and career counselor, a student at the University
of Hawaii, and thirteen high school students.

     While in support of the intent of the bill, the University
of Hawaii proposed two amendments.  The Department of Taxation
testified that it was not opposed to the bill.  The Department of
Accounting and General Services recommended that an organization
with expertise in this type of program administer the proposed
college savings program.

     Your Committee finds that college tuition is increasing
faster than the cost of living, making it more difficult for
families to save for their children's college education.  Other
higher education costs are rising as well.  The federal
government has created tax incentives to those who save for
college through qualified state tuition programs under the
Internal Revenue Code.  This bill creates such a program for
Hawaii.  The program also allows state tax incentives as well.

 
                                 STAND. COM. REP. NO. 336
                                 Page 2

 
     The bill privatizes the college savings program by
authorizing the Comptroller to contract with a private financial
organization to administer the program.  Thereafter, the
Comptroller is responsible for oversight.  As such, the
Comptroller does not have day-to-day responsibility for
administration.

     Your Committee agrees with the recommendations of the
University of Hawaii and has amended the bill by:

     (1)  Specifying that an accrediting agency be "a regional
          accrediting agency recognized by the United States
          Secretary of Education" rather than "a nationally
          recognized accrediting agency"; and

     (2)  Deleting the prohibition from using moneys in a college
          account to calculate financial aid under any financial
          aid program administered by the State.

     In addition, technical, nonsubstantive amendments were made
for purposes of style and clarity.

     As affirmed by the record of votes of the members of your
Committee on Higher Education that is attached to this report,
your Committee is in accord with the intent and purpose of H.B.
No. 307, as amended herein, and recommends that it pass Second
Reading in the form attached hereto as H.B. No. 307, H.D. 1, and
be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Higher Education,



                                   ______________________________
                                   DAVID MORIHARA, Chair