REPORT TITLE:
High Technology


DESCRIPTION:
Establishes the new economy technology scholarship pilot program
(program).  Appropriates funds to establish the program.
Provides an income tax credit for the cost of training the
taxpayer or the taxpayer's employees to upgrade their technology-
related skills.  (SB2948 HD2)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2948
THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 2000                                H.D. 2
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO HIGH TECHNOLOGY.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1                              PART I
 
 2      SECTION 1.  The legislature finds that in the last fifteen
 
 3 years a "New Economy" has emerged in the United States.  This
 
 4 change has fundamentally altered industrial and occupational
 
 5 order, introduced unprecedented levels of entrepreneurial
 
 6 dynamism and competition, as well as a dramatic trend toward
 
 7 globalization.  This "New Economy" has been spurred by advances
 
 8 in technologies and has effectively restructured the way
 
 9 businesses operate in today's marketplace.
 
10      The legislature further finds that a recent report, "The
 
11 State New Economy Index, Benchmarking Economic Transformations in
 
12 the States," by the Progressive Policy Institute, has begun to
 
13 assess how the fifty states have responded to and encouraged
 
14 these fundamental changes.  In this report, Hawaii has attained
 
15 an overall rank of twenty-six among the fifty states.  While
 
16 Hawaii does well in some areas--foreign direct investment,
 
17 workforce education, and education technology in the schools--it
 
18 ranks poorly in a number of critical areas, particularly new
 
19 business start-ups and high technology jobs.
 

 
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                                     S.B. NO.           S.D. 1
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 1      The legislature believes that if Hawaii's businesses and
 
 2 residents are to compete successfully in this "New Economy," the
 
 3 State must encourage and support growth in technology.
 
 4 Currently, there is a demand for highly trained technology
 
 5 workers.  For example, CISCO Networking Systems urgently needs a
 
 6 highly-skilled workforce and is committing substantial energy
 
 7 toward training and developing technology workers.  It has helped
 
 8 prepare over seventy thousand students worldwide during the past
 
 9 three years in its networking academies; of these, just six
 
10 hundred eighty four students are from Hawaii.
 
11      The purpose of this part is to establish a new economy
 
12 technology scholarship program on a pilot basis to create a
 
13 sustained pool of highly trained technology workers, in the
 
14 shortest time possible, to improve this State's ability to
 
15 attract and retain business.  Further, this part is intended to
 
16 encourage Hawaii students to pursue higher education and training
 
17 in science and technology fields that are essential to economic
 
18 development in this State.
 
19      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
20 a new chapter to be appropriately designated and to read as
 
21 follows:
 

 
 
 
 
 
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                                     S.B. NO.           S.D. 1
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 1                             "CHAPTER
 
 2         NEW ECONOMY TECHNOLOGY SCHOLARSHIP PILOT PROGRAM
 
 3      §   -1 Definitions.  As used in this chapter, unless the
 
 4 context otherwise requires:
 
 5      "Approved course of study" means a program or curriculum
 
 6 offered by an approved post-secondary educational institution
 
 7 that provides instruction in science, technology, and related
 
 8 fields, and that is on the list of approved courses of study
 
 9 established by the department in    -2(c).
 
10      "Approved educational institution" means a public or private
 
11 post-secondary educational institution located in this State that
 
12 has been accredited by a nationally-recognized accrediting agency
 
13 that is listed by the United States Secretary of Education, or
 
14 vendor educational programs provided by vendor certified training
 
15 organizations.
 
16      "Council" means the Hawaii workforce development council.
 
17      "Department" means the department of business, economic
 
18 development, and tourism.
 
19      "Incumbent worker" means any person who has been a resident
 
20 of this State for one year and who has been employed full-time in
 
21 this State for a period of one year while pursuing an associate
 
22 degree or its equivalent.
 

 
 
 
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                                     S.B. NO.           S.D. 1
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 1      "Program" means the new economy technology scholarship pilot
 
 2 program established under section    -2.
 
 3      "Student" means any individual domiciled in this State who
 
 4 attends or is about to attend a secondary school or post-
 
 5 secondary educational institution located in this State.
 
 6      "Vendor educational programs" means those courses offered by
 
 7 technology businesses, resulting in a professional certification
 
 8 to provide services within that vendor's business.
 
 9      "Work requirement" means postgraduate, full-time employment
 
10 with an employer located in this State in an occupation related
 
11 to an approved course of study required under    -2.  The term
 
12 does not include a paid student internship, a paid fellowship,
 
13 volunteer service, or employment before graduation.
 
14      §   -2 New economy technology scholarship pilot program;
 
15 establishment, administration.(a)  There is established a five-
 
16 year pilot program to be known as the new economy technology
 
17 scholarship pilot program to be placed in the department of
 
18 business, economic development, and tourism.
 
19      (b)  Under the parameters of the program, the department may
 
20 provide scholarship grants to eligible students who are residents
 
21 of this State upon confirmation from an approved educational
 
22 institution that the student has been accepted for enrollment in
 
23 an approved course of study.  Scholarship grants shall only be
 

 
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                                     S.B. NO.           S.D. 1
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 1 for the amount set forth in sections    -3(a) and    -4(a) and
 
 2 shall only be used for tuition and mandatory fees.
 
 3      (c) The department, in cooperation with the council, shall
 
 4 establish lists of approved courses of study for the various
 
 5 types of approved educational institutions to be addressed by the
 
 6 program.  The lists shall be based on areas of business demand
 
 7 and expected contribution to economic development and shall be
 
 8 reviewed and updated on an annual basis.
 
 9      (d)  Prior to making a grant under this chapter, the
 
10 department, in cooperation with approved educational
 
11 institutions, shall apply Federal Pell Grant and state grants
 
12 available for tuition and mandatory fees related to an
 
13 undergraduate program for the student prior to determining the
 
14 amount of the scholarship grant.
 
15      (e)  To receive a scholarship grant under this chapter, a
 
16 student shall meet all of the following requirements:
 
17      (1)  Graduation from a high school in this State, or earned
 
18           a general educational development (GED) diploma or the
 
19           equivalent thereof;
 
20      (2)  Maintenance of domicile in Hawaii during the term of
 
21           the scholarship grants;
 
22      (3)  Compliance with any conditions placed on the
 
23           scholarship grant by the department;
 

 
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                                     S.B. NO.           S.D. 1
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 1      (4)  For those attending a post-secondary education
 
 2           institution, maintenance of a grade point average of
 
 3           3.0 or higher, on a scale of 4.0, or its equivalent,
 
 4           beginning with the first semester of the freshman year
 
 5           and through the term of the scholarship or in the last
 
 6           year of high school if the student is applying under
 
 7           section    -3 or    -4; or if enrolled in a vendor
 
 8           educational program, maintenance of a passing rate in
 
 9           the program; and
 
10      (5)  Enter into a written agreement with the department to:
 
11           (A)  Satisfy all degree, diploma, or certificate
 
12                requirements and other requirements under this
 
13                chapter;
 
14           (B)  Commence employment in this State within one year
 
15                after completion of an approved undergraduate
 
16                degree or certificate program for a period of one
 
17                year for each academic year the student received a
 
18                scholarship grant under this chapter, unless the
 
19                department determines that there are extenuating
 
20                circumstances; and
 
21           (C)  Reimburse the State all amounts received under
 
22                this chapter and interest, as determined by the
 
23                department, if the student fails to comply with
 
24                subparagraphs (A) and (B).
 

 
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                                     S.B. NO.           S.D. 1
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 1      (f)  A student shall apply to the department for a
 
 2 scholarship grant as prescribed by the department, and include
 
 3 all information and documentation required by the department.
 
 4 The application of a student under eighteen years of age shall
 
 5 include the signature of a parent or guardian.  The application
 
 6 shall include a verified statement of grade point average from
 
 7 the appropriate approved educational institution.
 
 8      (g)  The work requirement under subsection (e)(5)(B) shall
 
 9 begin after the receipt of bachelor's or associate's degree or
 
10 other appropriate certificate from an approved educational
 
11 institution.
 
12      (h)  If a student terminates enrollment in the approved
 
13 educational institution during the academic year or prior to
 
14 completion of the approved course of study, the approved
 
15 educational institution shall notify the department in writing
 
16 and shall return all unused portions of the scholarship grant.
 
17 Returned amounts shall be used to fund other scholarship grants
 
18 under this chapter.
 
19      (i)  A scholarship under this chapter is only transferrable
 
20 to another approved educational institution if approved by the
 
21 department.
 
22      (j)  Grants awarded under the program shall be limited to
 
23 funds appropriated for that purpose or funds otherwise matched by
 

 
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                                     S.B. NO.           S.D. 1
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 1 external entities.  First priority for awarding grants shall be
 
 2 given to renewal applicants.  Thereafter, grants shall be awarded
 
 3 on a first-come, first-served basis.
 
 4      §   -3 Scholarships; bachelor's degree programs.(a)  The
 
 5 department shall award a scholarship in the amount of $          
 
 6 per academic year, or a lesser amount, following application of
 
 7 federal and state grants under section    -2(d) to a student
 
 8 enrolled full-time in an approved educational institution
 
 9 pursuing a bachelor's degree in an approved course of study.
 
10      (b)  A grant shall be awarded beginning no earlier than the
 
11 second academic year of enrollment in an approved educational
 
12 institution.  The grant shall be for a maximum of three academic
 
13 years or for up to four academic years if the student is enrolled
 
14 in an approved course of study that, according to the department,
 
15 requires five academic years to complete.  To qualify for
 
16 renewals beyond three years, the student shall be in compliance
 
17 with the requirements of section    -2(e) and the department
 
18 shall determine that the student is making satisfactory progress
 
19 toward completing a degree.
 
20      (c)  A student who accepts a grant under this section shall
 
21 complete a college-approved or university-approved internship or
 
22 work experience in a science, technology, or related field with
 
23 an employer located in this State prior to receiving a bachelor's
 

 
Page 9                                                     2948
                                     S.B. NO.           S.D. 1
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 1 degree.  The student shall comply with any conditions placed upon
 
 2 the internship by the department.  Proof of completion of the
 
 3 internship or work experience requirements shall be submitted to
 
 4 the department prior to graduation, unless otherwise authorized
 
 5 by the department.
 
 6      §   -4 Scholarships; associate and certificate programs.
 
 7 (a)  The department shall award a scholarship in the amount of
 
 8 $           per academic year or a lesser amount following
 
 9 application of federal or state grants under section    -3(d) to
 
10 a student enrolled full-time in an approved educational
 
11 institution pursuing an associate's degree or a certificate
 
12 provided by a vendor educational program, or in a degree-granting
 
13 institution subject to chapter 446E in an academic program
 
14 approved by the department.  A student who is enrolled part time
 
15 and is an incumbent worker pursuing an associate's degree,
 
16 certification, or other specialized program approved by the
 
17 department is eligible for a grant of twenty per cent tuition and
 
18 mandatory fees.
 
19      (b)  The grant shall be for a maximum of two academic years
 
20 or for up to three academic years if the student is enrolled in
 
21 an approved course of study that, according to the department,
 
22 requires three academic years to complete.  To qualify for a
 
23 grant three times, the student shall be in compliance with
 

 
Page 10                                                    2948
                                     S.B. NO.           S.D. 1
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 1 section    -2(e), and the approved educational institution shall
 
 2 determine that the student is making satisfactory progress toward
 
 3 completing an associate's degree or the requirements of the
 
 4 certificate program.
 
 5      (c)  The department may waive the one-year employment
 
 6 requirement for an incumbent worker for extenuating circumstances
 
 7 related to the student's employment within the last year.
 
 8      §   -5 Program administration.(a)  The department shall
 
 9 monitor and verify a student's fulfillment of all internship and
 
10 work requirements under this chapter.
 
11      (b)  The department shall enforce repayment of all
 
12 scholarship grants for a student who does not comply with this
 
13 chapter.  Repayment shall include the use of all lawful
 
14 collection procedures and the use of private collection agencies.
 
15      (c)  Scholarship grants received by a student from the
 
16 program shall not be considered taxable income under chapter 235.
 
17      (d)  Scholarship grants received by a student from the
 
18 program shall not be considered financial assistance or
 
19 appropriations to the approved educational institution.
 
20      (e)  No funds under this chapter shall be granted to a
 
21 person enrolled in a customized job training partnership program
 
22 or continuing education course from a post-secondary educational
 
23 institution for which an employer is providing over fifty per
 

 
Page 11                                                    2948
                                     S.B. NO.           S.D. 1
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 1 cent of the financial support, directly or indirectly, and for
 
 2 which the student is not being charged tuition or fees.
 
 3      (f)  Any person who knowingly or intentionally procures,
 
 4 obtains, or aids another to procure or obtain a grant under this
 
 5 chapter through fraudulent means shall be disqualified from
 
 6 participation in the program and shall be liable to the
 
 7 department for an amount equal to three times the amount
 
 8 obtained.
 
 9      (g)  Any appeal under this chapter shall be subject to
 
10 chapter 91.
 
11      (h)  The department shall adopt rules under chapter 91
 
12 necessary to carry out the purposes of this chapter.
 
13      §   -6 Annual report.(a)  The department shall publish a
 
14 report by September 1, 2001, and every year thereafter.  The
 
15 report shall include information regarding the operation of the
 
16 program, including:
 
17      (1)  The total number of students receiving scholarship
 
18           grants;
 
19      (2)  The total amount of scholarship funds awarded;
 
20      (3)  The number of full-time and part-time students
 
21           receiving scholarship grants attending four-year
 
22           educational institutions, community colleges,
 
23           independent two-year colleges, degree-granting
 

 
Page 12                                                    2948
                                     S.B. NO.           S.D. 1
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 1           institutions, vendor educational programs, and
 
 2           certificate programs reported by institution and
 
 3           category of institution;
 
 4      (4)  The amount of scholarship funds awarded to students
 
 5           attending four-year educational institutions, community
 
 6           colleges, independent two-year colleges, degree-
 
 7           granting institutions, vendor educational programs, and
 
 8           certificate programs reported by institution and
 
 9           category of institution; and 
 
10      (5)  The total number of students who withdraw from the
 
11           program or internship or work requirements.
 
12      (b)  The annual report shall be submitted to the governor
 
13 and the legislature."
 
14      SECTION 3.  There is appropriated out of the general
 
15 revenues of the State of Hawaii the sum of $1 or so much thereof
 
16 as may be necessary for fiscal year 2000-2001 to establish and
 
17 implement the new economy technology scholarship pilot program.  
 
18      The sum appropriated shall be expended by the department of
 
19 business, economic development, and tourism for the purposes of
 
20 this Act.
 
21                              PART II
 
22      SECTION 4.  The purpose of this part is to support the
 
23 growth and development of technology in Hawaii by offering a tax
 

 
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                                     S.B. NO.           S.D. 1
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 1 incentive for new economy skills training to offset the cost of
 
 2 training, retraining, and related job creation efforts.
 
 3      SECTION 5.  Chapter 235, Hawaii Revised Statutes, is amended
 
 4 by adding a new section to be appropriately designated and to
 
 5 read as follows:
 
 6      "§235-    Tax credit for new economy skills training.  (a)
 
 7 Each taxpayer in this State may claim a tax credit for new
 
 8 economy skills training under this section.  The credit shall be
 
 9 for the cost of training the taxpayer or the taxpayer's employees
 
10 to upgrade the taxpayer or the taxpayer's employee's
 
11 technology-related skills.  To claim the credit:
 
12      (1)  The individual taxpayer shall create a new
 
13           technology-related job to be filled by the employee
 
14           receiving the technology training; or
 
15      (2)  The individual taxpayer shall acquire, within one year
 
16           of completion of the technology training, a
 
17           technology-related job that pays fifteen per cent more
 
18           than the taxpayer's previous job.
 
19 The credit shall be equal to the cost of this training or
 
20 creating those jobs but shall not exceed $           for
 
21 individual taxpayers and shall not exceed $           for
 
22 employees.  The credit may be claimed only by the taxpayer who
 
23 paid for the cost of the technology training and may be claimed
 
24 against the taxpayer's income tax liability for the taxable year.
 

 
Page 14                                                    2948
                                     S.B. NO.           S.D. 1
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 1      (b)  The tax credit claimed by a taxpayer pursuant to this
 
 2 section shall be deductible from the taxpayer's individual income
 
 3 tax liability, if any, for the tax year in which the credit is
 
 4 properly claimed.  If the tax credit claimed by a taxpayer
 
 5 exceeds the amount of income tax payment due from the taxpayer,
 
 6 the excess of credit over payments due shall be refunded to the
 
 7 taxpayer; provided that:
 
 8      (1)  A tax credit properly claimed by a taxpayer who has no
 
 9           income tax liability shall be paid to the taxpayer; and
 
10      (2)  No refunds or payment on account of the tax credit
 
11           allowed by this section shall be made for amounts less
 
12           than $1.
 
13      (c)  All claims for a tax credit under this section,
 
14 including any amended claims, shall be filed on or before the end
 
15 of the twelfth month following the close of the taxable year for
 
16 which the credit may be claimed.  Failure to comply with the
 
17 foregoing provision shall constitute a waiver of the right to
 
18 claim the credit.
 
19      (d)  For the purpose of this section "technology-related"
 
20 means emerging industries that are technology intensive,
 
21 including but not limited to electronics, biotechnology, or
 
22 computer systems."
 
23      SECTION 6.  New statutory material is underscored.
 
24      SECTION 7.  This Act shall take effect on July 1, 2010.