BILL NUMBER: AB 961 CHAPTERED 09/22/05 CHAPTER 318 FILED WITH SECRETARY OF STATE SEPTEMBER 22, 2005 APPROVED BY GOVERNOR SEPTEMBER 22, 2005 PASSED THE ASSEMBLY AUGUST 29, 2005 PASSED THE SENATE AUGUST 22, 2005 AMENDED IN SENATE AUGUST 17, 2005 AMENDED IN SENATE MAY 31, 2005 AMENDED IN ASSEMBLY APRIL 20, 2005 AMENDED IN ASSEMBLY MARCH 29, 2005 INTRODUCED BY Committee on Higher Education (Liu (Chair), Shirley Horton, Matthews, Nava, and Ruskin) FEBRUARY 18, 2005 An act to amend Sections 69980, 69981, 69982, 69983, 69984, 69986, 69989, 69990, 69992, 69993, and 89903 of, and to add Section 94103 to, the Education Code, to amend Section 10708 of the Public Contract Code, and to amend Section 1 of Chapter 402 of the Statutes of 2001, relating to postsecondary education, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST AB 961, Committee on Higher Education Postsecondary education: Golden State Scholarshare Trust: Board of Governors of the California Community Colleges: California Educational Facilities Authority: California State University. (1) The Golden State Scholarshare Trust Act establishes the Golden State Scholarshare Trust, under the administration of the Scholarshare Investment Board, to provide financial aid for postsecondary education costs of participating students. The act authorizes the board to appoint a program administrator and determine his or her duties and compensation. The act authorizes the program administrator to enter into contracts on behalf of the board. This bill would delete those provisions relating to a program administrator and, instead, authorize the board to appoint an executive director with similar powers. The bill would also authorize the executive director to conduct any business necessary for efficient operations of the board. The bill would additionally authorize the board to invest specified moneys under contract with investment managers, and would make related conforming changes. (2) The act requires that participants in the program be permitted to make up payments, in full or in part, for years in which they were eligible to contribute, but did not, for the benefit of a designated beneficiary. The act authorizes the amendment of participation agreements to provide for adjusted levels of payments based upon changed circumstances or changes in educational plans. The act requires that participation agreements be freely amended throughout their terms to enable participants to increase or decrease the level of participation. The bill would delete the make up payment provision, delete the participation agreement payment adjustment option for changed circumstances or changes in educational plans, and delete the participation level adjustment provision. (3) The act requires program administrators to develop adequate measures to prevent certain excess contributions, to pay the balance of a participant's account to the participant under certain circumstances, to develop a method to make payment of qualified higher education expenses directly to higher education institutions for the benefit of designated beneficiaries and to control for fraud under any direct reimbursement method of payment. The act authorizes program administrators to develop a method to make payment of qualified higher education expenses directly to beneficiaries in a manner that is consistent with applicable federal requirements and restrictions. The bill would delete references to program administrators, and instead impose the described responsibilities and powers on the board. The bill would delete that provision requiring the development of measures to prevent excess contributions. (4) The act requires the board to submit an annual audited financial report on the operations of the trust by September 30. This bill would change that date to October 31. (5) The act requires the trust to provide an annual listing to the Franchise Tax Board on magnetic tape or other machine-readable form, and in a manner agreed upon by the Franchise Tax Board and the Scholarshare trust, of all distributions, including payment of benefits and refunds, to any individual with respect to an interest in a participation agreement. The act requires the listing to include the names, addresses, tax identification numbers, and type and amounts of each distribution, including interest earned and penalties imposed. The act requires the trust to make a report to each participant or beneficiary of the type and amount of each distribution, including payment of benefits and refunds. The act requires the trust to report annually to each participant or beneficiary on the investment goal the participant will achieve if all future contributions with respect to that beneficiary are timely made. The bill would specifically impose those requirements and other trust responsibilities on the board. The bill modifies the annual listing requirement to instead require an annual listing of distributions to individuals with respect to an interest in a participation agreement to the Franchise Tax Board at a time and in a manner and form as specified by the Franchise Tax Board. The bill would modify the individual report requirement to require the board to make a report to the appropriate individual of any distribution to any individual with respect to an interest in a participation agreement, at a time and in a form and manner as required by the Franchise Tax Board. The bill would delete the individual investment goal reporting requirement, and instead would require the board's report to include information on investments and education costs that participants can use to set savings goals and contribution amounts. (6) Existing law establishes the California State University under the administration of the Trustees of the California State University. Existing law authorizes the establishment of auxiliary organizations of the university for various purposes consistent with the mission of the university. Existing law requires the governing board of each auxiliary organization to meet on at least a quarterly basis. This bill would instead require that the governing boards of these auxiliary organizations meet on at least an annual basis. (7) Existing law establishes the California Educational Facilities Authority Act, the purpose of which is to provide private institutions of higher education within the state an additional means by which to expand, enlarge, and establish dormitory, academic, faculty and staff housing, and related facilities, finance those facilities, refinance existing facilities, and to provide private and public institutions of higher education within the state an additional means to assist students in financing their costs of attendance. This bill would prohibit a city, county, city and county, district, or other local jurisdiction from operating, authorizing, or requesting an entity, including a corporation, to take any of several specified actions with respect to student loans. The bill would also require any entity that, as of January 1, 2006, is not qualified to be awarded an allocation of the state's annual private activity volume cap to issue qualified scholarship funding bonds, as defined, to obtain approval from the authority to operate as a qualified scholarship funding corporation, as defined. (8) Existing law, the California State University Contract Law, provides, among other things, that when, in the opinion of the Trustees of the California State University, the best interests of the university so dictate, the trustees may enter into an agreement with a contractor to provide all or significant portions of the design services and construction services relating to the erection, construction, alteration, painting, repair, or improvement of a state structure, building, road, or other state improvement of any kind. This bill would require that, when the design of portions of the building project permits the selection of subcontractors, the contractor competitively bid those portions. The bill would also require the contractor to provide to the trustees a list of subcontractors whose work is in excess of 1/2 of 1% of the total project cost as soon as the subcontractors are identified. The bill would further require that, once the subcontractors are listed, they shall have the rights provided in the Subletting and Subcontracting Fair Practices Act. The bill would, notwithstanding a provision of existing law that requires the Department of General Services to approve, with respect to access compliance, plans and specifications for state buildings that are intended for use by the public and constructed with state funds, authorize the trustees to perform this function for California State University buildings and facilities that are intended for use by the public and constructed with state funds. (9) Existing law establishes the various campuses of the California State University, including the campus of California State University, Channel Islands, under the administration of the Trustees of the California State University. Existing law authorizes the trustees to exchange a portion of a prescribed parcel located approximately 8 miles from, and maintained by, the California State University, Channel Islands, for land, or for a combination of land and money, in accordance with prescribed criteria. Existing law provides that any funds received from the transaction authorized by this provision would be appropriated to the trustees for expenditure, without regard to fiscal years, for construction and capital development of projects that are eligible for state support, following review and approval by the Department of Finance. Existing law requires that the expenditure of funds received under these provisions be consistent with the master plan of the campus for which the project is proposed. Existing law also requires that any funds received under these provisions that are not encumbered prior to January 1, 2007, revert to the General Fund. This bill would additionally authorize the university to sell all or a portion of the 262-acre parcel and to use the proceeds of that sale to acquire a specified parcel or to meet commitments made in an environmental impact report. The bill would require any exchange or sale of properties to be for no more than fair market value for any land acquired. The bill would require any funds received to be held in trust and used for either of those purposes. Any proceeds of the sale of land authorized by the bill would be deposited into a continuously appropriated fund. Because the bill would authorize the deposit of moneys into that continuously appropriated fund from a new source, the bill would make an appropriation. The bill would move to January 1, 2012, the date on which any funds, received under these provisions and not previously encumbered, would revert to the General Fund. Appropriation: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 69980 of the Education Code is amended to read: 69980. As used in this article, the following terms have the following meanings, unless the context requires otherwise: (a) "Administrative fund" means the funds used to administer this article. (b) "Beneficiary" has the same meaning as "designated beneficiary," as provided in paragraph (1) of subsection (e) of Section 529 of the Internal Revenue Code of 1986, as it is amended from time to time, if, as determined by the board, the amendment is consistent with the purposes of this article. (c) "Benefits" means the payment of higher education expenses on behalf of a beneficiary by the Scholarshare trust during the beneficiary's attendance at an institution of higher education. (d) "Board" means the Scholarshare Investment Board established pursuant to subparagraph (B) of paragraph (2) of subdivision (a) of Section 69984. (e) "Golden State Scholarshare College Savings Trust" or "Scholarshare trust" means the trust created pursuant to this article. (f) "Executive director" means the administrator of the Scholarshare trust appointed by the board to administer and manage the Scholarshare trust. (g) "Institution of higher education" has the same meaning as "eligible educational institution," as provided in paragraph (5) of subsection (e) of Section 529 of the Internal Revenue Code of 1986, as it is amended from time to time, if, as determined by the board, the amendment is consistent with the purposes of this article. (h) "Investment manager" means a manager contracted to perform functions delegated by the board. "Investment management" means the functions performed by a manager contracted to perform functions delegated by the board. (i) "Participant" means an individual, trust, estate, partnership, association, company or corporation, a custodian under the California Uniform Transfers to Minors Act (Part 9 (commencing with Section 3900) of Division 4 of the Probate Code) or similar provisions adopted by another state, a state or local government agency, or a legal representative of a participant who has entered into a participation agreement pursuant to this article. "Participant" also means an account owner. (j) "Participation agreement" means an agreement between a participant and the Scholarshare trust, pursuant to this article. (k) "Program fund" means the program fund established by this article, which shall be held as a separate fund within the Scholarshare trust. (l) "Qualified higher education expenses" means the expenses of attendance at an institution of higher education as provided in paragraph (3) of subsection (e) of Section 529 of the Internal Revenue Code of 1986, as it is amended from time to time, if, as determined by the board, the amendment is consistent with the purposes of this article, and as determined and certified by the institution of higher education in the same manner as prescribed in Title IV of the Higher Education Act of 1965 (20 U.S.C. Sec. 1087l l, as amended). (m) "Tuition and fees" means the quarterly or semester charges imposed to attend an institution of higher education and required as a condition of enrollment. SEC. 2. Section 69981 of the Education Code is amended to read: 69981. (a) There is hereby created an instrumentality of the State of California to be known as the Golden State Scholarshare College Savings Trust. (b) The purposes, powers, and duties of the Scholarshare trust are vested in, and shall be exercised by, the board. (c) The board, in the capacity of trustee, shall have the power and authority to do all of the following: (1) Sue and be sued. (2) Make and enter into contracts necessary for the administration of the Scholarshare trust. (3) Adopt a corporate seal and change and amend it from time to time. (4) Cause moneys in the program fund to be held and invested and reinvested. (5) Enter into agreements with any institution of higher education or any federal or other state agency or other entity as required for the effectuation of its rights and duties. (6) Accept any grants, gifts, appropriation, and other moneys from any unit of federal, state, or local government or any other person, firm, partnership, or corporation for deposit to the administrative fund or the program fund. Except as otherwise provided in Section 69982, the board may not accept any contribution by any nonpublic entity, person, firm, partnership, or corporation that is not designated for a specified beneficiary. (7) Enter into participation agreements with participants, as set forth in Section 69983. (8) Make payments to institutions of higher education pursuant to participation agreements on behalf of beneficiaries. (9) Make refunds to participants upon the cancellation of participation agreements pursuant to the provisions, limitations, and restrictions set forth in this article. (10) Appoint an executive director, who shall serve at the pleasure of the board, and determine the duties of the executive director and other staff as necessary and set their compensation. The board may authorize the executive director to enter into contracts on behalf of the board or conduct any business necessary for the efficient operation of the board. (11) Make provisions for the payment of costs of administration and operation of the Scholarshare trust. (12) Carry out the duties and obligations of the Scholarshare trust pursuant to this article and have any and all other powers as may be reasonably necessary for the effectuation of the purposes, objectives, and provisions of this article . (d) The board shall adopt regulations as it deems necessary to implement this article and Article 20 (commencing with Section 69995) consistent with the federal Internal Revenue Code and regulations issued pursuant to that code to ensure that this program meets all criteria for federal tax-deferral or tax-exempt benefits, or both. SEC. 3. Section 69982 of the Education Code is amended to read: 69982. In addition to the powers and authority granted pursuant to Section 69981, the board shall have the powers and authority to do all of the following: (a) Carry out studies and projections in order to advise participants regarding present and estimated future higher education expenses and the levels of financial participation in the Scholarshare trust required in order to enable participants to achieve their education funding objectives. (b) Contract for goods and services and engage personnel, including consultants, actuaries, managers, counsel, and auditors, as necessary for the purpose of rendering professional, managerial, and technical assistance and advice. (c) Participate in any other way in any federal, state, or local governmental program for the benefit of the Scholarshare trust. (d) Promulgate, impose, and collect administrative fees and charges in connection with transactions of the Scholarshare trust, and provide for reasonable service charges, including penalties for cancellations. (e) Procure insurance against any loss in connection with the property, assets, or activities of the Scholarshare trust. (f) Administer the funds of the Scholarshare trust. (g) Procure insurance indemnifying any member of the board from personal loss or liability resulting from a member's action or inaction as a member of the board. (h) Adopt reasonable regulations for the administration of the Scholarshare trust. (i) Set minimum and maximum investment levels. (j) (1) Except as otherwise provided in this section, the overall maximum investment level for a designated beneficiary shall not exceed the amount equivalent to the maximum estimated qualified higher education expenses, as defined by subdivision (l) of Section 69980 and established by the board, that can be incurred by a beneficiary. The maximum investment level shall be published by the board as a monetary amount, in order to state contribution limits clearly and to encourage participation on behalf of beneficiaries who will attend all types of higher education institutions, both public and independent. (2) Contributions by entities exempt from taxation pursuant to Section 501(c)(3) of the Internal Revenue Code and state and local government agencies operating bona fide scholarship programs for the benefit of beneficiaries to be named when the scholarships are awarded are not subject to maximum contribution limits. SEC. 4. Section 69983 of the Education Code is amended to read: 69983. The Scholarshare trust may enter into participation agreements with participants on behalf of beneficiaries pursuant to the following terms and agreements: (a) The board may specify a required minimum length of time before distributions for higher education expenses may be made, and may impose a penalty on the early distribution of funds if deemed by the board to be necessary. (b) Beneficiaries designated in participation agreements may be designated from date of birth. (c) Participants shall be informed that the execution of a participation agreement by the Scholarshare trust shall not guarantee in any way that higher education expenses will be equal to projections and estimates provided by the Scholarshare trust or that the beneficiary named in any participation agreement will do any of the following: (1) Be admitted to an institution of higher education. (2) If admitted, be determined a resident for tuition purposes by the institution of higher education. (3) Be allowed to continue attendance at the institution of higher education following admission. (4) Graduate from the institution of higher education. (5) Have sufficient savings to cover fully all qualified education expenses of attending an institution of higher education. (d) Beneficiaries may be changed as permitted by the regulations of the board upon request of the participant, provided that the substitute beneficiary is eligible. (e) Participation agreements shall be freely amended throughout their terms in order to enable participants to change the designation of beneficiaries and carry out similar matters. (f) Each participation agreement shall provide that the participation agreement may be canceled upon the terms and conditions set forth and contained in the regulations adopted by the board. (g) All contributions to Scholarshare accounts shall be in cash. SEC. 5. Section 69984 of the Education Code is amended to read: 69984. (a) (1) The board shall segregate moneys received by the Scholarshare trust into two funds, which shall be identified as the program fund and the administrative fund. Notwithstanding Section 13340 of the Government Code, the program fund is hereby continuously appropriated, without regard to fiscal years, to the board for the purposes of this article. Funds in the administrative fund shall be available for expenditure, upon appropriation, for the purposes specified in this article. (2) (A) The board shall separately account for any moneys received by an entity exempt from taxation under Section 501(c)(3) of the Internal Revenue Code or a state or local government agency, depositing the money for the benefit of a beneficiary to be named later pursuant to the operation of a bona fide scholarship program. (B) There is hereby created the Scholarshare Investment Board, that consists of the Treasurer, the Director of Finance, the Secretary of Education, a member of the Student Aid Commission appointed by the Governor, a member of the public appointed by the Governor, a representative from a California public institution of higher education appointed by the Senate Committee on Rules, and a representative from a California independent college or university or a state-approved college, university, or vocational/technical school appointed by the Speaker of the Assembly. The Treasurer shall serve as chair of the board. The board shall annually prepare and adopt a written statement of investment policy. The board shall consider the statement of investment policy and any changes in the investment policy at a public hearing. The board shall approve the investment management entity or entities consistent with subparagraph (D). (C) Not later than 30 days after the close of each month, the investment manager shall place on file for public inspection during business hours a report with respect to investment performance. The investment manager shall report the following information, to the extent applicable, to the board within 30 days following the end of each month: (i) The type of investment, name of the issuer, date of maturity, par and dollar amount invested in each security, investment, and money within the program fund. (ii) The weighted average maturity of the investments within the program fund. (iii) Any amounts in the program fund that are under the management of an investment manager. (iv) The market value as of the date of the report and the source of this valuation for any security within the program fund. (v) A description of the compliance with the statement of investment policy. (D) Moneys in the program fund may be invested or reinvested by the Treasurer or may be invested in whole or in part under contract with an investment manager, as determined by the board. (b) Transfers may be made from the program fund to the administrative fund for the purpose of paying operating costs associated with administering the Scholarshare trust and as required by this article. On an annual basis, expenditures from the administrative fund shall not exceed more than 1 percent of the total program fund. All costs of administration of the Scholarshare trust shall be paid out of the administrative fund. (c) All moneys paid by participants in connection with participation agreements shall be deposited as received into the program fund, and shall be promptly invested and accounted for separately. Deposits and interest thereon accumulated on behalf of participants in the program fund of the Scholarshare trust may be used for payments to any institution of higher education. SEC. 6. Section 69986 of the Education Code is amended to read: 69986. For all purposes of California law, the following apply: (a) The participant shall retain ownership of all contributions made under any participation agreement up to the date of utilization for payment of higher education costs for the beneficiary, and all interest derived from the investment of the payments made by the participant shall be deemed to be held in Scholarshare trust for the benefit of the beneficiary. Neither the contributions, nor any interest derived therefrom, may be pledged as collateral for any loan. (b) If the participation agreement is canceled prior to payment of higher education expenses for the beneficiary, the participant shall retain ownership of all contributions made under the participation agreement and reversionary right to receive interest on all the contributions at the rate of interest at which the contributions were invested. (c) Notwithstanding subdivision (b), if there has been a decrease in the value of the funds in a participant's account at the time of cancellation of the participation agreement, the participant shall not have ownership rights to any amount above the market value of the funds in the account at the time of cancellation. (d) The board shall develop adequate measures to prevent contributions on behalf of a designated beneficiary in excess of the maximum contribution limits provided for in this article. (e) If the beneficiary graduates from an institution of higher education and has no intention of further attendance at an institution of higher education, and a balance remains in the participant's account, then the Scholarshare trust shall pay the balance to the participant. (f) The board shall develop a method to make payment of qualified higher education expenses directly to higher education institutions for the benefit of designated beneficiaries and to control for fraud under any direct reimbursement method of payment that it may adopt. The institution of higher education shall obtain ownership of the payments made for the higher education expenses paid to the institution at the time each payment is made to the institution. (g) The board may also develop a method to make payment of qualified higher education expenses directly to beneficiaries in a manner that is consistent with applicable federal requirements and restrictions. (h) Any amounts paid pursuant to the Scholarshare trust that are not listed in this section shall be owned by the Scholarshare trust. (i) A participant may transfer ownership rights to another eligible participant, including, but not necessarily limited to, a gift of the ownership rights to an eligible minor beneficiary pursuant to this article. The transfer shall be effected and the property distributed in accordance with administrative regulations adopted by the board or the terms of the participation agreement. (j) Custodians for a minor under the California Uniform Transfers to Minors Act (Part 9 (commencing with Section 3900) of Division 4 of the Probate Code) or similar provisions adopted by another state may enter into participation agreements in accordance with regulations adopted by the board. SEC. 7. Section 69989 of the Education Code is amended to read: 69989. (a) The board shall submit an annual audited financial report, prepared in accordance with generally accepted accounting principles, on the operations of the Scholarshare trust by October 31 to the Governor, the Controller, the State Auditor, and the Legislature. The annual audit shall be made by an independent certified public accountant, and shall include, but need not be limited to, direct and indirect costs attributable to the use of outside consultants, independent contractors, and any other persons who are not state employees. Any contributions to the Scholarshare trust that are not directed to a specified beneficiary shall be accounted for and treated separately in the annual audit. (b) The annual audit shall be supplemented by the following information prepared by the board: (1) Any studies or evaluations prepared in the preceding year. (2) A summary of the benefits provided by the Scholarshare trust, including the number of participants and beneficiaries in the Scholarshare trust. (3) Any other information that is relevant in order to make a full, fair, and effective disclosure of the operations of the Scholarshare trust. SEC. 8. Section 69990 of the Education Code is amended to read: 69990. (a) The board shall provide an annual listing of distributions to individuals with respect to an interest in a participation agreement to the Franchise Tax Board at a time and in a manner and form as specified by the Franchise Tax Board. The taxpayers' identification numbers obtained through the participation agreement process shall be used exclusively for state and federal tax administration purposes. (b) The board shall make a report to the appropriate individual of any distribution to any individual with respect to an interest in a participation agreement, at a time and in a form and manner as required by the Franchise Tax Board. (c) The board also shall report annually to each participant or beneficiary all of the following: (1) The value of the beneficiary's account. (2) The interest earned thereon. (3) The rate of return of the investments in the beneficiary's account for that reporting period. (4) Information on investments and education costs that participants can use to set savings goals and contribution amounts. (5) Information regarding the trends in qualified higher education expenses at the state's public segments of higher education, which shall include, but need not be limited to, the following: (A) The actual increase or decrease in qualified higher education expenses in the prior year. (B) To the extent possible, any proposals by the segments to increase or decrease fees or tuition in the next fiscal year. (C) To the extent possible, any proposals by the Legislature or the Governor to increase or decrease fees or tuition in the next fiscal year. (D) An Internet Web site and toll-free telephone number where the names of the State Senator and Assembly Member who represent the district in which the participant or beneficiary resides, and a business address and telephone number where they may be reached, may be accessed. (d) The board, as an advocate for affordable higher education opportunities for participants and beneficiaries of the program, shall also provide a means for participants or beneficiaries to express concerns or comments regarding the Scholarshare trust program and any information required to be reported by this section. SEC. 9. Section 69992 of the Education Code is amended to read: 69992. The board shall aggressively market this program to the citizens of the State of California. The board shall include in its marketing efforts information designed to educate citizens about the benefits of saving for higher education and information to help them decide the level of Scholarshare participation and the combination of savings strategies that may be appropriate for them. The board shall also develop a mechanism to keep participants in this program motivated about their current and future academic endeavors. SEC. 10. Section 69993 of the Education Code is amended to read: 69993. Funding for startup and first-year administrative costs shall be appropriated from the General Fund in the annual Budget Act. The board shall repay, within five years, the amount appropriated, plus interest calculated at the rate earned by the Pooled Money Investment Account. Necessary administrative costs in future years shall be paid out of the administrative fund. SEC. 11. Section 89903 of the Education Code is amended to read: 89903. (a) (1) Each auxiliary organization formed pursuant to this article shall have a board of directors composed, both as to size and categories of membership, in accordance with regulations established by the Trustees of the California State University. (2) If, in any fiscal year, a majority of the funding of the auxiliary organization is received from student fees collected on a campus or systemwide, at least a majority of the board of directors of that auxiliary organization shall consist of California State University students with full voting privileges on that board. This paragraph shall only be applicable to effectuate a change in the membership of a board of directors of an auxiliary organization if the trustees determine that there is no legal or contractual barrier to changing the governing structure of that organization. In the event that the trustees determine that there is a legal or contractual barrier to changing the governing structure of an auxiliary organization, information relating to that determination shall be reported, in a timely manner, to that auxiliary organization and any affected student body organization. (b) Each governing board shall, during each fiscal year, hold at least one business meeting in accordance with Article 2 (commencing with Section 89920). The board shall have the benefit of the advice and counsel of at least one attorney admitted to practice law in this state and at least one licensed certified public accountant. Neither the attorney at law nor the certified public accountant need be members of the board. (c) No auxiliary organization shall accept any grant, contract, bequest, trust, or gift, unless it is so conditioned that it may be used only for purposes consistent with policies of the trustees. SEC. 12. Section 94103 is added to the Education Code, to read: 94103. (a) Notwithstanding any other provision of law, no city, county, city and county, district, or other local jurisdiction shall operate, or request or authorize another entity, including, but not necessarily limited to, a corporation, either directly or through an intermediary, to do either of the following: (1) Finance, or purchase or take assignments of, or make commitments to finance, any loan, or otherwise acquire any student loan note, including, but not necessarily limited to, any loan guaranteed under the Federal Family Education Loan Program established under Title IV of the federal Higher Education Act of 1965, that is made to finance or refinance the costs of attendance at any institution of higher education, including any public and nonprofit private or independent degree-granting educational institution. (2) Issue bonds, notes, debentures, or other securities involving any loan, including, but not necessarily limited to, any loan guaranteed under the Federal Family Education Loan Program established under Title IV of the federal Higher Education Act of 1965, that is made to finance or refinance the costs of attendance at any institution of higher education, including any public and nonprofit private or independent degree-granting educational institution. (b) Any entity that, as of January 1, 2006, is not qualified to be awarded an allocation of the state's annual private activity volume cap to issue qualified scholarship funding bonds, as defined in subsection (d) of Section 150 of Title 26 of the United States Code as it exists on January 1, 2006, shall obtain approval from the authority to operate as a qualified scholarship funding corporation within the meaning of subsection (d) of Section 150 of Title 26 of the United States Code as it exists on January 1, 2006. SEC. 13. Section 10708 of the Public Contract Code is amended to read: 10708. (a) When, in the opinion of the trustees, the best interests of the California State University dictate, the trustees may enter into an agreement with a contractor to provide all or significant portions of the design services and construction of a project under this chapter. The contractor shall design the project pursuant to the scope of services set forth in the request for proposals, build the project, and present the completed project to the trustees for their approval and acceptance. (b) Work under this section shall be carried out by a contractor chosen by a competitive bidding process that employs selection criteria in addition to cost. Any design work performed pursuant to this section shall be prepared and signed by an architect certificated pursuant to Chapter 3 (commencing with Section 5500) of Division 3 of the Business and Professions Code. (c) When the design of portions of the project permits the selection of subcontractors, the contractor shall competitively bid those portions. The contractor shall provide to the trustees a list of subcontractors whose work is in excess of one-half of 1 percent of the total project cost as soon as the subcontractors are identified. Once listed, the subcontractors shall have the rights provided in the Subletting and Subcontracting Fair Practices Act (Chapter 4 (commencing with Section 4100) of Part 1). SEC. 14. Section 1 of Chapter 402 of the Statutes of 2001 is amended to read: Section 1. (a) The Legislature finds and declares all of the following: (1) In 1995 the state purchased 262 acres of land in Ventura County, known as the Lemon Orchard Parcel, for the purpose of establishing a new campus of the California State University. (2) In 1997, prior to the development of a new California State University campus on the Lemon Orchard Parcel, the Legislature expressed its intent, pursuant to Senate Bill 623 (Chapter 914) that the land and improvements comprising the Camarillo State Hospital be transferred to the trustees to be developed and improved as a campus of the California State University. (3) The trustees officially opened the new California State University, Channel Islands (CSUCI) campus on August 16, 2002, and developed a master plan for a projected enrollment of 15,000 full-time equivalent students by 2025. (4) In developing the master plan for CSUCI, the trustees have approved an environmental impact report (EIR) in accordance with the California Environmental Quality Act that provides for a more direct new entry road across land proposed to be acquired in order to provide a needed second route for access to the campus and to address safety issues related to the existing long, narrow, and winding entry road. (5) The County of Ventura has commenced construction of an off-ramp grade separated intersection at the location of the proposed new entry road's intersection with county owned Lewis Road. CSUCI must construct its entry road in that location in order to connect to the county off-ramp and intersection with Lewis Road. (6) As the original purchase of the Lemon Orchard Parcel was intended by the Legislature to be used for the establishment of a campus of the California State University, and as the Lemon Orchard Parcel must be sold or exchanged and the proceeds used to carry out the intent of the Legislature and to protect the health and safety of the people, the Lemon Orchard Parcel is not surplus to the needs of the California State University and is therefore not surplus state property. (b) Notwithstanding any other provision of law, the Trustees of the California State University may exchange or sell all or a portion of the 262-acre parcel of property known as the Lemon Orchard Parcel under the jurisdiction of and maintained by California State University, Channel Islands, and that is located approximately eight miles northwest of the campus of California State University, Channel Islands. The trustees may use the proceeds of a sale made pursuant to this subdivision to acquire a parcel bounded by Lewis Road on the northwest, California State University, Channel Islands, and the Camrosa Water District on the south, and farmlands on the northeast and east, or to meet the commitments made in the EIR. (c) Any exchange or sale of properties carried out pursuant to this section shall be for no less than fair market value for the Lemon Orchard Parcel, and for no more than fair market value for any land acquired, as determined by an independent appraisal. Compensation for the Lemon Orchard Parcel may include land, or a combination of land and money. (d) Notwithstanding any other provision of law, any exchange, acquisition, or sale of properties carried out pursuant to this section shall be subject to the Property Acquisition Law (Part 11 (commencing with Section 15850) of Division 3 of Title 2 of the Government Code). (e) Notwithstanding Section 13340 of the Government Code or any other provision of law, any funds received from the transaction authorized by this section shall be held in trust and used either for the acquisition of the parcel bounded by Lewis Road on the northwest, by CSUCI and Camrosa Water District on the south, and farmlands on the north and northeast, or to meet the commitments made in the EIR, and are hereby appropriated to the trustees for expenditure, without regard to fiscal years, for acquisition of land and construction and capital development of projects that meet the commitments made in the EIR and are eligible for state support, following review and approval by the Department of Finance. The expenditure of funds received under this section shall be for projects that are consistent with the master plan of the campus for which the project is proposed. Any funds received under this subdivision that are not encumbered prior to January 1, 2012, shall revert to the General Fund.