SB907 SD1.DOC

SECTION 1. The legislature finds that universal children's savings and investment accounts, which facilitate the compounding of interest and growth of investments, would help families to start saving at birth for their child's future. A universal children's savings and investment program would provide a significant foundation for every child in Hawaii, particularly those with no other assets. It would also provide a vehicle for savings, and serve as a tool for children and parents to learn the value of saving and investment.

The legislature further finds that thirty-four per cent of Hawaii's middle class families, meaning those earning $44,801 to $68,800 a year, are asset poor. A household is asset poor if it lacks the resources to subsist at the poverty level for three months if it loses its source of income.

According to a study conducted by the Center for Social Development at Washington University in St. Louis, students with savings are significantly more likely to pursue a higher education. In addition, the national policy organization, Corporation for Enterprise Development, has found that children's savings accounts increase expectations for the future, provide children and families opportunities for economic mobility, serve as an educational tool in regard to learning about investing, and allow for the building of meaningful savings while learning about money and finance. Educating and encouraging families to create savings accounts, which may include a diverse investment portfolio of stocks, bond, or mutual funds for children accordingly contribute to the economic viability of Hawaii's citizens.

The purpose of this Act is to establish a universal children's savings and investment account program that allows funds to be invested for children, at birth, who are born in Hawaii or reside in Hawaii to assist them with a positive financial foundation in adulthood, including but not limited to purchasing a home, starting a business, or obtaining higher education.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

UNIVERSAL CHILDREN'S SAVINGS AND INVESTMENT ACCOUNT PROGRAM

§ ‑1 Universal children's savings and investment account program. There is established the universal children's savings and investment account program within the department of budget and finance. The purpose of the program is to enable families to establish an account for their children that can accumulate savings and interest and dividends from various diversified investments, which will assist children with a positive financial foundation in adulthood, including but not limited to purchasing a home, starting a business, or obtaining higher education. The program shall:

(1) Encourage children who were born in Hawaii or reside in Hawaii to save money; and

(2) Promote and educate eligible children and their families on the importance of developing an investment strategy.

§ -2 Rules. The department of budget and finance shall adopt rules, pursuant to chapter 91, and in consultation with the final report adopted by the Hawaii state asset building and financial education task force in January 2010. The rules to be adopted shall include but not be limited to establishing:

(1) Eligibility requirements for participation in the program;

(2) Appropriate uses for the funds provided through the program and appropriate types of investment portfolios used by the program; and

(3) Procedures and criteria for depositing funds into the investment fund and accessing funds from an established savings and investment account, including the ability to access funds upon the recipient reaching eighteen years of age.

§ -3 Universal children's savings and investment trust fund. (a) There is established the universal children's savings and investment trust fund. The director of finance shall have custody of the trust fund. All payments from the trust fund shall be made in accordance with this chapter.

(b) The trust fund shall consist of a trust account and an operating account. The trust account shall consist of:

(1) Amounts received by the universal children's savings and investment program pursuant to savings agreements, administrative charges, or fees;

(2) All appropriations made by the legislature to the fund;

(3) All other amounts received by the program from any other source; and

(4) Interest and investment income earned by the fund.

The director of finance, from time to time, shall make transfers from the trust account to the operating account for the immediate payment of obligations under savings and investment agreements, operating expenses, and administrative costs of the universal children's savings and investment program.

(c) The director of finance, as trustee, shall invest the assets of the fund in securities that constitute legal investments under state laws relating to the investment of trust fund assets by trust companies, including those authorized by article 8 of chapter 412. Trust fund assets shall be kept separate and shall not be commingled with other assets, except as provided in this chapter. The director of finance may enter into contracts to provide for investment advice and management, custodial services, and other professional services for the administration and investment of the program.

(d) The director of finance shall provide for the administration of the fund, including maintaining participant records and accounts, and providing annual audited reports. The director of finance may enter into contracts for administrative services, including reports.

(e) All administrative fees, costs, and expenses, including investment fees and expenses, shall be paid from the operating account of the fund and, notwithstanding any other law to the contrary, may be made without appropriation or allotment."

SECTION 3. The department of budget and finance shall include in its next biennium budget request an appropriation for the amount necessary to administer the universal children's savings and investment account program.

SECTION 4. This Act shall take effect on July 1, 2017.

THE SENATE	S.B. NO.	907
TWENTY-EIGHTH LEGISLATURE, 2015		S.D. 1
STATE OF HAWAII