Journal of the House - 44th Day - Monday, April 28, 2003

A quorum was present.

Westrom was excused until 12:35 p.m. Hausman was excused until 12:40 p.m.

The Chief Clerk proceeded to read the Journal of the preceding day. Samuelson moved that further reading of the Journal be suspended and that the Journal be approved as corrected by the Chief Clerk. The motion prevailed.

Journal of the House - 44th Day - Monday, April 28, 2003 - Top of Page 2824

PETITIONS AND COMMUNICATIONS

The following communications were received:

STATE OF MINNESOTA

OFFICE OF THE GOVERNOR

SAINT PAUL 55155

April 23, 2003

The Honorable Steve Sviggum

Speaker of the House of Representatives

The State of Minnesota

Dear Speaker Sviggum:

It is my honor to inform you that I have received, approved, signed, and deposited in the Office of the Secretary of State the following House Files:

H. F. No. 51, relating to insurance; clarifying that a certain law includes long-term care insurance.

H. F. No. 266, relating to human services; modifying the purchasing alliance stop-loss fund.

Sincerely,

Tim Pawlenty

Governor

STATE OF MINNESOTA

OFFICE OF THE SECRETARY OF STATE

ST. PAUL 55155

The Honorable Steve Sviggum

Speaker of the House of Representatives

The Honorable James P. Metzen

President of the Senate

I have the honor to inform you that the following enrolled Acts of the 2003 Session of the State Legislature have been received from the Office of the Governor and are deposited in the Office of the Secretary of State for preservation, pursuant to the State Constitution, Article IV, Section 23:

S. F.

No.

H. F.

No.

Session Laws

Chapter No.

Time and

Date Approved

2003

Date Filed

2003

51 19 3:30 p.m. April 23 April 23

266 20 3:30 p.m. April 23 April 23

Sincerely,

Mary Kiffmeyer

Secretary of State

Journal of the House - 44th Day - Monday, April 28, 2003 - Top of Page 2825

REPORTS OF STANDING COMMITTEES

Knoblach from the Committee on Ways and Means to which was referred:

H. F. No. 748, A bill for an act relating to state government; appropriating money for economic development, housing, and certain agencies of state government; modifying programs; regulating activities and practices; modifying penalty provisions; changing terms; authorizing a registration fee; modifying displaced homemaker provisions; increasing the petroleum inspection fee; requiring uniform mandatory penalties against license holders and a licensee's employees for sales to minors; providing for mitigating circumstances in assessing penalties; amending Minnesota Statutes 2002, sections 13.462, subdivision 2; 16B.35, subdivision 1; 17.101, subdivision 1; 41A.036, subdivision 2; 43A.24, subdivision 2; 60A.14, subdivision 1; 79.56, subdivisions 1, 3; 115C.02, subdivision 14; 115C.08, subdivision 4; 115C.09, subdivision 3, by adding subdivisions; 115C.11, subdivision 1; 115C.13; 116.073, subdivisions 1, 2; 116.46, by adding subdivisions; 116.49, by adding subdivisions; 116.50; 116J.011; 116J.411, by adding a subdivision; 116J.415, subdivisions 1, 2, 4, 5, 7, 11; 116J.553, subdivision 2; 116J.554, subdivision 2; 116J.8731, subdivisions 1, 4, 5, 7; 116J.8764, by adding a subdivision; 116J.955, subdivision 2; 116J.966, subdivision 1; 116J.994, subdivision 4; 116J.995; 116L.02; 116L.04, subdivisions 1, 1a; 116L.12, subdivision 4; 116L.17, subdivisions 2, 3, 8, by adding a subdivision; 116M.14, subdivision 4; 116O.03, subdivision 2; 116O.091, subdivision 7; 116O.12; 154.18; 175.16, subdivision 1; 177.26, subdivisions 1, 2; 178.01; 178.03, subdivisions 1, 2; 181.9435, subdivision 1; 181.9436; 216A.03, subdivision 1; 239.10, subdivision 3; 239.101, subdivision 3; 248.10; 268.022, subdivision 1; 268A.02, by adding a subdivision; 326.105; 354D.02, subdivision 2; 461.12, subdivision 2; 461.19; 624.20, subdivision 1; proposing coding for new law in Minnesota Statutes, chapters 60A; 115C; 178; repealing Minnesota Statutes 2002, sections 13.598, subdivision 2; 116J.411, subdivision 3; 116J.415, subdivisions 6, 9, 10; 116J.693; 116J.9665; 116L.03, subdivision 7; 138.91; 155A.03, subdivisions 14, 15; 155A.07, subdivision 9; 177.26, subdivision 3; 178.11; Minnesota Rules, part 2100.9300, subpart 1.

Reported the same back with the following amendments:

Page 2, delete line 17 and insert:

"General $165,223,000 $158,178,000 $323,401,000"

Page 2, delete line 27 and insert:

"TOTAL $198,632,000 $190,532,000 $389,164,000"

Page 2, delete lines 34 and 35 and insert:

"Subdivision 1. Total Appropriation $69,448,000 $64,673,000"

Page 2, delete line 37 and insert:

"General 60,278,000 56,253,000"

Page 3, delete lines 5 and 6 and insert:

"Subd. 2. Business and Community Development 13,114,000 8,734,000"

Page 3, delete line 8 and insert:

"General 11,664,000 8,034,000"

Journal of the House - 44th Day - Monday, April 28, 2003 - Top of Page 2826

Page 3, after line 40, insert:

"$1,000,000 the first year and $1,000,000 the second year are onetime appropriations to encourage and facilitate a joint partnership with the University of Minnesota and the Mayo Foundation for research in biotechnology and medical genomics. This appropriation must be matched dollar for dollar by nonstate funds. Funds shall be made available on a reimbursement basis after certification to the commissioner of finance of the nonstate match.

In the first year, the appropriation funds operating costs of the collaboration, including salaries, but does not include capital expenditures. The University of Minnesota and the Mayo Foundation shall submit a business plan to the governor, the chair of the house jobs and economic development committee, and the chair of the senate jobs, housing, and community development committee no later than October 1, 2003. The plan should identify specific disciplines for development and collaboration, timelines, and include a discussion of the expected economic benefits of the partnership to the state of Minnesota.

After adoption of the business plan by the governing bodies of the University of Minnesota and the Mayo Foundation, the appropriation in the second year shall be made available on a reimbursement basis to begin implementation of the business plan. A preliminary report on the budgeted expenditure of these funds should be submitted no later than October 1, 2004. A final report on the expenditure of these funds should be submitted no later than July 31, 2005."

Page 3, line 41, delete "$2,375,000" and insert "$2,000,000"

Page 6, after line 2, insert:

"The base funding restored by this subdivision is intended to be used to provide services to blind persons, and that restored funding should not be used to increase administrative expenditures."

Page 9, delete lines 44 to 50 and insert:

"The historical society may not close or effectively eliminate public access to any historic site in order to reduce its budget. The society may act to eliminate access to a site only if the reason for doing so is a public safety or other emergency unrelated to the reductions in its budget that are called for in this or other legislative acts."

Journal of the House - 44th Day - Monday, April 28, 2003 - Top of Page 2827

Page 17, after line 15, insert:

"Sec. 5. Minnesota Statutes 2002, section 216C.41, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] (a) The definitions in this subdivision apply to this section.

(b) "Qualified hydroelectric facility" means a hydroelectric generating facility in this state that:

(1) is located at the site of a dam, if the dam was in existence as of March 31, 1994; and

(2) begins generating electricity after July 1, 1994, or generates electricity after substantial refurbishing of a facility that begins after July 1, 2001.

(1) produces two megawatts or less of electricity as measured by nameplate rating and begins generating electricity after December 31, 1996, and before July 1, 1999;

(2) begins generating electricity after June 30, 1999, produces two megawatts or less of electricity as measured by nameplate rating, and is:

(i) located within one county and owned by ~~a natural person who~~ an entity that is not prohibited from owning agricultural land under section 500.24 that owns the land where the facility is sited;

(ii) owned by a Minnesota small business as defined in section 645.445;

(iii) owned by a nonprofit organization; or

(iv) owned by a tribal council if the facility is located within the boundaries of the reservation; or

(3) begins generating electricity after June 30, 1999, produces seven megawatts or less of electricity as measured by nameplate rating, and:

(i) is owned by a cooperative organized under chapter 308A; and

(ii) all shares and membership in the cooperative are held by natural persons or estates, at least 51 percent of whom reside in a county or contiguous to a county where the wind energy production facilities of the cooperative are located.

(d) "Qualified on-farm biogas recovery facility" means an anaerobic digester system that:

(1) is located at the site of an agricultural operation;

(2) is owned by a natural person who owns or rents the land where the facility is located; and

(3) begins generating electricity after July 1, 2001.

(e) "Anaerobic digester system" means a system of components that processes animal waste based on the absence of oxygen and produces gas used to generate electricity."

Journal of the House - 44th Day - Monday, April 28, 2003 - Top of Page 2828

Page 19, delete section 11

Pages 23 and 24, delete section 2

Page 31, after line 8, insert:

"(l) Notwithstanding other law to the contrary in this section, the board shall reimburse a state agency from the fund for 100 percent of its total reimbursable costs at a site."

Page 35, after line 8, insert:

"Sec. 8. [STATE TANK REMOVAL; INVENTORY AND REIMBURSEMENT.]

The petroleum tank release compensation board shall inventory the sites for which a state agency has incurred reimbursable costs under Minnesota Statutes 2002, section 115C.09, subdivision 1, from 1990 to the present. To the extent these costs were not reimbursed or expended from the petroleum tank fund or state general obligation bond funds, the board shall reimburse the agency for 100 percent of its total reimbursable costs, by transferring funds from the petroleum tank fund to the general fund or other state fund from which the agency expended funds for this purpose."

Page 60, after line 23, insert:

"ARTICLE 8

MOTOR VEHICLE INSTALLMENT SALES

Section 1. Minnesota Statutes 2002, section 47.59, subdivision 4a, is amended to read:

Subd. 4a. [FINANCE CHARGE FOR MOTOR VEHICLE RETAIL INSTALLMENT SALES.] A retail installment contract evidencing the retail installment sale of a motor vehicle as defined in section 168.66 is subject to the finance charge limitations in paragraphs (a) and (b).

(a) The finance charge authorized by this subdivision in a retail installment sale may not exceed the following annual percentage rates applied to the principal balance determined in the same manner as in section 168.71, subdivision 2, clause (5):

(1) Class 1. A motor vehicle designated by the manufacturer by a year model of the same or not more than one year before the year in which the sale is made, 18 percent per year.

(2) Class 2. A motor vehicle designated by the manufacturer by a year model of two to three years before the year in which the sale is made, 19.75 percent per year.

(3) Class 3. Any motor vehicle not in Class 1 or Class 2, 23.25 percent per year.

(b) A sale of a manufactured home made after July 31, 1983, is governed by this subdivision for purposes of determining the lawful finance charge rate, except that the maximum finance charge for a Class 1 manufactured home may not exceed 14.5 percent per year. A retail installment sale of a manufactured home that imposes a finance charge that is greater than the rate permitted by this subdivision is lawful and enforceable in accordance with its terms until the indebtedness is fully satisfied if the rate was lawful when the sale was made.

Journal of the House - 44th Day - Monday, April 28, 2003 - Top of Page 2829

Sec. 2. Minnesota Statutes 2002, section 168.66, subdivision 14, is amended to read:

Subd. 14. [CASH SALE PRICE.] "Cash sale price" means the price at which the seller would in good faith sell to the buyer, and the buyer would in good faith buy from the seller, the motor vehicle which is the subject matter of the retail installment contract, if such sale were a sale for cash, instead of a retail installment sale. The cash sale price may include any taxes, charges for delivery, servicing, repairing or improving the motor vehicle, including accessories and their installation, and any other charges agreed upon between the parties. The cash price may not include a documentary fee or document administration fee in excess of ~~$25~~ $50 for services actually rendered to, for, or on behalf of, the retail buyer in preparing, handling, and processing documents relating to the motor vehicle and the closing of the retail sale.

Sec. 3. Minnesota Statutes 2002, section 168.71, subdivision 2, is amended to read:

Subd. 2. [CONTENTS.] The retail installment contract shall contain the following items:

(1) the cash sale price of the motor vehicle which is the subject matter of the retail installment contract;

(2) the total amount of the retail buyer's down payment, whether made in money or goods, or partly in money or partly in goods;

(3) the difference between clauses (1) and (2);

(4) the ~~charge~~ amount, if any, included in the transaction but not included in clause (1) to pay the balance of an existing purchase money motor vehicle lien which exceeds the value of the trade-in amount, or to discharge an interest in an existing motor vehicle lease, for any insurance ~~and other benefits not included in clause (1)~~, specifying the types of coverage ~~and~~, taxes, fees, and charges that actually are or will be paid to public officials or government agencies, including those for perfecting, releasing, or satisfying a security interest ~~if such taxes, fees, or charges are not included in clause (1)~~, and any other amount to be financed that is related to the transaction;

(5) principal balance, which is the sum of clauses (3) and (4);

(6) the amount of the finance charge;

(7) the total of payments payable by the retail buyer to the retail seller and the number of installment payments required and the amount of each installment expressed in dollars or percentages, and date of each payment necessary finally to pay the total of payments which is the sum of clauses (5) and (6).

Provided, however, that said clauses (1) to (7) inclusive need not be stated in the terms, sequence, or order set forth above. Provided further, that clauses (6) and (7) may be disclosed on the assumption that all scheduled payments under the contract will be made when due.

In lieu of the above clauses, the retail seller may give the retail buyer disclosures which satisfy the requirements of the Federal Truth-In-Lending Act in effect as of the time of the contract, notwithstanding whether or not that act applies to the transaction.

Sec. 4. Minnesota Statutes 2002, section 168.75, is amended to read:

168.75 [VEHICLE SALES FINANCE COMPANY VIOLATIONS; REMEDIES.]

~~(a)~~ Subdivision 1. [CRIMINAL VIOLATIONS.] Any person engaged in the business of a sales finance company in this state without a license therefor as provided in sections 168.66 to 168.77 shall be guilty of a gross misdemeanor and punished by a fine not exceeding $3,000, or by imprisonment for a period not to exceed one year, or by both such fine and imprisonment in the discretion of the court.

Journal of the House - 44th Day - Monday, April 28, 2003 - Top of Page 2830

(b) In case of an intentional failure to comply with any provision of sections 168.66 to 168.77, the buyer shall have a right to recover from the person committing such violation, to set off or counterclaim in any action by such person to enforce such contract an amount as liquidated damages, the whole of the contract due and payable, plus reasonable attorneys' fees.

(c) In case of a failure to comply with any provision of sections 168.66 to 168.77, other than an intentional failure, the buyer shall have a right to recover from the person committing such violation, to set off or counterclaim in any action by such person to enforce such contract an amount as liquidated damages equal to three times the amount of any time price differential charged in excess of the amount authorized by sections 168.66 to 168.77 or $50, whichever is greater, plus reasonable attorneys' fees.

Subd. 2. [EXCESS CHARGES; RETAIL BUYER'S REMEDIES.] A retail buyer is not obligated to pay a charge in excess of the amounts allowed by sections 168.66 to 168.77 and has a right to a refund of any excess charge paid. If a retail seller or assignee refuses to make a refund or reduce the retail buyer's obligation by the amount of the excess charge within 30 days of the retail buyer's written demand, the retail buyer shall also have the right to recover a penalty in an amount determined by the court but not less than $100 nor more than $1,000 together with reasonable attorney fees as determined by the court.

Subd. 3. [DISCLOSURE VIOLATIONS; RETAIL BUYER'S REMEDIES.] (a) If a retail seller or assignee fails to comply with any provision of sections 168.66 to 168.77 other than a section establishing maximum charges, the retail buyer has a right to recover any actual damages sustained as a result of the violation and, in an action other than a class action, a penalty in an amount determined by the court but not less than $100 nor more than $1,000 together with reasonable attorney fees as determined by the court.

(b) In the case of a class action brought pursuant to this paragraph, each retail buyer who is a member of the class has a right to recover any actual damages sustained as a result of the failure to comply. The court may also award each class member a penalty, except that as to each member of the class the $100 minimum penalty does not apply and the total penalty award in any class action or series of class actions arising out of the same failure to comply must not be more than the lesser of $500,000 or one percent of the net worth of the person committing the violation. In determining whether to award a penalty, and the amount of the penalty, the court shall consider, among other relevant factors, the amount of any actual damages awarded, the frequency and persistence of the failure to comply, the resources of the person committing the violation, the number of persons adversely affected, and the extent to which the conduct was intentional.

Subd. 4. [COMPLIANCE WITH FEDERAL LAW.] Notwithstanding the provisions of subdivision 3, a retail buyer has no right of recovery if the retail seller complied with the provisions of the federal Truth-In-Lending Act, United States Code, title 15, section 1601, et seq., in effect as of the time of the contract. A retail buyer also has no right to recover a penalty under subdivision 3 if the failure to comply would also violate the federal Truth-In-Lending Act in effect as of the time of the contract and the Truth-In-Lending Act would not impose an award of statutory damages for such violation.

Subd. 5. [CORRECTION OF ERRORS.] A retail seller or assignee may not be held liable for a penalty under subdivision 2 or 3 if within 45 days after discovering an error, and before either the institution of an action by the retail buyer or receipt of written notice of the error from the retail buyer, the retail seller or assignee provides written notice of the error to the retail buyer and corrects the error. If the error consists of an excess charge, correction may be made by adjustment or refund. If the violation consists of an improper disclosure or improper retail installment contract, providing the retail buyer a corrected copy of the writing is sufficient notification and correction.

Subd. 6. [UNINTENTIONAL VIOLATIONS; BONA FIDE ERRORS.] A retail seller or assignee may not be held liable in an action brought under this section if the retail seller or assignee shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adopted to avoid the error.

Journal of the House - 44th Day - Monday, April 28, 2003 - Top of Page 2831

Subd. 7. [MULTIPLE OBLIGORS.] When there are multiple obligors under a retail installment contract, there must be no more than one recovery under this section.

Subd. 8. [LIABILITY OF ASSIGNEES.] Unless the assignee is the person committing the violation of sections 168.66 to 168.77, an action for a violation of sections 168.66 to 168.77 which may be brought against a retail seller may be maintained against an assignee of the retail seller only if the violation for which the action is brought is apparent on the face of the retail installment contract, except where the assignment is involuntary.

Subd. 9. [RECOVERY FOR MULTIPLE VIOLATIONS.] Multiple violations in connection with a single retail installment contract entitle the retail buyer to a single penalty under this section. A retail seller or assignee may not be held liable for a penalty under subdivision 2 or 3 if the failure to comply also violates the federal Truth-In-Lending Act and the retail buyer has recovered statutory damages under that act.

Subd. 10. [OFFSET FROM AMOUNT OWED TO CREDITOR OR ASSIGNEE; RIGHTS OF DEFAULTING RETAIL BUYER.] A violation of sections 168.66 to 168.77 does not impair rights on a debt. A retail buyer may not offset any amount for which a retail seller or assignee is potentially liable to the person against any amount owed by the person under a retail installment contract, unless the amount of the retail seller or assignee's liability under this section has been determined by a final judgment of a court of competent jurisdiction in an action of which the person was a party.

Subd. 11. [LIMITATION OF ACTIONS.] Any action under this section may be brought within one year from the date of the occurrence of the violation. This subdivision does not bar a retail buyer from asserting a violation of sections 168.66 to 168.77 in an action to collect the debt which was brought more than one year from the date of the occurrence of the violation as a matter of defense by recoupment or setoff in the action.

Subd. 12. [ATTORNEY FEES; RETAIL SELLER AND ASSIGNEE REMEDIES.] The court may award attorney fees and costs to the retail seller or assignee if the party complaining of a violation of sections 168.66 to 168.77 has brought an action knowing it to be groundless.

Sec. 5. [EFFECTIVE DATE.]

Sections 1 to 3 are effective the day following final enactment. Section 4 is effective the day following final enactment and applies to all actions commenced on or after that date."

Page 60, line 24, delete "8" and insert "9"

Page 64, after line 31, insert:

"Sec. 4. Minnesota Statutes 2002, section 43A.27, subdivision 2, is amended to read:

Subd. 2. [ELECTIVE ELIGIBILITY.] The following persons, if not otherwise covered by section 43A.24, may elect coverage for themselves or their dependents at their own expense:

(a) a state employee, including persons on layoff from a civil service position as provided in collective bargaining agreements or a plan established pursuant to section 43A.18;

(b) an employee of the board of regents of the University of Minnesota, including persons on layoff, as provided in collective bargaining agreements or by the board of regents;

Journal of the House - 44th Day - Monday, April 28, 2003 - Top of Page 2832

(c) an officer or employee of the state agricultural society, state horticultural society, Sibley house association, ~~Minnesota humanities commission,~~ Minnesota area industry labor management councils, Minnesota international center, Minnesota academy of science, science museum of Minnesota, Minnesota safety council, state office of disabled American veterans, state office of the American Legion and its auxiliary, state office of veterans of foreign wars and its auxiliary, or state office of the Military Order of the Purple Heart;

(d) a civilian employee of the adjutant general who is paid from federal funds and who is not eligible for benefits from any federal civilian employee group life insurance or health benefits program; and

(e) an officer or employee of the state capitol credit union or the highway credit union.

Sec. 5. Minnesota Statutes 2002, section 116J.64, subdivision 2, is amended to read:

Subd. 2. "Indian" means a person ~~of one-quarter or more Indian blood and~~ who is an enrolled member of a federally recognized Minnesota based band or tribe."

Page 72, after line 27, insert:

"Sec. 16. [TRANSFER OF RESPONSIBILITIES FOR INDIAN BUSINESS LOAN PROGRAM.]

The responsibilities of the Indian Affairs Council in administering the Indian Business Loan program under Minnesota Statutes, section 116J.64, are transferred to the department of trade and economic development, which may enter into an agreement with the governing body of a federally recognized Indian tribe in Minnesota to administer the program or a portion of the program."

Page 72, line 33, delete "10 and 11" and insert "12 and 13"

Page 72, line 36, delete "7, 13, and 14" and insert "9, 15, and 17"

Page 73, line 1, delete "8" and insert "10"

Renumber the sections in sequence

Amend the title as follows:

Page 1, line 12, after the semicolon, insert "modifying motor vehicle installment sales provisions;"

Page 1, line 15, after the first semicolon, insert "43A.27, subdivision 2; 47.59, subdivision 4a;"

Page 1, line 23, after the second semicolon, insert "116J.64, subdivision 2;"

Page 1, line 30, after "154.18;" insert "168.66, subdivision 14; 168.71, subdivision 2; 168.75;"

Page 1, line 33, after the second semicolon, insert "216C.41, subdivision 1;"

Page 1, lines 34 and 35, delete "268.022, subdivision 1;"

With the recommendation that when so amended the bill pass.

The report was adopted.

Journal of the House - 44th Day - Monday, April 28, 2003 - Top of Page 2833

Kuisle from the Committee on Transportation Finance to which was referred:

H. F. No. 1071, A bill for an act relating to traffic regulations; providing for speed limits of 65 miles per hour during daytime and 55 miles per hour during nighttime on paved two-lane highways; amending Minnesota Statutes 2002, sections 169.14, subdivision 2; 169.99, subdivision 1b; 171.12, subdivision 6.

Reported the same back with the following amendments:

Page 1, lines 21 and 23, after "paved" insert "trunk"

Page 2, lines 28 and 35, strike "(3)" and delete ", (4)," and insert "(4)"

Page 3, after line 1, insert:

"Sec. 4. [REPORT.]

The commissioner of transportation shall report by February 1, 2004, to the chairs of the legislative committees having jurisdiction over transportation policy and finance on the commissioner's plans to implement sections 1 to 3. The report must identify (1) each segment of trunk highway described in section 1, paragraph (a), clause (3), on which the commissioner has conducted an engineering and traffic investigation under Minnesota Statutes, section 169.14, subdivision 4, since June 1, 2003, or on which the commissioner expects to conduct such an investigation before July 1, 2005, and (2) each segment of county highway and county state-aid highway described in section 1, paragraph (a), clause (3), for which the commissioner has received a request for an engineering and traffic investigation under Minnesota Statutes, section 169.14, subdivision 5, since June 1, 2003.

Sec. 5. [EFFECTIVE DATE.]

Sections 1 to 3 are effective June 1, 2004."

Amend the title as follows:

Page 1, line 4, after "two-lane" insert "trunk"

Page 1, line 5, after "highways" insert ", beginning June 1, 2004; requiring a report"

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Ways and Means.

The report was adopted.

Knoblach from the Committee on Ways and Means to which was referred:

S. F. No. 1511, A bill for an act relating to higher education; appropriating money for educational and related purposes to the higher education services office, board of trustees of the Minnesota state colleges and universities, board of regents of the University of Minnesota, and the Mayo Medical Foundation with certain restrictions; making various changes to the state grant program and the college savings plan; providing for purchasing and other administrative changes at MnSCU; authorizing revenue bonds; amending Minnesota Statutes 2002, sections 124D.42, subdivision 3; 135A.14, by adding a subdivision; 136A.08, subdivision 3; 136A.101, subdivision 5a;

Journal of the House - 44th Day - Monday, April 28, 2003 - Top of Page 2834

136A.121, subdivisions 6, 7, 9, 9a, 13; 136A.125, subdivision 4; 136A.171; 136A.29, subdivision 9; 136A.69; 136F.12; 136F.40, subdivision 2; 136F.45, subdivisions 1, 2; 136F.581, subdivision 2; 136F.59, subdivision 3; 136F.60, subdivision 3; 136G.01; 136G.03, subdivision 31, by adding subdivisions; 136G.05, subdivisions 4, 5, 10; 136G.09, subdivisions 1, 2, 6, 7, 8, 9; 136G.11, subdivisions 1, 2, 3, 9, 13; 136G.13, subdivisions 1, 3; 137.44; 299A.45, subdivision 2; proposing coding for new law in Minnesota Statutes, chapters 135A; 136F; 136G; repealing Minnesota Statutes 2002, sections 124D.95; 136A.1211; 136A.122; 136A.124; 136F.13; 136F.56; 136F.582; 136F.59, subdivision 2; 136G.03, subdivision 25.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"ARTICLE 1

APPROPRIATIONS

Section 1. [HIGHER EDUCATION APPROPRIATIONS.]

The sums in the columns marked "APPROPRIATIONS" are appropriated from the general fund, or other named fund, to the agencies and for the purposes specified in this article. The listing of an amount under the figure "2004" or "2005" in this article indicates that the amount is appropriated to be available for the fiscal year ending June 30, 2004, or June 30, 2005, respectively. "The first year" is fiscal year 2004. "The second year" is fiscal year 2005. "The biennium" is fiscal years 2004 and 2005.

SUMMARY BY FUND

2004 2005 TOTAL

General $1,296,742,000 $1,301,970,000 $2,598,712,000

Health Care Access 2,157,000 2,157,000 4,314,000

SUMMARY BY AGENCY - ALL FUNDS

2004 2005 TOTAL

Higher Education Services Office 177,102,000 192,734,000 369,836,000

Board of Trustees of the Minnesota State

Colleges and Universities 567,381,000 554,194,000 1,121,575,000

Board of Regents of the University of Minnesota 552,941,000 555,724,000 1,108,665,000

Mayo Medical Foundation 1,475,000 1,475,000 2,950,000

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APPROPRIATIONS

Available for the Year

Ending June 30

2004 2005

Sec. 2. HIGHER EDUCATION SERVICES OFFICE

Subdivision 1. Total Appropriation $177,102,000 $192,734,000

The amounts that may be spent from this appropriation for each purpose are specified in the following subdivisions.

Notwithstanding Minnesota Statutes, section 136A.1211, savings in the state grant program in fiscal years 2004 and 2005 resulting from any increases in the maximum federal grant must be used as provided in this section.

Subd. 2. State Grants 142,675,000 158,307,000

If the appropriation in this subdivision for either year is insufficient, the appropriation for the other year is available for it.

For the biennium, the private institution tuition maximum shall be $8,983 in the first year and $8,983 in the second year for four-year institutions and $6,913 in the first year and $6,913 in the second year for two-year institutions.

This appropriation contains money to set the living and miscellaneous expense allowance at $5,405 in each year.

The appropriation contains money to provide educational benefits to dependent children under age 23 and the spouses of public safety officers killed in the line of duty pursuant to Minnesota Statutes 2002, section 299A.45.

Subd. 3. Interstate Tuition Reciprocity 3,600,000 3,600,000

If the appropriation in this subdivision for either year is insufficient, the appropriation for the other year is available to meet reciprocity contract obligations.

Subd. 4. State Work Study 12,444,000 12,444,000

Subd. 5. Child Care Grants 4,743,000 4,743,000

Subd. 6. Minitex 4,381,000 4,381,000

Journal of the House - 44th Day - Monday, April 28, 2003 - Top of Page 2836

APPROPRIATIONS

Available for the Year

Ending June 30

2004 2005

Subd. 7. MnLINK 450,000 450,000

The base appropriation for MnLINK operations is $400,000 each year in fiscal years 2006 and 2007.

Any unexpended funds from the appropriation in Laws 1997, chapter 183, article 1, section 2, subdivision 8, shall cancel on June 30, 2005.

Subd. 8. Learning Network of Minnesota 4,829,000 4,829,000

Subd. 9. Minnesota College Savings Plan 1,120,000 1,120,000

Subd. 10. Income Contingent Loans

The higher education services office shall administer an income-contingent loan repayment program to assist graduates of Minnesota schools in medicine, dentistry, pharmacy, chiropractic medicine, public health, and veterinary medicine, and Minnesota residents graduating from optometry and osteopathy programs. Applicant data collected by the office for this program may be disclosed to a consumer credit reporting agency under the same conditions as those that apply to the supplemental loan program under Minnesota Statutes, section 136A.162. No new applicants may be accepted after June 30, 1995.

Subd. 11. Agency Administration 2,860,000 2,860,000

Subd. 12. Balances Forward

A balance in the first year under this section does not cancel, but is available for the second year.

Subd. 13. Transfers

The higher education services office may transfer unencumbered balances from the appropriations in this section to the state grant appropriation, the interstate tuition reciprocity appropriation, the child care appropriation, and the state work study appropriation.

Subd. 14. Reporting

The higher education services office shall collect data monthly from institutions disbursing state financial aid. The data collected shall include, but is not limited to, expenditures by type to date and unexpended balances.

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APPROPRIATIONS

Available for the Year

Ending June 30

2004 2005

The higher education services office shall evaluate and report monthly on state financial aid expenditures and unexpended balances to the chairs of the higher education finance committees of the senate and house of representatives and the commissioner of finance. By July 15, December 15, February 15, and April 15, the services office shall provide updated state grant spending projections taking into account the most current and projected enrollment and tuition and fee information, economic conditions, and other relevant factors. Before submitting state grant spending projections, the office shall meet and consult with representatives of public and private postsecondary education, the department of finance, governor's office, legislative staff, and financial aid administrators. The institutions are encouraged to provide tuition information to the higher education services office no later than July 1 of each year.

Sec. 3. BOARD OF TRUSTEES OF THE MINNESOTA STATE COLLEGES AND UNIVERSITIES

Subdivision 1. Total Appropriation 567,381,000 554,194,000

The amounts that may be spent from this appropriation for each purpose are specified in the following subdivisions.

The legislature intends that state appropriations be used to strengthen and support education of students. To this end, all money appropriated in this section, except that in direct support of system office activities, shall be allocated by the board directly to the colleges and universities.

The legislature intends that the office of the chancellor must reduce its expenditures during the biennium ending June 30, 2005, in at least the same proportion as the reduction in the allocation of state appropriations to MnSCU institutions.

Subd. 2. Operations and Maintenance 564,381,000 551,194,000

Estimated Expenditures and Appropriations

The legislature estimates that instructional expenditures will be $758,713,000 in the first year and $738,933,000 in the second year. The legislature estimates that noninstructional expenditures will be $61,572,000 in the first year and $61,572,000 in the second year.

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APPROPRIATIONS

Available for the Year

Ending June 30

2004 2005

During the biennium, neither the board nor campuses shall plan or develop doctoral level programs or degrees until after they have received the recommendation of the house and senate committees on education, finance, and ways and means.

During the biennium, technical and consolidated colleges shall make use of instructional advisory committees consisting of employers, students, and instructors. The instructional advisory committee shall be consulted when a technical program is proposed to be created, modified, or eliminated. If a decision is made to eliminate a program, a college shall adequately notify students and make plans to assist students affected by the closure.

The board must publish an Internet-based student manual that identifies and describes how general education courses at two-year MnSCU institutions transfer to state universities within the Minnesota state colleges and universities system.

In each year, the board of trustees shall increase the percentage of the total general fund expenditures for direct instruction and academic support, as reported in the federal Integrated Postsecondary Education Data System (IPEDS).

By February 15 of each year, the board of trustees shall report to the higher education finance committees of the legislature the percentage of total general fund expenditures spent on direct instruction and on academic support during the previous fiscal year by institution and for the system as a whole.

The board may waive tuition for eligible Southwest Asia veterans, as provided in Minnesota Statutes, section 136F.28.

Subd. 3. Health Education 3,000,000 3,000,000

This appropriation is for health education to meet the health care needs of Minnesota by increasing nursing graduates, recruiting nursing faculty, and expanding the use of technology and distance education in nursing and allied healthcare.

Subd. 4. Accountability

The board shall continue to submit reports as required by Laws 2001, First Special Session chapter 1, article 1, section 3, subdivision 3.

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APPROPRIATIONS

Available for the Year

Ending June 30

2004 2005

Subd. 5. Land Sales

Notwithstanding Minnesota Statutes 2002, sections 94.09 to 94.16, or any other law to the contrary, in the biennium ending June 30, 2005, the board of trustees may sell surplus state-owned land of an institution. The board must deposit the net proceeds of the sale in the account of the institution from which the land was sold. The board must report all land sales under this subdivision to the chairs of the higher education committees in the house and the senate by January 1, 2006.

Sec. 4. BOARD OF REGENTS OF THE UNIVERSITY OF MINNESOTA

Subdivision 1. Total Appropriation 552,941,000 555,724,000

The amounts that may be spent from this appropriation for each purpose are specified in the following subdivisions.

Subd. 2. Operations and Maintenance 486,300,000 489,083,000

Estimated Expenditures and Appropriations

The legislature estimates that instructional expenditures will be $370,547,000 in the first year and $374,676,000 in the second year. The legislature estimates that noninstructional expenditures will be $240,209,000 the first year and $240,619,000 in the second year.

Subd. 3. Health Care Access Fund 2,157,000 2,157,000

This appropriation is from the health care access fund for primary care education initiatives.

Subd. 4. Special Appropriation 64,484,000 64,484,000

The board may transfer amounts in this subdivision to the operations and maintenance appropriations in subdivision 2.

(a) Agriculture and Extension Service

51,518,000 51,518,000

This appropriation is for the Agricultural Experiment Station, Minnesota Extension Service.

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APPROPRIATIONS

Available for the Year

Ending June 30

2004 2005

The university must continue to provide support for the rapid agricultural response fund, and sustainable and organic agriculture initiatives including, but not limited to, the alternative swine systems program.

Any salary increases granted by the university to personnel paid from the Minnesota Extension appropriation must not result in a reduction of the county responsibility for the salary payments.

During the biennium, the university shall maintain an advisory council system for each experiment station. The advisory councils must be broadly representative of the range in size and income distribution of farms and agribusinesses and must not disproportionately represent those from the upper half of the size and income distributions.

(b) Health Sciences

5,016,000 5,016,000

This appropriation is for the rural physicians associates program, the Veterinary Diagnostic Laboratory, health sciences research, dental care, and the Biomedical Engineering Center.

1,411,000 1,411,000

This appropriation is for the Geological Survey and the Talented Youth Mathematics Program.

(d) System Specials

6,539,000 6,539,000

This appropriation is for general research, student loans matching money, industrial relations education, Natural Resources Research Institute, Center for Urban and Regional Affairs, Bell Museum of Natural History, and the Humphrey exhibit.

Subd. 5. Academic Health Center

The appropriation under Minnesota Statutes, section 137.026, if enacted, is anticipated to be $22,515,000 in the first year and $22,403,000 in the second year.

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APPROPRIATIONS

Available for the Year

Ending June 30

2004 2005

Subd. 6. Accountability

The board shall continue to submit reports as required by Laws 2001, First Special Session chapter 1, article 1, section 4, subdivision 5, or a comparable accountability report.

Sec. 5. MAYO MEDICAL FOUNDATION

Subdivision 1. Total Appropriation 1,475,000 1,475,000

The amounts that may be spent from this appropriation for each purpose are specified in the following subdivisions.

If appropriations are insufficient to cover the rates established in subdivisions 2 and 3, the Mayo Medical Foundation may evenly distribute the funds received among students who are Minnesota residents.

Subd. 2. Medical School 545,000 545,000

The state of Minnesota must pay a capitation of $14,405 each year for each student who is a resident of Minnesota. The appropriation may be transferred between years of the biennium to accommodate enrollment fluctuations.

The legislature intends that during the biennium the Mayo foundation use the capitation money to increase the number of doctors practicing in rural areas in need of doctors.

Subd. 3. Family Practice and Graduate Residency Program 563,000 563,000

The state of Minnesota must pay a capitation of $22,313 for 26 residents each year and $44,627 for one resident each year.

Subd. 4. St. Cloud Hospital-Mayo Family Practice Residency Program 367,000 367,000

This appropriation is to the Mayo foundation to support 12 resident physicians each year in the St. Cloud Hospital-Mayo Family Practice Residency program. The program shall prepare doctors to practice primary care medicine in the rural areas of the state. It is intended that this program will improve health care in rural communities, provide affordable access to appropriate medical care, and manage the treatment of patients in a more cost-effective manner.

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ARTICLE 2

RELATED PROVISIONS

Section 1. Minnesota Statutes 2002, section 41D.01, subdivision 4, is amended to read:

Subd. 4. [EXPIRATION.] This section expires on June 30, ~~2003~~ 2008.

Sec. 2. Minnesota Statutes 2002, section 93.22, subdivision 2, is amended to read:

Subd. 2. [TACONITE LEASE REVENUE.] Notwithstanding subdivision 1, from July 1, 2001, to June 30, 2006, payments made under state taconite leases shall be distributed as follows:

~~(1)~~ if the lands or minerals and mineral rights covered by a lease are held by the state by virtue of a school, swamp, or internal improvement land grant of Congress, payments made under the lease shall be distributed annually on September 1 to the school fund mineral lease suspense account created under section 93.223, subdivision 1~~; and~~.

(2) if the lands or minerals and mineral rights covered by a lease are held by the state by virtue of a university land grant of Congress, payments made under the lease shall be distributed annually on September 1 to the university mineral lease suspense account created under section 93.223, subdivision 2.

Sec. 3. Minnesota Statutes 2002, section 124D.42, subdivision 3, is amended to read:

Subd. 3. [POSTSERVICE BENEFIT.] (a) Each eligible organization must agree to provide to every participant who fulfills the terms of a contract under subdivision 2, a nontransferable postservice benefit. The benefit must be not less than $4,725 per year of full-time service or prorated for part-time service or for partial service of at least 900 hours. Upon signing a contract under subdivision 2, each eligible organization must deposit funds to cover the full amount of postservice benefits obligated, except for national education awards that are deposited in the national service trust fund. Funds encumbered in fiscal years 1994 and 1995 for postservice benefits must be available until the participants for whom the funds were encumbered are no longer eligible to draw benefits.

(b) Nothing in this subdivision prevents a grantee organization from using funds from nonfederal or nonstate sources to increase the value of postservice benefits above the value described in paragraph (a).

(c) The higher education services office must establish an account for depositing funds for postservice benefits received from eligible organizations. If a participant does not complete the term of service or, upon successful completion of the program, does not use a postservice benefit according to subdivision 4 within seven years, the amount of the postservice benefit must be refunded to the eligible organization or, at the organization's discretion, dedicated to another eligible participant. Interest earned on funds deposited in the postservice benefit account is appropriated to the higher education services office for the costs of administering the postservice benefits accounts.

~~(d)~~ The state must provide an additional postservice benefit to any participant who successfully completes the program. The benefit must be a credit of five points to be added to the competitive open rating of a participant who obtains a passing grade on a civil service examination under chapter 43A. The benefit is available for five years after completing the community service.

Sec. 4. Minnesota Statutes 2002, section 135A.14, is amended by adding a subdivision to read:

Subd. 6a. [MENINGITIS INFORMATION.] Each public and private postsecondary institution shall provide information on the risks of meningococcal disease and on the availability and effectiveness of any vaccine to each individual who is a first-time enrollee and who resides in on-campus student housing. The institution may provide the information in an electronic format. The institution must consult with the department of health on the preparation of the informational materials provided under this subdivision.

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Sec. 5. [135A.157] [PENALTIES FOR RIOTING.]

A student in a postsecondary institution who is convicted of riot under section 609.71 is not eligible for a state grant award under section 136A.121 following conviction and must pay the highest applicable tuition rate, including the nonresident tuition rate, to attend a public postsecondary institution in any subsequent enrollment periods.

Sec. 6. Minnesota Statutes 2002, section 136A.03, is amended to read:

136A.03 [EXECUTIVE OFFICERS; EMPLOYEES.]

The office of higher education shall be under the administrative control of the director. The director of the ~~higher education services~~ office shall possess the powers and perform the duties as ~~prescribed by the higher education services council and shall~~ provided in this chapter. The director shall be appointed by the governor with the advice and consent of the senate and serve in the unclassified service of the state civil service. The director, or the director's designated representative, on behalf of the office is authorized to sign contracts and execute all instruments necessary or appropriate to carry out the purposes of sections 136A.01 to 136A.178 for the office. The salary of the director shall be established ~~by the higher education services council~~ according to section 15A.0815. The director shall be a person qualified by training or experience in the field of higher education or in financial aid administration. The director may appoint other professional employees who shall serve in the unclassified service of the state civil service. All other employees shall be in the classified civil service.

An officer or professional employee in the unclassified service as provided in this section is a person who has studied higher education or a related field at the graduate level or has similar experience and who is qualified for a career in financial aid and other aspects of higher education and for activities in keeping with the planning and administrative responsibilities of the office and who is appointed to assume responsibility for administration of educational programs or research in matters of higher education.

Sec. 7. Minnesota Statutes 2002, section 136A.031, subdivision 2, is amended to read:

Subd. 2. [HIGHER EDUCATION ADVISORY COUNCIL.] A higher education advisory council (HEAC) is established. The HEAC is composed of the director of the office of higher education, who shall serve as chair; the president ~~and the senior vice-president for academic affairs~~ of the University of Minnesota or designee; the chancellor of the Minnesota state colleges and universities or designee; ~~the associate vice-chancellors of the state universities, community colleges, and technical colleges;~~ the commissioner of children, families, and learning; the president of the private college council; and a representative from the Minnesota association of private post-secondary schools. The HEAC shall also be composed of the following members who shall be appointed by the governor: three citizen members, representing urban, rural, and regional areas of the state, who are qualified by training or experience in the fields of higher education, job skills training, and business; and six student members, one representing the University of Minnesota, three representing the Minnesota state colleges and universities, one student representing four-year universities, one student representing two-year community colleges, and one student representing two-year technical colleges, one private college student, and one private vocational school student. The term of citizen members is five years. The term of student members is two years. The HEAC shall (1) bring to the attention of the ~~higher education services council~~ governor any matters that the HEAC deems necessary, and (2) review and comment upon matters ~~before the council~~ as requested. The council shall refer all proposals to the HEAC before submitting recommendations to the governor and the legislature. The council shall provide time for a report from the HEAC at each meeting of the council.

Sec. 8. Minnesota Statutes 2002, section 136A.031, subdivision 5, is amended to read:

Subd. 5. [EXPIRATION.] Notwithstanding section 15.059, subdivision 5a 5, the advisory ~~groups~~ group established in this section ~~expire~~ expires on June 30, ~~2003~~ 2005.

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Sec. 9. Minnesota Statutes 2002, section 136A.08, subdivision 3, is amended to read:

Subd. 3. [WISCONSIN.] A higher education reciprocity agreement with the state of Wisconsin may include provision for the transfer of funds between Minnesota and Wisconsin ~~provided that an income tax reciprocity agreement between Minnesota and Wisconsin is in effect for the period of time included under the higher education reciprocity agreement~~. If this provision is included, the amount of funds to be transferred shall be determined according to a formula which is mutually acceptable to the office and a duly designated agency representing Wisconsin. The formula shall recognize differences in tuition rates between the two states and the number of students attending institutions in each state under the agreement. Any payments to Minnesota by Wisconsin shall be deposited by the office in the general fund of the state treasury. The amount required for the payments shall be certified by the director of the office to the commissioner of finance annually.

Sec. 10. Minnesota Statutes 2002, section 136A.101, subdivision 5a, is amended to read:

Subd. 5a. [ASSIGNED FAMILY RESPONSIBILITY.] "Assigned family responsibility" means the amount of a family contribution to a student's cost of attendance, as determined by a federal need analysis, except that~~, beginning for the 1998-1999 academic year,~~ up to $25,000 in savings and other assets shall be subtracted from the federal calculation of net worth before determining the contribution. For dependent students, the assigned family responsibility is the parental contribution. For independent students with dependents other than a spouse, the assigned family responsibility is the student contribution. For independent students without dependents other than a spouse, the assigned family responsibility is 80 percent of the student contribution. ~~Beginning in fiscal year 2002,~~ The assigned family responsibility for all independent students is reduced an additional ten percent.

Sec. 11. Minnesota Statutes 2002, section 136A.121, subdivision 6, is amended to read:

Subd. 6. [COST OF ATTENDANCE.] (a) The recognized cost of attendance consists of allowances specified in law for living and miscellaneous expenses, and an allowance for tuition and fees equal to the lesser of the actual tuition and fees charged by the institution, or the ~~private institution~~ tuition and fee maximums established in law.

(b) For the purpose of paragraph (a), the private institution tuition and fee maximum for two- and four-year, private, residential, liberal arts, degree-granting colleges and universities must be the same.

~~(c)~~ For a student registering for less than full time, the office shall prorate the living and miscellaneous expense allowance to the actual number of credits for which the student is enrolled.

The recognized cost of attendance for a student who is confined to a Minnesota correctional institution shall consist of the tuition and fee component in paragraph (a), with no allowance for living and miscellaneous expenses.

Sec. 12. Minnesota Statutes 2002, section 136A.121, subdivision 7, is amended to read:

Subd. 7. [INSUFFICIENT APPROPRIATION.] (a) If the amount appropriated is determined by the office to be insufficient to make full awards to applicants under subdivision 5, ~~before any award for that year has been disbursed, awards must be reduced~~ the office shall reduce awards by:

(1) prorating awards for summer academic terms;

(2) adding a surcharge to the applicant's assigned family responsibility, as defined in section 136A.101, subdivision 5a; and

~~(2)~~ (3) adding a percentage increase in the applicant's assigned student responsibility, as defined in subdivision 5.

The office may establish an award cutoff deadline, if necessary. If a grant for a summer term is prorated under this section, credits earned during the term do not count toward the student's enrollment limit under subdivision 9.

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Sec. 13. Minnesota Statutes 2002, section 136A.121, subdivision 9, is amended to read:

Subd. 9. [AWARDS.] An undergraduate student who meets the office's requirements is eligible to apply for and receive a grant in any year of undergraduate study unless the student has obtained a baccalaureate degree or previously has been enrolled full time or the equivalent for ~~ten~~ eight semesters or the equivalent, excluding courses taken from a Minnesota school or post-secondary institution which is not participating in the state grant program and from which a student transferred no credit. A student enrolled in a two-year program at a four-year institution is only eligible for the tuition and fee maximums established by law for two-year institutions.

Sec. 14. Minnesota Statutes 2002, section 136A.121, subdivision 9a, is amended to read:

Subd. 9a. [FULL-YEAR GRANTS.] Students may receive state grants for four consecutive quarters or three consecutive semesters during the course of a single fiscal year. In calculating a state grant for the fourth quarter or third semester, the office must use the same calculation as it would for any other term, except that the calculation must subtract any Pell grant for which a student would be eligible even if the student has exhausted the Pell grant for that fiscal year.

Sec. 15. Minnesota Statutes 2002, section 136A.121, subdivision 13, is amended to read:

Subd. 13. [DEADLINE.] The office shall accept applications for state grants until October 15 for awards for the first semester or equivalent enrollment period and until February 15 ~~and may establish a deadline for the acceptance of applications that is later than February 15~~ for awards for the second semester or equivalent enrollment period of each academic year. A student who applies for state grant funds after the first semester or the equivalent of the academic year may not receive retroactive funding for the entire academic year.

Sec. 16. Minnesota Statutes 2002, section 136A.1211, is amended to read:

136A.1211 [USE OF STATE GRANT SAVINGS.]

Savings in the state grant program resulting from an increase in the maximum federal Pell grant from the anticipated level of ~~$3,125~~ $4,050 shall be used by the office to increase the living and miscellaneous expense allowance.

Sec. 17. Minnesota Statutes 2002, section 136A.125, subdivision 2, is amended to read:

Subd. 2. [ELIGIBLE STUDENTS.] An applicant is eligible for a child care grant if the applicant:

(1) is a resident of the state of Minnesota;

(2) has a child 12 years of age or younger, or 14 years of age or younger who is handicapped as defined in section 125A.02, and who is receiving or will receive care on a regular basis from a licensed or legal, nonlicensed caregiver;

(3) is income eligible as determined by the office's policies and rules, but is not a recipient of assistance from the Minnesota family investment program;

(4) has not earned a baccalaureate degree and has been enrolled full time less than ~~ten~~ eight semesters or the equivalent;

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(5) is pursuing a nonsectarian program or course of study that applies to an undergraduate degree, diploma, or certificate;

(6) is enrolled at least half time in an eligible institution; and

(7) is in good academic standing and making satisfactory academic progress.

Sec. 18. Minnesota Statutes 2002, section 136A.171, is amended to read:

136A.171 [REVENUE BONDS; ISSUANCE; PROCEEDS.]

The higher education services office may issue revenue bonds to obtain funds for loans made in accordance with the provisions of this chapter. The aggregate amount of revenue bonds, issued directly by the office, outstanding at any one time, not including refunded bonds or otherwise defeased or discharged bonds, shall not exceed ~~$550,000,000~~ $850,000,000. Proceeds from the issuance of bonds may be held and invested by the office pending disbursement in the form of loans. All interest and profits from the investments shall inure to the benefit of the office and shall be available to the office for the same purposes as the proceeds from the sale of revenue bonds including, but not limited to, costs incurred in administering loans under this chapter and loan reserve funds.

Sec. 19. Minnesota Statutes 2002, section 136A.29, subdivision 9, is amended to read:

Subd. 9. The authority is authorized and empowered to issue revenue bonds whose aggregate principal amount at any time shall not exceed ~~$650,000,000~~ $800,000,000 and to issue notes, bond anticipation notes, and revenue refunding bonds of the authority under the provisions of sections 136A.25 to 136A.42, to provide funds for acquiring, constructing, reconstructing, enlarging, remodeling, renovating, improving, furnishing, or equipping one or more projects or parts thereof.

Sec. 20. Minnesota Statutes 2002, section 136A.69, is amended to read:

136A.69 [FEES.]

The office shall collect reasonable registration fees that are sufficient to recover, but do not exceed, its costs of administering the registration program. The office shall charge $1,100 for initial registration fees and $950 for annual renewal fees.

Sec. 21. Minnesota Statutes 2002, section 136F.12, is amended to read:

136F.12 [FOND DU LAC CAMPUS.]

Subdivision 1. [UNIQUE MISSIONS.] The Fond du Lac campus has a unique mission among two-year colleges to serve the lower division general education needs in Carlton and south St. Louis counties, and the education needs of American Indians throughout the state and especially in northern Minnesota. The campus has a further unique mission to provide programs in support of its federal land grant status. Accordingly, while the college is governed by the board of trustees, its governance is accomplished in conjunction with the board of directors of Fond du Lac tribal college.

Subd. 2. [SELECTED PROGRAMS.] Notwithstanding section 135A.052, subdivision 1, to better meet the education needs of Minnesota's American Indian students, and in furtherance of the unique missions provided in subdivision 1, Fond du Lac tribal and community college may offer a baccalaureate program in elementary education, as approved by the board of trustees of the Minnesota state colleges and universities, and the board of directors of Fond du Lac tribal and community college.

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Subd. 3. [BARGAINING UNIT ASSIGNMENT.] Notwithstanding section 179A.10, subdivision 2, the state university instructional unit shall include faculty who teach upper division courses at the Fond du Lac tribal and community college.

Sec. 22. Minnesota Statutes 2002, section 136F.40, subdivision 2, is amended to read:

Subd. 2. [CONTRACTS.] (a) The board may enter into a contract with the chancellor, a vice-chancellor, or a president, containing terms and conditions of employment. The terms of the contract must be authorized under a plan approved under section 43A.18, subdivision 3a.

(b) Notwithstanding section 43A.17, subdivision 11, or other law to the contrary, a contract under this section may provide a liquidated salary amount or other compensation if a contract is terminated by the board prior to its expiration.

(c) Notwithstanding section 356.24 or other law to the contrary, a contract under this section may contain a deferred compensation plan made in conformance with section 457(f) of the Internal Revenue Code.

Sec. 23. Minnesota Statutes 2002, section 136F.45, subdivision 1, is amended to read:

Subdivision 1. [PURCHASE.] (a) At the request of an employee, the board may negotiate and purchase an individual ~~annuity contract~~ custodial account under section 403(b)(7) of the Internal Revenue Code, for an employee for retirement or other purposes from a company licensed to do business in Minnesota, and may allocate a portion of the compensation otherwise payable to the employee as salary for the purpose of paying the entire ~~premium~~ contribution due or to become due under the ~~contract~~ account. The allocation shall be made in a manner that will qualify the ~~annuity premiums~~ custodial account contributions, or ~~a portion~~ portions thereof, for the benefit afforded under section 403(b)(7) of the current federal Internal Revenue Code or any equivalent provision of subsequent federal income tax law. The employee shall own the ~~contract~~ account and the employee's rights thereunder shall be nonforfeitable except for failure to pay ~~premiums~~ contributions.

(b) At its discretion, and in the same manner provided in paragraph (a), the board may negotiate and purchase individual custodial accounts under section 403(b)(7) of the Internal Revenue Code, for employees of the higher education services office as defined in section 136A.03. Participation under this paragraph must be in accordance with any applicable federal law.

Sec. 24. Minnesota Statutes 2002, section 136F.45, subdivision 2, is amended to read:

Subd. 2. [DEPOSITS; PAYMENT.] All amounts so allocated shall be deposited in an ~~annuity~~ account established by the board. Payment of ~~annuity premiums~~ custodial account contributions shall be made when due or in accordance with the salary agreement entered into between the employee and the board. The money in the ~~annuity~~ account is not subject to the budget, allotment, and incumbrance system provided for in chapter 16A.

Sec. 25. Minnesota Statutes 2002, section 136F.581, subdivision 1, is amended to read:

Subdivision 1. [~~CONDITIONS~~ AUTHORITY FOR PURCHASES AND CONTRACTS.] The board and the colleges and universities are subject to the provisions of section 471.345. In addition to the contracting authority under this chapter, the board of trustees may utilize any contracting options available to the commissioner of administration under chapters 16A, 16B, 16C, or any other contract option available under state law.

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Sec. 26. Minnesota Statutes 2002, section 136F.581, subdivision 2, is amended to read:

Subd. 2. [POLICIES AND PROCEDURES.] The board shall develop policies~~, and each college and university shall develop procedures,~~ for purchases and contracts that are consistent with the authority granted in subdivision 1. The policies and procedures shall be developed through the system and campus labor management committees and shall include provisions requiring the system and campuses to determine that they cannot use available staff before contracting with additional outside consultants or services. In addition, each college and university, in consultation with the ~~system~~ office of the chancellor, shall develop procedures for those purchases and contracts that can be accomplished by a college and university without board approval. The board policies must allow each college and university the local authority to enter into contracts for construction projects of up to $250,000 and to make other purchases of up to $50,000, without receiving board approval. The board may allow a college or university local authority to make purchases over $50,000 without receiving board approval.

Sec. 27. Minnesota Statutes 2002, section 136F.59, subdivision 3, is amended to read:

Subd. 3. [OFFICE OF TECHNOLOGY.] The ~~system~~ office of the chancellor and the campuses shall cooperate with the office of technology in its responsibility to coordinate information and communications technology development throughout the state. The system and campuses shall consult with the office of technology throughout any efforts to plan or implement information and communication systems to ensure that the systems are effective, efficient, and, where appropriate, compatible with other state systems.

Sec. 28. Minnesota Statutes 2002, section 136F.60, subdivision 3, is amended to read:

Subd. 3. [EASEMENTS.] (a) The board may grant permanent or temporary easements over, under, or across any land under its jurisdiction for reasonable purposes determined by the board as provided in paragraphs (b) and (c).

(b) The board may grant a revocable easement or permit under this paragraph. An easement or permit is revocable by written notice given by the board if at any time its continuance will conflict with a public use of the land over, under, or upon which it is granted, or for any other reason. The notice must be in writing and is effective 90 days after the notice is sent by certified mail to the last known address of the holder of record of the easement. If the address of the holder of the easement or permit is not known, it expires 90 days after the notice is recorded in the office of the county recorder of the county in which the land is located. Upon revocation of an easement or permit, the board may allow a reasonable time to vacate the premises affected.

(c) State land subject to an easement or permit granted by the board remains subject to sale or lease, and the sale or lease does not revoke the permit or easement granted.

Sec. 29. [136F.65] [ACCEPTANCE OF FEDERAL MONEY.]

The board of trustees is hereby designated the state agency empowered to accept any and all money provided for or made available to this state by the United States of America or any department or agency thereof for the construction and equipping of any building for university or college purposes in accordance with the provisions of federal law and any rules or regulations promulgated thereunder and are further authorized to do any and all things required of this state by such federal law and the rules and regulations promulgated thereunder in order to obtain such federal money.

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Sec. 30. Minnesota Statutes 2002, section 136G.01, is amended to read:

136G.01 [PLAN ESTABLISHED.]

A college savings plan known as the Minnesota college savings plan is established. In establishing this plan, the legislature seeks to encourage individuals to save for post-secondary education by:

(1) providing a qualified ~~state~~ tuition plan under federal tax law;

(2) providing matching grants for contributions to the program by low- and middle-income families; and

(3) by encouraging individuals, foundations, and businesses to provide additional grants to participating students.

Sec. 31. Minnesota Statutes 2002, section 136G.03, is amended by adding a subdivision to read:

Subd. 4a. [APPLICATION.] "Application" means the form executed by a prospective account owner to enter into a participation agreement and open an account in the plan. The application incorporates by reference the participation agreement.

Sec. 32. Minnesota Statutes 2002, section 136G.03, is amended by adding a subdivision to read:

Subd. 21a. [MINOR TRUST ACCOUNT.] "Minor trust account" means a Uniform Gift to Minors Act account, a Uniform Transfers to Minors Act account, or a trust instrument naming a minor person as beneficiary, created and operating under the laws of Minnesota or another state.

Sec. 33. Minnesota Statutes 2002, section 136G.03, subdivision 31, is amended to read:

Subd. 31. [ROLLOVER DISTRIBUTION.] "Rollover distribution" means a transfer of funds made:

(1) from one account to another account within 60 days of a distribution;

(2) from another qualified state tuition program to an account within 60 days of the distribution; or

(3) to another qualified state tuition program from an account within 60 days of a distribution.

~~Each~~ When there is a change of beneficiary in a rollover distribution, the transfer of funds must be made for the benefit of a new beneficiary who is a member of the family of the prior beneficiary. A rollover distribution is permitted from one qualified tuition plan to another once every 12 months without a change of beneficiary.

Sec. 34. Minnesota Statutes 2002, section 136G.05, subdivision 4, is amended to read:

Subd. 4. [PLAN TO COMPLY WITH FEDERAL LAW.] The director shall ensure that the plan meets the requirements for a qualified ~~state~~ tuition program under section 529(b)(1)(A)(ii) of the Internal Revenue Code. The director may request a private letter ruling or rulings from the Internal Revenue Service or take any other steps to ensure that the plan qualifies under section 529 of the Internal Revenue Code or other relevant provisions of federal law.

Sec. 35. Minnesota Statutes 2002, section 136G.05, subdivision 5, is amended to read:

Subd. 5. [~~MINIMUM PENALTY~~ NONQUALIFIED DISTRIBUTIONS AND MATCHING GRANTS.] ~~In establishing the terms of the program, the office must provide that refunds of amounts in an account are subject to a~~

~~Journal of the House - 44th Day - Monday, April 28, 2003 - Top of Page 2850~~

minimum penalty, as required by section 529(b)(3) of the Internal Revenue Code. If the refunds or payments are not used for qualified higher education expenses of the designated beneficiary, this penalty must equal, at least, the proportionate amount of any matching grants deposited in the account under section 136G.11 and the investment return on the grants, plus an additional penalty that meets the requirement of federal law. There cannot be a nonqualified withdrawal of matching grant funds and any refund of matching grants must be returned to the plan.

Sec. 36. Minnesota Statutes 2002, section 136G.05, subdivision 10, is amended to read:

Subd. 10. [DATA.] Account owner data, account data, and data on beneficiaries of accounts are private data on individuals or nonpublic data as defined in section 13.02, except that the names and addresses of the beneficiaries of accounts that receive matching grants are public.

Sec. 37. Minnesota Statutes 2002, section 136G.09, subdivision 1, is amended to read:

Subdivision 1. [CONTRIBUTIONS TO AN ACCOUNT.] A person may make contributions to an account on behalf of a beneficiary. Contributions to an account made by persons other than the account owner become the property of the account owner. A person does not acquire an interest in an account by making contributions to an account. Contributions to an account must be made by check~~, money order,~~ or other commercially acceptable means as permitted by the United States Internal Revenue Service and other applicable federal and state law and ~~authorized~~ approved by the plan administrator in cooperation with the office and the board.

Sec. 38. Minnesota Statutes 2002, section 136G.09, subdivision 2, is amended to read:

Subd. 2. [AUTHORITY OF ACCOUNT OWNER.] Except as provided for minor trust accounts in section 136G.14, an account owner is the only person entitled to:

(1) select or change a beneficiary or a contingent account owner; or

(2) request distributions or rollover distributions from an account.

Sec. 39. Minnesota Statutes 2002, section 136G.09, subdivision 6, is amended to read:

Subd. 6. [CHANGE OF BENEFICIARY.] Except as provided for minor trust accounts in section 136G.14, an account owner may change the beneficiary of an account to a member of the family of the current beneficiary, at any time without penalty, if the change will not cause the total account balance of all accounts held for the new beneficiary to exceed the maximum account balance limit as provided in subdivision 8. A change of beneficiary other than as permitted in this subdivision is treated as a nonqualified distribution under section 136G.13, subdivision 3.

Sec. 40. Minnesota Statutes 2002, section 136G.09, subdivision 7, is amended to read:

Subd. 7. [CHANGE OF ACCOUNT OWNERSHIP.] Except as provided for minor trust accounts in section 136G.14, an account owner may transfer ownership of an account to another person eligible to be an account owner. All transfers of ownership are absolute and irrevocable.

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Sec. 41. Minnesota Statutes 2002, section 136G.09, subdivision 8, is amended to read:

Subd. 8. [MAXIMUM ACCOUNT BALANCE LIMIT.] (a) When a contribution is made, the total account balance of all accounts held for the same beneficiary, including matching grant accounts, must not exceed the maximum account balance limit as determined under this subdivision.

(b) The maximum account balance limit is reduced for withdrawals from any account for the same beneficiary that are qualified distributions, distributions due to the death or disability of the beneficiary, or distributions due to the beneficiary receiving a scholarship. Subsequent contributions must not be made to replenish an account if the contribution results in the total account balance of all accounts held for the beneficiary to exceed the reduced maximum account balance limit. Any subsequent contributions must be rejected. A subsequent contribution accepted in error must be returned to the account owner plus any earnings on the contribution less any applicable penalties.

(c) The maximum account balance limit is not reduced for a nonqualified distribution or a rollover distribution. When such distributions are taken, subsequent contributions may be made to replenish an account up to the maximum account balance limit.

~~(d)~~ The office must establish a maximum account balance limit. The office must adjust the maximum account balance limit, as necessary, or on January 1 of each year. The maximum account balance limit must not exceed the amount permitted for the plan to qualify as a qualified state tuition program under section 529 of the Internal Revenue Code. For calendar years ~~2002~~ 2004 and ~~2003~~ 2005, the maximum account balance is $235,000.

(e) If the total account balance of all accounts held for a single beneficiary reaches the maximum account balance limit prior to the end of that calendar year, the beneficiary may receive an applicable matching grant for that calendar year.

Sec. 42. Minnesota Statutes 2002, section 136G.09, subdivision 9, is amended to read:

Subd. 9. [EXCESS CONTRIBUTIONS AND BALANCES.] A contribution to any account for a beneficiary must be rejected if the contribution would cause the total account balance of all accounts held for the same beneficiary, including the matching grant account, to exceed the maximum account balance limit under section 529 of the Internal Revenue Code as established by the office. If a contribution under this subdivision is accepted in error, the contribution must be returned to the account owner plus any earnings thereon, less applicable penalties. A payment of an excess contribution to the account owner may be a nonqualified distribution subject to a penalty.

Sec. 43. Minnesota Statutes 2002, section 136G.11, subdivision 1, is amended to read:

Subdivision 1. [MATCHING GRANT QUALIFICATION.] By ~~March 1~~ June 30 of each year, a state matching grant must be added to each account established under the program if the following conditions are met:

(1) the contributor applies, in writing in a form prescribed by the director, for a matching grant;

(2) a minimum contribution of $200 was made during the preceding calendar year; and

(3) the family income of the beneficiary did not exceed $80,000.

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Sec. 44. Minnesota Statutes 2002, section 136G.11, subdivision 2, is amended to read:

Subd. 2. [FAMILY INCOME.] (a) For purposes of this section, "family income" means:

(1) if the beneficiary is under age 25, the combined adjusted gross income of the beneficiary's parents or legal guardians as reported on the federal tax return or returns for the ~~most recently available tax~~ calendar year in which contributions were made. If the beneficiary's parents are divorced, the income of the parent claiming the beneficiary as a dependent on the federal individual income tax return and the income of that parent's spouse, if any, is used to determine family income; or

(2) if the beneficiary is age 25 or older, the combined adjusted gross income of the beneficiary and spouse, if any.

(b) For a parent or legal guardian of beneficiaries under age 25 and for beneficiaries age 25 or older who resided in Minnesota and filed a federal individual income tax return two years prior to the year in which the matching grant is awarded, the matching grant must be based on family income from Internal Revenue Service tax data on file with the Minnesota department of revenue.

(c) Parents or legal guardians of beneficiaries under age 25 and beneficiaries age 25 or older who did not reside in Minnesota two years prior to the year in which the matching grant is awarded must provide a signed copy of their federal individual income tax return to the office, regardless of who the account owner is, in order to be considered for a matching grant, the matching grant must be based on family income from the calendar year in which contributions were made.

Sec. 45. Minnesota Statutes 2002, section 136G.11, subdivision 3, is amended to read:

Subd. 3. [RESIDENCY REQUIREMENT.] (a) If the beneficiary is under age 25, the beneficiary's parents or legal guardians must be Minnesota residents to qualify for a matching grant. If the beneficiary is age 25 or older, the beneficiary must be a Minnesota resident to qualify for a matching grant.

(b) To meet the residency requirements, the parent or legal guardian of beneficiaries under age 25 must have filed a Minnesota individual income tax return as a Minnesota resident~~, claiming~~ and claimed the beneficiary as a dependent~~, two years prior to the year in which the matching grant is awarded~~ on the federal tax return of the parent or legal guardian for the calendar year in which contributions were made. For beneficiaries age 25 or older, the beneficiary, and a spouse, if any, must have filed a Minnesota and a federal individual income tax return as a Minnesota resident ~~two years prior to the year in which the matching grant is awarded~~ for the calendar year in which contributions were made.

(c) A parent of beneficiaries under age 25 and beneficiaries age 25 or older who did not reside in Minnesota ~~two years prior to the year in which the matching grant is awarded must establish Minnesota residency through the issuance of a Minnesota driver's license or identification card~~ in the calendar year in which contributions were made are not eligible for a matching grant.

Sec. 46. Minnesota Statutes 2002, section 136G.11, subdivision 9, is amended to read:

Subd. 9. [ANNUAL APPLICATION.] An account owner must submit an application form for a matching grant on an annual basis. The application must be postmarked by ~~December 31~~ May 1 of the year ~~preceding the awarding of the~~ in which the matching grant would be awarded if the applicant qualifies for a matching grant.

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Sec. 47. Minnesota Statutes 2002, section 136G.11, subdivision 13, is amended to read:

Subd. 13. [FORFEITURE OF MATCHING GRANTS.] (a) Matching grants are forfeited if:

(1) the account owner transfers the total account balance of an account to another account or to another qualified ~~state~~ tuition program;

(2) the beneficiary receives a full tuition scholarship or admission to a United States service academy;

(3) the beneficiary dies or becomes disabled;

(4) the account owner changes the beneficiary of the account; or

(5) the account owner closes the account with a nonqualified withdrawal.

(b) Matching grants must be proportionally forfeited if:

(1) the account owner transfers a portion of an account to another account or to another qualified ~~state~~ tuition program;

(2) the beneficiary receives a scholarship covering a portion of qualified higher education expenses; or

(3) the account owner makes a partial nonqualified withdrawal.

(c) If the account owner makes a misrepresentation in a participation agreement or an application for a matching grant that results in a matching grant, the matching grant associated with the misrepresentation is forfeited. The office and the board must instruct the plan administrator as to the amount to be forfeited from the matching grant account. The office and the board must withdraw the matching grant or the proportion of the matching grant that is related to the misrepresentation.

Sec. 48. Minnesota Statutes 2002, section 136G.13, subdivision 1, is amended to read:

Subdivision 1. [QUALIFIED DISTRIBUTION METHODS.] (a) Qualified distributions may be made:

(1) directly to participating eligible educational institutions on behalf of the beneficiary; or

(2) in the form of a check payable to both the beneficiary and the eligible educational institution~~; or~~.

~~(3) to an account owner with a receipt verifying the payment of qualified higher education expenses.~~

(b) When administratively feasible, distributions may be made when the account owner and beneficiary certify prior to the distribution that the distribution will be expended for qualified higher education expenses a reasonable time after the distribution. The plan administrator may retain a penalty on the earnings portion of the nonqualified distribution until payment of qualified higher education expenses are substantiated. A payment receipt showing payment for qualified higher education expenses must be submitted to the program administrator within 30 days of distribution.

~~(c)~~ Qualified distributions must be withdrawn proportionally from contributions and earnings in an account owner's account on the date of distribution as provided in section 529 of the Internal Revenue Code.

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Sec. 49. Minnesota Statutes 2002, section 136G.13, subdivision 3, is amended to read:

Subd. 3. [NONQUALIFIED DISTRIBUTION.] An account owner may request a nonqualified distribution from an account at any time. Nonqualified distributions are based on the total account balances in an account owner's account and must be withdrawn proportionally from contributions and earnings as provided in section 529 of the Internal Revenue Code. The earnings portion of a nonqualified distribution is subject to ~~a penalty~~ a federal additional tax pursuant to section 529 of the Internal Revenue Code. For purposes of this subdivision, "earnings portion" means the ratio of the earnings in the account to the total account balance, immediately prior to the distribution, multiplied by the distribution. ~~The penalty must be withheld from the total amount of any distribution.~~

Sec. 50. [136G.14] [MINOR TRUST ACCOUNTS.]

(a) This section applies to a plan account in which funds of a minor trust account are invested.

(b) The account owner may not be changed to any person other than a successor custodian or the beneficiary unless a court order directing the change of ownership is provided to the plan administrator. The custodian must sign all forms and requests submitted to the plan administrator in the custodian's representative capacity. The custodian must notify the plan administrator in writing when the beneficiary becomes legally entitled to be the account owner. An account owner under this section may not select a contingent account owner.

(c) The beneficiary of an account under this section may not be changed. If the beneficiary dies, assets in a plan account become the property of the beneficiary's estate. Funds in an account must not be transferred or rolled over to another account owner or to an account for another beneficiary. A nonqualified distribution from an account, or a distribution due to the disability or scholarship award to the beneficiary, must be used for the benefit of the beneficiary.

Sec. 51. Minnesota Statutes 2002, section 137.0245, subdivision 2, is amended to read:

Subd. 2. [MEMBERSHIP.] The regent candidate advisory council shall consist of 24 members. Twelve members shall be appointed by the subcommittee on committees of the committee on rules and administration of the senate. Twelve members shall be appointed by the speaker of the house of representatives. Each appointing authority must appoint one member who is a student enrolled in a degree program at the University of Minnesota at the time of appointment. No more than one-third of the members appointed by each appointing authority may be current or former legislators. No more than two-thirds of the members appointed by each appointing authority may belong to the same political party; however, political activity or affiliation is not required for the appointment of any member. Geographical representation must be taken into consideration when making appointments. Section 15.0575 shall govern the advisory council, except that:

(1) the members shall be appointed to six-year terms with one-third appointed each even-numbered year; and

(2) student members are appointed to two-year terms with two students appointed each even-numbered year.

Sec. 52. [137.026] [APPROPRIATIONS; ACADEMIC HEALTH CENTER.]

Money deposited in the academic health center special revenue fund under section 297F.10 is annually appropriated to the board of regents for the academic health center at the University of Minnesota.

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Sec. 53. Minnesota Statutes 2002, section 299A.45, subdivision 2, is amended to read:

Subd. 2. [AWARD AMOUNT.] (a) The amount of the award is the lesser of:

(1) ~~for public institutions, the actual tuition and fees charged by the institution; or~~

~~(2) for private institutions the lesser of (i)~~ the actual tuition and fees charged by the institution; or ~~(ii) the highest tuition and fees charged by a public institution in Minnesota~~

(2) the tuition maximums established in law.

(b) An award under this subdivision must not affect a recipient's eligibility for a state grant under section 136A.121.

Sec. 54. [LEARN AND EARN PROGRAM; POSTSECONDARY OPPORTUNITIES ACCOUNT.]

The higher education services office shall maintain a postsecondary opportunities account for students who earned stipends and bonuses that were deposited in the account through the learn and earn graduation achievement program under Minnesota Statutes 2000, section 124D.32. A participating student may, upon graduation from high school, use the funds accumulated for the student toward the costs of attending a Minnesota postsecondary institution or a career-training program, including the costs of tuition, books, and lab fees. Funds accumulated for a student must be available to the student from the time a student graduates from high school until ten years after the date the student entered the learn and earn graduation achievement program. After ten years, the office shall close the account and any remaining money in the account must cancel to the general fund.

Sec. 55. [OPTIONAL STUDENT FEES.]

The board of trustees of the Minnesota state colleges and universities must provide students with the opportunity to affirmatively choose to pay any optional student fee used to fund student groups. These optional fees must not be assessed by requiring a student to opt out of the fee. The board of regents of the University of Minnesota are requested to provide all students with opportunity to affirmatively choose to pay any optional student fee used to fund student groups and to not require students to opt out of these fees.

Sec. 56. [SURVEY OF EDUCATION FACULTY.]

(a) The board of trustees of the Minnesota state colleges and universities must evaluate the teaching experience of faculty providing instruction to prepare teachers for licensure in kindergarten through grade 12 education. The evaluation must include a survey of all tenured and adjunct faculty at a state university who provide instruction in a college of education or any other college or division that prepares students for teacher licensure. The survey must, at a minimum, address the following:

(1) the extent to which faculty are licensed to teach at the kindergarten through grade 12 level in Minnesota;

(2) the extent to which faculty members are licensed in the subject area or grade level in which they are providing instruction;

(3) for licensed faculty, the date of their most recent teaching experience in a kindergarten through grade 12 school and the date of their most recent teaching experience in a kindergarten through grade 12 school in the subject or grade level in which they are providing instruction at a Minnesota state colleges and universities institution.

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(b) The board of regents of the University of Minnesota and the private colleges in Minnesota that participate in the state grant program under Minnesota Statutes, section 136A.121, that provide instruction leading to kindergarten through grade 12 teacher licensure are requested to evaluate the kindergarten through grade 12 teaching experience of faculty in their colleges of education or other colleges, divisions, or departments that provide instruction leading to licensure by surveying tenured and adjunct faculty. The survey must include the three issues in paragraph (a).

(c) By January 15, 2004, the board of trustees must, and the board of regents and the private colleges are requested to, report the results of this evaluation to the chairs of the higher education and the education policy committees in the senate and the house of representatives.

Sec. 57. [REVISOR'S INSTRUCTION.]

The revisor of statutes shall substitute the term "office of higher education" for "higher education services office" wherever the term appears in Minnesota Statutes and Minnesota Rules. The revisor shall also make any grammatical changes related to the changes in terms.

Sec. 58. [REPEALER.]

Minnesota Statutes 2002, sections 15A.081, subdivision 7b; 17.985; 93.223, subdivision 2; 93.2235, subdivision 2; 124D.95; 136A.011; 136A.031, subdivisions 1, 3, and 4; 136A.07; 136A.124; 136F.13; 136F.56; 136F.582; 136F.59, subdivision 2; and 136G.03, subdivision 25, are repealed.

Sec. 59. [EFFECTIVE DATE.]

Sections 1, 4, 5, and 22 to 29 are effective the day following final enactment."

Delete the title and insert:

"A bill for an act relating to higher education; appropriating money for higher education and related purposes to the higher education services office, board of trustees of the Minnesota state colleges and universities, board of regents of the University of Minnesota, and the Mayo Medical Foundation, with certain conditions; authorizing revenue bonds; making changes to financial aid programs, the higher education services office, and the Minnesota state colleges and universities; adding students to the regent candidate advisory council; amending Minnesota Statutes 2002, sections 41D.01, subdivision 4; 93.22, subdivision 2; 124D.42, subdivision 3; 135A.14, by adding a subdivision; 136A.03; 136A.031, subdivisions 2, 5; 136A.08, subdivision 3; 136A.101, subdivision 5a; 136A.121, subdivisions 6, 7, 9, 9a, 13; 136A.1211; 136A.125, subdivision 2; 136A.171; 136A.29, subdivision 9; 136A.69; 136F.12; 136F.40, subdivision 2; 136F.45, subdivisions 1, 2; 136F.581, subdivisions 1, 2; 136F.59, subdivision 3; 136F.60, subdivision 3; 136G.01; 136G.03, subdivision 31, by adding subdivisions; 136G.05, subdivisions 4, 5, 10; 136G.09, subdivisions 1, 2, 6, 7, 8, 9; 136G.11, subdivisions 1, 2, 3, 9, 13; 136G.13, subdivisions 1, 3; 137.0245, subdivision 2; 299A.45, subdivision 2; proposing coding for new law in Minnesota Statutes, chapters 135A; 136F; 136G; 137; repealing Minnesota Statutes 2002, sections 15A.081, subdivision 7b; 17.985; 93.223, subdivision 2; 93.2235, subdivision 2; 124D.95; 136A.011; 136A.031, subdivisions 1, 3, 4; 136A.07; 136A.124; 136F.13; 136F.56; 136F.582; 136F.59, subdivision 2; 136G.03, subdivision 25."

With the recommendation that when so amended the bill pass.

The report was adopted.

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SECOND READING OF HOUSE BILLS

H. F. No. 748 was read for the second time.

SECOND READING OF SENATE BILLS

S. F. No. 1511 was read for the second time.

INTRODUCTION AND FIRST READING OF HOUSE BILLS

The following House Files were introduced:

Lesch introduced:

H. F. No. 1584, A bill for an act relating to taxation; changing the sales price of cigarettes and tobacco products for purposes of the sales tax; eliminating certain discounts relating to cigarettes and tobacco products taxes; providing for use of the proceeds to fund youth tobacco use prevention programs; appropriating money; amending Minnesota Statutes 2002, sections 297A.62, by adding a subdivision; 297A.94; 297F.05, subdivision 1; 297F.08, subdivision 7; 297F.09, subdivision 2; 297F.10; proposing coding for new law in Minnesota Statutes, chapter 144.

The bill was read for the first time and referred to the Committee on Taxes.

Samuelson introduced:

H. F. No. 1585, A bill for an act relating to the city of New Brighton; requiring a referendum for the city to impose an intoxicating beverage tax.

The bill was read for the first time and referred to the Committee on Taxes.

Paulsen moved that the House recess subject to the call of the Chair. The motion prevailed.

RECESS

RECONVENED

The House reconvened and was called to order by the Speaker.

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CERTIFICATION PURSUANT TO RULE 4.03

ON FINANCE AND REVENUE BILLS

April 28, 2003

Edward A. Burdick

Chief Clerk of the House of Representatives

The State of Minnesota

Dear Mr. Burdick:

House Rule 4.03 requires the Chair of the Committee on Ways and Means to certify to the House of Representatives that the Committee has reconciled any finance and revenue bills with the budget resolution and targets.

Please accept this letter as certification that H. F. No. 627, Transportation Finance, and H. F. No. 750, Judiciary Finance, reconcile with the budget resolution and targets.

Sincerely,

Representative Jim Knoblach

Chair, House Ways and Means Committee

FISCAL CALENDAR

Pursuant to rule 1.22, Knoblach requested immediate consideration of H. F. No. 750.

H. F. No. 750 was reported to the House.

Smith moved to amend H. F. No. 750, the second engrossment, as follows:

Page 3, article 1, line 22, delete "72,637,000" and "72,652,000" and insert "70,137,000" and "70,152,000"

Page 3, article 1, line 25, delete "$71,585,000" and "71,600,000" and insert "69,085,000" and "69,100,000"

Page 3, article 1, line 35, delete "6,216,000" and "6,217,000" and insert "3,716,000" and "3,717,000"

Page 3, article 1, line 38, delete "6,167,000" and "6,168,000" and insert "3,667,000" and "3,668,000"

Page 5, article 1, line 41, delete "358,158,000" and "362,862,000" and insert "360,658,000" and "365,362,000"

Page 5, article 1, line 43, delete "357,158,000" and "361,862,000" and insert "359,658,000" and "364,362,000"

Page 6, article 1, line 54, delete "92,945,000" and "94,032,000" and insert "95,445,000" and "96,532,000"

Page 6, article 1, line 56, delete "92,825,000" and "93,912,000" and insert "95,325,000" and "96,412,000"

The motion prevailed and the amendment was adopted.

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Atkins, Pugh, Entenza and Murphy moved to amend H. F. No. 750, the second engrossment, as amended, as follows:

Page 3, delete lines 4 to 10

Pages 10 and 11, delete article 2, section 2

Renumber the sections in sequence and correct the internal references

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the Atkins et al amendment and the roll was called. There were 63 yeas and 67 nays as follows:

Those who voted in the affirmative were:

The bill was passed, as amended, and its title agreed to.

FISCAL CALENDAR ANNOUNCEMENT

Pursuant to rule 1.22, Knoblach announced his intention to place H. F. No. 779 and S. F. No. 1511 on the Fiscal Calendar for Tuesday, April 29, 2003.

FISCAL CALENDAR

Pursuant to rule 1.22, Knoblach requested immediate consideration of H. F. No. 627.

H. F. No. 627 was reported to the House.

Otremba was excused for the remainder of today's session.

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Erhardt moved to amend H. F. No. 627, the fourth engrossment, as follows:

Pages 68 to 71, delete article 3 and insert:

"ARTICLE 3

TRANSPORTATION FUNDING

"Section 1. [16A.89] [METROPOLITAN TRANSPORTATION FUND.]

Subdivision 1. [FUND CREATED.] A metropolitan transportation fund is created in the state treasury, consisting of money credited to the fund under section 297A.94, paragraph (g), and other money credited to the fund by law.

Subd. 2. [TRANSFER TO GENERAL FUND.] Within ten days of the end of each fiscal year through fiscal year 2007 the commissioner shall determine if the amount of sales and use tax revenue credited in the fund under section 297A.94, paragraph (g), has been greater in that fiscal year than an amount equal to 32 percent of revenue from the motor vehicle sales tax in that fiscal year. If the first amount is greater than the second amount, the commissioner shall transfer an amount equal to the difference from the metropolitan transportation fund to the general fund.

Subd. 3. [APPORTIONMENT OF FUND.] Money in the metropolitan transportation fund not transferred under subdivision 2 must be allocated as follows:

(a) 37.5 percent must be allocated to a transit ways account. Money in the account is appropriated to the commissioner of transportation for expenditure on planning, design, engineering, construction, and operation of the following transit ways:

(1) the northwest busway from downtown Minneapolis to Rogers;

(2) the Rush line busway from St. Paul to Rush City;

(3) the Cedar Avenue busway connecting the Mall of America in Bloomington with Eagan, Apple Valley, Burnsville, and Lakeville;

(4) the marked interstate highway 494 busway between the Mall of America and marked trunk highway 100;

(5) for operating assistance only, the Hiawatha light rail transit line; and

(6) other projects designated by law for funding from the transit ways account.

The commissioner may make grants from the account to the metropolitan council for transit way projects identified in this subdivision that will be planned, designed, engineered, constructed, or operated by the council.

(b) 15 percent must be allocated to a transit operations account. Money in the account is appropriated as follows:

(1) 80 percent to the metropolitan council for public transit systems the council operates or assists, including transitways and replacement transit; and

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(2) 20 percent to the commissioner of transportation for public transit operating assistance under section 174.24, subdivision 3b.

(c) 47.5 percent must be allocated to a metropolitan highway improvement account. Money in the account is appropriated to the commissioner of transportation for planning, design, engineering, and construction of trunk highway projects that are in (1) the department of transportation metropolitan division's 20-year transportation system plan, or (2) the division's project list of unmet needs over 20 years.

Sec. 2. Minnesota Statutes 2002, section 162.07, subdivision 1, is amended to read:

Subdivision 1. [FORMULA.] (a) After deducting for administrative costs and for the disaster account and research account and state park roads as ~~heretofore~~ provided in section 162.06, subdivisions 2 through 5, the remainder of the total sum provided for in section 162.06, subdivision 1, ~~shall be~~ is identified as the apportionment sum and the excess sum. ~~shall be apportioned by the commissioner to the several counties on the basis of the needs of the counties as determined in accordance with the following formula:~~

~~(a) An amount equal to ten percent of the apportionment sum shall be apportioned equally among the 87 counties.~~

(b) An amount equal to ten percent of the apportionment sum shall be apportioned among the several counties so that each county shall receive of such amount the percentage that its motor vehicle registration for the calendar year preceding the one last past, determined by residence of registrants, bears to the total statewide motor vehicle registration.

(c) An amount equal to 30 percent of the apportionment sum shall be apportioned among the several counties so that each county shall receive of such amount the percentage that its total lane-miles of approved county state-aid highways bears to the total lane-miles of approved statewide county state-aid highways. In 1997 and subsequent years no county may receive, as a result of an apportionment under this clause based on lane-miles rather than miles of approved county state-aid highways, an apportionment that is less than its apportionment in 1996.

(d) An amount equal to 50 percent of the apportionment sum shall be apportioned among the several counties so that each county shall receive of such amount the percentage that its money needs bears to the sum of the money needs of all of the individual counties; provided, that the percentage of such amount that each county is to receive shall be adjusted so that each county shall receive in 1958 a total apportionment at least ten percent greater than its total 1956 apportionments from the state road and bridge fund; and provided further that those counties whose money needs are thus adjusted shall never receive a percentage of the apportionment sum less than the percentage that such county received in 1958.

(b) For purposes of this section and section 162.07:

(1) the "excess sum" is the money available for apportionment to the counties that is attributable to (i) motor fuel tax rates under section 296A.07, subdivision 3, and 296A.08, subdivision 2, that are in excess of the rates for the taxes under those provisions that were in effect on January 1, 2003, and (ii) changes in passenger automobile taxes under section 168.013, subdivision 1a; and

(2) the "apportionment sum" is the total sum less the excess sum.

Sec. 3. Minnesota Statutes 2002, section 162.07, is amended by adding a subdivision to read:

Subd. 1a. [APPORTIONMENT SUM.] The commissioner shall apportion the apportionment sum to the several counties on the basis of the needs of the counties as determined in accordance with the following formula:

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(a) An amount equal to ten percent of the apportionment sum must be apportioned equally among the 87 counties.

(b) An amount equal to ten percent of the apportionment sum must be apportioned among the several counties so that each county receives of that amount the percentage that its motor vehicle registration for the calendar year preceding the one last past, determined by residence of registrants, bears to the total statewide motor vehicle registration.

(c) An amount equal to 30 percent of the apportionment sum must be apportioned among the several counties so that each county receives of that amount the percentage that its total lane-miles of approved county state-aid highways bears to the total lane-miles of approved statewide county state-aid highways. In 1997 and subsequent years no county may receive, as a result of an apportionment under this paragraph based on lane-miles rather than miles of approved county state-aid highways, an apportionment that is less than its apportionment in 1996.

(d) An amount equal to 50 percent of the apportionment sum must be apportioned among the several counties so that each county receives of that amount the percentage that its money needs bears to the sum of the money needs of all of the individual counties; provided, that the percentage of the amount that each county is to receive must be adjusted so that each county receives in 1958 a total apportionment at least ten percent greater than its total 1956 apportionments from the state road and bridge fund; and provided further, that those counties whose money needs are thus adjusted shall never receive a percentage of the apportionment sum less than the percentage that such county received in 1958.

Sec. 4. Minnesota Statutes 2002, section 162.07, is amended by adding a subdivision to read:

Subd. 1b. [EXCESS SUM.] (a) In fiscal years 2004 and 2005, the commissioner shall apportion the excess sum to the several counties on the basis of the needs of the counties as determined in accordance with the following formula:

(1) An amount equal to 50 percent of the excess sum must be apportioned among the several counties so that each county receives of that amount the percentage that its population bears to the total population of the state.

(2) An amount equal to 50 percent of the excess sum must be apportioned among the several counties so that each county receives of that amount the percentage that its money needs bears to the sum of the money needs of all of the individual counties.

(b) In fiscal years 2006 and subsequently the commissioner shall apportion the excess sum in the same manner as the apportionment sum under subdivision 1a.

Sec. 5. Minnesota Statutes 2002, section 168.013, subdivision 1a, is amended to read:

Subd. 1a. [PASSENGER AUTOMOBILE; HEARSE.] (a) On passenger automobiles as defined in section 168.011, subdivision 7, and hearses, except as otherwise provided, the tax shall be $10 plus an additional tax equal to 1.25 percent of the base value.

(b) Subject to the classification provisions herein, "base value" means the manufacturer's suggested retail price of the vehicle including destination charge using list price information published by the manufacturer or determined by the registrar if no suggested retail price exists, and shall not include the cost of each accessory or item of optional equipment separately added to the vehicle and the suggested retail price.

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(c) If the manufacturer's list price information contains a single vehicle identification number followed by various descriptions and suggested retail prices, the registrar shall select from those listings only the lowest price for determining base value.

(d) If unable to determine the base value because the vehicle is specially constructed, or for any other reason, the registrar may establish such value upon the cost price to the purchaser or owner as evidenced by a certificate of cost but not including Minnesota sales or use tax or any local sales or other local tax.

(e) The registrar shall classify every vehicle in its proper base value class as follows:

FROM TO

$0 $199.99

200 399.99

and thereafter a series of classes successively set in brackets having a spread of $200 consisting of such number of classes as will permit classification of all vehicles.

(f) The base value for purposes of this section shall be the middle point between the extremes of its class.

(g) The registrar shall establish the base value, when new, of every passenger automobile and hearse registered prior to the effective date of Extra Session Laws 1971, chapter 31, using list price information published by the manufacturer or any nationally recognized firm or association compiling such data for the automotive industry. If unable to ascertain the base value of any registered vehicle in the foregoing manner, the registrar may use any other available source or method. The registrar shall calculate tax using base value information available to dealers and deputy registrars at the time the application for registration is submitted. The tax on all previously registered vehicles shall be computed upon the base value thus determined taking into account the depreciation provisions of paragraph (h).

(h) The annual additional tax computed upon the base value as provided herein, during the first ~~and second years~~ year of vehicle life shall be computed upon 100 percent of the base value; for the second year, 90 percent of such value; for the third ~~and fourth years, 90~~ year, 80 percent of such value; for the fourth year, 70 percent of such value; for the fifth ~~and sixth years, 75~~ year, 60 percent of such value; for the sixth year, 50 percent of such value; for the seventh year, 60 40 percent of such value; for the eighth year, 40 30 percent of such value; for the ninth year, 30 20 percent of such value; for the tenth year, ten percent of such value; for the 11th and each succeeding year, the sum of $25. In no event shall the annual additional tax be less than $25. The total tax under this subdivision shall not exceed $189 for the first renewal period and shall not exceed $99 for subsequent renewal periods. The total tax under this subdivision on any vehicle filing its initial registration in Minnesota in the second year of vehicle life shall not exceed $189 and shall not exceed $99 for subsequent renewal periods. The total tax under this subdivision on any vehicle filing its initial registration in Minnesota in the third or subsequent year of vehicle life shall not exceed $99 and shall not exceed $99 in any subsequent renewal period.

(i) As used in this subdivision and section 168.017, the following terms have the meanings given: "initial registration" means the 12 consecutive months calendar period from the day of first registration of a vehicle in Minnesota; and "renewal periods" means the 12 consecutive calendar months periods following the initial registration period. Notwithstanding any other provision of this subdivision, the additional tax on any passenger automobile registered on and after July 1, 2003, may not exceed the additional tax on that passenger automobile in its last full registration period.

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Sec. 6. Minnesota Statutes 2002, section 296A.07, subdivision 3, is amended to read:

Subd. 3. [RATE OF TAX.] The gasoline excise tax is imposed at the following rates:

(1) E85 is taxed at the rate of ~~14.2~~ 17.75 cents per gallon;

(2) M85 is taxed at the rate of ~~11.4~~ 14.25 cents per gallon; and

(3) all other gasoline is taxed at the rate of 20 25 cents per gallon.

Sec. 7. Minnesota Statutes 2002, section 296A.08, subdivision 2, is amended to read:

Subd. 2. [RATE OF TAX.] The special fuel excise tax is imposed at the following rates:

(1) Liquefied petroleum gas or propane is taxed at the rate of 15 18.75 cents per gallon.

(2) Liquefied natural gas is taxed at the rate of 12 15 cents per gallon.

(3) Compressed natural gas is taxed at the rate of ~~$1.739~~ $2.174 per thousand cubic feet; or 20 25 cents per gasoline equivalent, as defined by the National Conference on Weights and Measures, which is 5.66 pounds of natural gas.

(4) All other special fuel is taxed at the same rate as the gasoline excise tax as specified in section 296A.07, subdivision 2. The tax is payable in the form and manner prescribed by the commissioner.

Sec. 8. Minnesota Statutes 2002, section 297A.94, is amended to read:

297A.94 [DEPOSIT OF REVENUES.]

(a) Except as provided in this section, the commissioner shall deposit the revenues, including interest and penalties, derived from the taxes imposed by this chapter in the state treasury and credit them to the general fund.

(b) The commissioner shall deposit taxes in the Minnesota agricultural and economic account in the special revenue fund if:

(1) the taxes are derived from sales and use of property and services purchased for the construction and operation of an agricultural resource project; and

(2) the purchase was made on or after the date on which a conditional commitment was made for a loan guaranty for the project under section 41A.04, subdivision 3.

The commissioner of finance shall certify to the commissioner the date on which the project received the conditional commitment. The amount deposited in the loan guaranty account must be reduced by any refunds and by the costs incurred by the department of revenue to administer and enforce the assessment and collection of the taxes.

(c) The commissioner shall deposit the revenues, including interest and penalties, derived from the taxes imposed on sales and purchases included in section 297A.61, subdivision 3, paragraph (g), clauses (1) and (4), in the state treasury, and credit them as follows:

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(1) first to the general obligation special tax bond debt service account in each fiscal year the amount required by section 16A.661, subdivision 3, paragraph (b); and

(2) after the requirements of clause (1) have been met, the balance to the general fund.

(d) The commissioner shall deposit the revenues, including interest and penalties, collected under section 297A.64, subdivision 5, in the state treasury and credit them to the general fund. By July 15 of each year the commissioner shall transfer to the highway user tax distribution fund an amount equal to the excess fees collected under section 297A.64, subdivision 5, for the previous calendar year.

(e) For fiscal year 2001, 97 percent; for fiscal years 2002 and 2003, 87 percent; and for fiscal year 2004 and thereafter, 87.1 percent of the revenues, including interest and penalties, transmitted to the commissioner under section 297A.65, must be deposited by the commissioner in the state treasury as follows:

(1) 50 percent of the receipts must be deposited in the heritage enhancement account in the game and fish fund, and may be spent only on activities that improve, enhance, or protect fish and wildlife resources, including conservation, restoration, and enhancement of land, water, and other natural resources of the state;

(2) 22.5 percent of the receipts must be deposited in the natural resources fund, and may be spent only for state parks and trails;

(3) 22.5 percent of the receipts must be deposited in the natural resources fund, and may be spent only on metropolitan park and trail grants;

(4) three percent of the receipts must be deposited in the natural resources fund, and may be spent only on local trail grants; and

(5) two percent of the receipts must be deposited in the natural resources fund, and may be spent only for the Minnesota zoological garden, the Como park zoo and conservatory, and the Duluth zoo.

(f) The revenue dedicated under paragraph (e) may not be used as a substitute for traditional sources of funding for the purposes specified, but the dedicated revenue shall supplement traditional sources of funding for those purposes. Land acquired with money deposited in the game and fish fund under paragraph (e) must be open to public hunting and fishing during the open season, except that in aquatic management areas or on lands where angling easements have been acquired, fishing may be prohibited during certain times of the year and hunting may be prohibited. At least 87 percent of the money deposited in the game and fish fund for improvement, enhancement, or protection of fish and wildlife resources under paragraph (e) must be allocated for field operations.

(g) The commissioner shall deposit 7.7 percent of the revenues from taxes imposed under sections 297A.61 to 297A.93 that the commissioner determines are derived from sales and use in the counties of Anoka, Carver, Chisago, Dakota, Hennepin, Ramsey, Scott, and Washington into the metropolitan transportation fund created in section 16A.89.

Sec. 9. Minnesota Statutes 2002, section 297B.09, subdivision 1, is amended to read:

Subdivision 1. [DEPOSIT OF REVENUES.] (a) Money collected and received under this chapter must be deposited as provided in this subdivision.

(b) From July 1, 2001, to June 30, 2002, 30.86 percent of the money collected and received must be deposited in the highway user tax distribution fund, and the remaining money must be deposited in the general fund.

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~~(c)~~ On and after July 1, ~~2002~~ 2003, ~~32 percent of the money collected and received must be deposited in the highway user tax distribution fund,~~ 20.5 percent must be deposited in the metropolitan area transit fund under section 16A.88, and 1.25 percent must be deposited in the greater Minnesota transit fund under section 16A.88.

(c) In fiscal year 2004 and thereafter, two percent of the money collected and received must be deposited in the metropolitan area transit appropriation account under section 16A.88. The remaining money must be deposited in the general fund.

(d) On and after July 1, 2007, 54.125 percent of the money collected and received must be deposited in the highway user tax distribution fund.

(e) On and after July 1, 2009, 76.25 percent of the money collected and received must be deposited in the highway user fund.

Sec. 10. [APPROPRIATION.]

(a) $550,000,000 is appropriated to the commissioner of transportation from the bond proceeds account in the trunk highway fund for the actual construction, reconstruction, and improvement of trunk highways. Of this appropriation:

(1) $250,000,000 is for trunk highway improvements within the seven-county metropolitan area primarily for improving traffic flow and expanding highway capacity by eliminating traffic bottlenecks and improving segments of at-risk interregional corridors within the seven-county metropolitan area;

(2) $250,000,000 is for trunk highway improvements on high-risk interregional corridors located outside the seven-county metropolitan area; and

(3) $50,000,000 is for accelerating transit capital improvements on trunk highways such as shoulder bus lanes, bus park-and-ride facilities, and ramp meter bypass facilities.

(b) The commissioner may use up to $93,500,000 of this appropriation for program delivery.

(c) These appropriations include the cost of actual payment to landowners for lands acquired for highway right-of-way, payment to lessees, interest subsidies, and relocation expenses.

Sec. 11. [BOND SALE EXPENSES.]

$550,000 is appropriated to the commissioner of finance for bond sale expenses under Minnesota Statutes, section 16A.641, subdivision 8. This appropriation is from the trunk highway bond proceeds account in the trunk highway fund.

Sec. 12. [BOND SALE.]

To provide the money appropriated in sections 10 and 11, from the bond proceeds account in the trunk highway fund, the commissioner of finance shall sell and issue bonds of the state in an amount up to $550,550,000 in the manner, on the terms, and with the effect prescribed by Minnesota Statutes, sections 167.50 to 167.52, and by the Minnesota Constitution, article XIV, section 11, at the times and in the amounts requested by the commissioner of transportation. The proceeds of the bonds, except accrued interest and any premium received from the sale of the bonds, must be deposited in the bond proceeds account in the trunk highway fund.

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Sec. 13. [ADVANCE CONSTRUCTION.]

(a) Through June 30, 2009, the commissioner of transportation may spend up to $550,000 on trunk highway improvements from funds approved for expenditure by the Federal Highway Administration and designated as advance construction funds.

(b) Any additional advance construction expenditures by the commissioner approved by the Federal Highway Administration through June 30, 2009, may be added to the amount in paragraph (a).

Sec. 14. [COUNTY STATE-AID APPORTIONMENT STUDY.]

Subdivision 1. [MEMBERSHIP.] (a) The commissioner of transportation shall convene a study group to study the current distribution of county state aid highway funds and make recommendations for a county state-aid distribution formula or formulas that would insure fairness in the distribution of county state aids. The study group must consist of:

(1) a county engineer of a county in greater Minnesota that contains a level 1 or level 2 regional trade center as identified by the commissioner;

(2) a county engineer of a county in greater Minnesota that does not contain such a regional trade center;

(3) a county engineer of a county in the seven county metropolitan area that does not contain a city of the first class;

(4) a county engineer of a county in the seven county metropolitan area that contains a city of the first class; and

(5) the department of transportation's director of state aid to local transportation or the director's designate.

The director or director's designee is the chair of the study group.

(b) The commissioner shall select a county engineer to fill positions (1) through (3) from a list of three persons for each position submitted by the association of Minnesota counties.

Subd. 2. [STUDY CONSIDERATIONS.] In making recommendations, if any, for changes in the distribution of county state aid highway funds the study group shall consider:

(1) population, vehicle miles traveled, county state aid mileage, and county state aid money needs in each county, and changes in the distribution of each since the original county state aid formula was enacted;

(2) the relative ability of counties to finance necessary improvements to and maintenance of their county state aid highway system; and

(3) the role of the county state aid system in creating an integrated regional and statewide transportation system.

Subd. 3. [REPORT.] The study group shall report to the governor and legislature on the results of its study by January 15, 2004.

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Sec. 15. [EFFECTIVE DATE.]

Sections 1 to 5, 8, and 9 are effective July 1, 2003. Sections 6 and 7 are effective June 1, 2003, and section 6 applies to all gasoline in distributor storage on that date. Sections 10 to 14 are effective the day following final enactment."

Amend the title accordingly

Dorman moved to amend the Erhardt amendment to H. F. No. 627, the fourth engrossment, as follows:

Page 8, after line 31, insert:

"Sec. 8. Minnesota Statutes 2002, section 297A.62, subdivision 1, is amended to read:

Subdivision 1. [GENERALLY.] Except as otherwise provided in subdivision 2 or 3 4 or in this chapter, a sales tax of 6.5 percent is imposed on the gross receipts from retail sales as defined in section 297A.61, subdivision 4, made in this state or to a destination in this state by a person who is required to have or voluntarily obtains a permit under section 297A.83, subdivision 1.

Sec. 9. Minnesota Statutes 2002, section 297A.62, is amended by adding a subdivision to read:

Subd. 4. [SALES IN METROPOLITAN COUNTIES.] A sales tax of seven percent is imposed on the gross receipts from retail sales, as defined in section 270A.61, subdivision 4, made in the counties of Anoka, Carver, Chisago, Dakota, Hennepin, Ramsey, Scott, and Washington."

Page 10, delete lines 35 and 36

Page 11, delete lines 1 to 4 and insert:

"(g) The commissioner shall deposit the revenues from the tax imposed under section 297A.62, subdivision 4, attributable to a tax rate of more than 6.5 percent, into the metropolitan transportation fund created in section 16A.89. The commissioner shall deposit remaining revenues into the general fund."

Renumber the sections in sequence and correct the internal references

Amend the title accordingly

The question was taken on the amendment to the amendment and the roll was called. There were 6 yeas and 126 nays as follows:

Those who voted in the affirmative were:

The motion did not prevail and the amendment was not adopted.

Lipman, Kuisle and Thissen moved to amend H. F. No. 627, the fourth engrossment, as follows:

Page 55, line 9, delete "filed"

Page 55, delete line 10 and insert "without substantial justification such that it did not have a reasonable basis in law and fact, based on the totality of the circumstances before and after the action."

The motion prevailed and the amendment was adopted.

The Speaker called Abrams to the Chair.

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Howes and Solberg moved to amend H. F. No. 627, the fourth engrossment, as amended, as follows:

Page 22, after line 12, insert:

"Sec. 14. Minnesota Statutes 2002, section 168.013, subdivision 3, is amended to read:

Subd. 3. [APPLICATION; CANCELLATION; EXCESSIVE GROSS WEIGHT FORBIDDEN.] (a) The applicant for all licenses based on gross weight shall state the unloaded weight of the motor vehicle, trailer, or semitrailer and the maximum load the applicant proposes to carry on it, the sum of which constitutes the gross weight upon which the license tax must be paid. However, the declared gross weight upon which the tax is paid must not be less than 1-1/4 times the declared unloaded weight of the motor vehicle, trailer, or semitrailer to be registered, except recreational vehicles taxed under subdivision 1g, school buses taxed under subdivision 18, and tow trucks or towing vehicles defined in section 169.01, subdivision 52. The gross weight of a tow truck or towing vehicle is the actual weight of the tow truck or towing vehicle fully equipped, but does not include the weight of a wrecked or disabled vehicle towed or drawn by the tow truck or towing vehicle.

(b) The gross weight of a motor vehicle, trailer, or semitrailer must not exceed the gross weight upon which the license tax has been paid by more than four percent or 1,000 pounds, whichever is greater; provided that, a vehicle transporting unfinished forest products on a highway, other than a highway that is part of the system of interstate and defense highways, unless a federal exemption is granted, in accordance with paragraph (d)(3) shall not exceed its gross vehicle weight upon which the license tax has been paid, or gross axle weight on any axle, by more than five percent and, notwithstanding other law to the contrary, is not subject to any fee, fine, or other assessment or penalty for exceeding a gross vehicle or axle weight by up to five percent.

(c) The gross weight of the motor vehicle, trailer, or semitrailer for which the license tax is paid must be indicated by a distinctive character on the license plate or plates except as provided in subdivision 12 and the plate or plates must be kept clean and clearly visible at all times.

(d) The owner, driver, or user of a motor vehicle, trailer, or semitrailer, upon conviction for transporting a gross weight in excess of the gross weight for which it was registered or for operating a vehicle with an axle weight exceeding the maximum lawful axle load weight, is guilty of a misdemeanor and subject to increased registration or reregistration according to the following schedule:

(1) Upon conviction for transporting a gross weight in excess of the gross weight for which a motor vehicle, trailer, or semitrailer is registered by more than the allowance set forth in paragraph (b) but less than 25 percent, or for operating or using a motor vehicle, trailer, or semitrailer with an axle weight exceeding the maximum lawful axle load as provided in sections 169.822 to 169.829 by more than the allowance set forth in paragraph (b) but less than 25 percent, the owner, driver, or user of the motor vehicle, trailer, or semitrailer used to commit the violation, in addition to any penalty imposed for the misdemeanor, shall apply to the registrar to increase the authorized gross weight to be carried on the vehicle to a weight equal to or greater than the gross weight the owner, driver, or user was convicted of carrying. The increase is computed for the balance of the calendar year on the basis of 1/12 of the annual tax for each month remaining in the calendar year beginning with the first day of the month in which the violation occurred. If the additional registration tax computed upon that weight, plus the tax already paid, amounts to more than the regular tax for the maximum gross weight permitted for the vehicle under sections 169.822 to 169.829, that additional amount must nevertheless be paid into the highway fund, but the additional tax thus paid does not authorize or permit any person to operate the vehicle with a gross weight in excess of the maximum legal weight as provided by sections 169.822 to 169.829. Unless the owner within 30 days after a conviction applies to increase the authorized weight and pays the additional tax as provided in this section, the registrar shall revoke the registration on the vehicle and demand the return of the registration card and plates issued on that registration.

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(2) Upon conviction of an owner, driver, or user of a motor vehicle, trailer, or semitrailer for transporting a gross weight in excess of the gross weight for which the motor vehicle, trailer, or semitrailer was registered by 25 percent or more or for operating or using the vehicle or trailer with an axle weight exceeding the maximum lawful axle load as provided in sections 169.822 to 169.829 by 25 percent or more, and in addition to any penalty imposed for the misdemeanor, the registrar shall either (i) cancel the reciprocity privileges on the vehicle involved if the vehicle is being operated under reciprocity or (ii) if the vehicle is not being operated under reciprocity, cancel the certificate of registration on the vehicle operated and demand the return of the registration certificate and registration plates. The registrar may not cancel the registration or reciprocity privileges for any vehicle found in violation of seasonal load restrictions imposed under section 169.87 unless the axle weight exceeds the year-round weight limit for the highway on which the violation occurred. The registrar may investigate any allegation of gross weight violations and demand that the operator show cause why all future operating privileges in the state should not be revoked unless the additional tax assessed is paid.

(3) Clause (1) does not apply to the first haul of unprocessed or raw farm products or unfinished forest products, when the registered gross weight is not exceeded by more than ten percent. For purposes of this clause, "first haul" means (i) the first, continuous transportation of unprocessed or raw farm products from the place of production or on-farm storage site to any other location within 50 miles of the place of production or on-farm storage site, or (ii) the continuous or noncontinuous transportation of unfinished forest products from the place of production to the place of final processing or manufacture located within 200 miles of the place of production.

(4) When the registration on a motor vehicle, trailer, or semitrailer is revoked by the registrar according to this section, the vehicle must not be operated on the highways of the state until it is registered or reregistered, as the case may be, and new plates issued, and the registration fee is the annual tax for the total gross weight of the vehicle at the time of violation. The reregistration pursuant to this subdivision of any vehicle operating under reciprocity agreements pursuant to section 168.181 or 168.187 must be at the full annual registration fee without regard to the percentage of vehicle miles traveled in this state."

Page 31, after line 5, insert:

"Sec. 26. Minnesota Statutes 2002, section 169.826, subdivision 1, is amended to read:

Subdivision 1. [WINTER INCREASE AMOUNTS.] The limitations provided in sections 169.822 to 169.829 are increased:

~~(1)~~ by ten percent between the dates set by the commissioner for each zone established by the commissioner based on a freezing index model each winter~~, statewide;~~.

(2) by ten percent between the dates set by the commissioner based on a freezing index model each winter, in the zone bounded as follows: beginning at Pigeon River in the northeast corner of Minnesota; thence in a southwesterly direction along the north shore of Lake Superior to the northeastern city limits of Duluth; thence along the eastern and southern city limits of Duluth to the junction with trunk highway No. 210; thence westerly along trunk highway No. 210 to the junction with trunk highway No. 10; thence northwesterly along trunk highway No. 10 to the Minnesota-North Dakota border; thence northerly along that border to the Minnesota-Canadian Border; thence easterly along said Border to Lake Superior; and

~~(3)~~ Subd. 1a. [HARVEST SEASON INCREASE AMOUNT.] The limitations provided in sections 169.822 to 169.829 are increased by ten percent from the beginning of harvest to November 30 each year for the movement of sugar beets, carrots, and potatoes from the field of harvest to the point of the first unloading. Transfer of the product from a farm vehicle or small farm trailer, within the meaning of chapter 168, to another vehicle is not considered to be the first unloading. The commissioner shall not issue permits under this ~~clause~~ subdivision if to do so will result in a loss of federal highway funding to the state.

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Sec. 27. Minnesota Statutes 2002, section 169.826, is amended by adding a subdivision to read:

Subd. 1b. [NINE-TON COUNTY ROADS.] Despite the provisions of subdivision 5 and sections 169.824, subdivision 2, paragraph (a), clause (2), and 169.832, subdivision 11, a vehicle or combination of vehicles with a gross vehicle weight up to 88,000 pounds may be operated on a nine-ton county road, consistent with the increases allowed for vehicles operating on a ten-ton road, during the time when the increases under subdivision 1 are in effect in that zone.

Sec. 28. Minnesota Statutes 2002, section 169.86, subdivision 5, is amended to read:

Subd. 5. [FEE; PROCEEDS TO TRUNK HIGHWAY FUND.] The commissioner, with respect to highways under the commissioner's jurisdiction, may charge a fee for each permit issued. All such fees for permits issued by the commissioner of transportation shall be deposited in the state treasury and credited to the trunk highway fund. Except for those annual permits for which the permit fees are specified elsewhere in this chapter, the fees shall be:

(a) $15 for each single trip permit.

(b) $36 for each job permit. A job permit may be issued for like loads carried on a specific route for a period not to exceed two months. "Like loads" means loads of the same product, weight, and dimension.

(c) $60 for an annual permit to be issued for a period not to exceed 12 consecutive months. Annual permits may be issued for:

(1) motor vehicles used to alleviate a temporary crisis adversely affecting the safety or well-being of the public;

(2) motor vehicles which travel on interstate highways and carry loads authorized under subdivision 1a;

(3) motor vehicles operating with gross weights authorized under section 169.826, subdivision ~~1, clause (3)~~ 1a;

(4) special pulpwood vehicles described in section 169.863;

(5) motor vehicles bearing snowplow blades not exceeding ten feet in width; and

(6) noncommercial transportation of a boat by the owner or user of the boat.

(d) $120 for an oversize annual permit to be issued for a period not to exceed 12 consecutive months. Annual permits may be issued for:

(1) mobile cranes;

(2) construction equipment, machinery, and supplies;

(3) manufactured homes;

(4) implements of husbandry when the movement is not made according to the provisions of paragraph (i);

(5) double-deck buses;

(6) commercial boat hauling.

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(e) For vehicles which have axle weights exceeding the weight limitations of sections 169.822 to 169.829, an additional cost added to the fees listed above. However, this paragraph applies to any vehicle described in section 168.013, subdivision 3, paragraph (b), but only when the vehicle exceeds its gross weight allowance set forth in that paragraph, and then the additional cost is for all weight, including the allowance weight, in excess of the permitted maximum axle weight. The additional cost is equal to the product of the distance traveled times the sum of the overweight axle group cost factors shown in the following chart:

Overweight Axle Group Cost Factors

Cost Per Mile For Each Group Of:

Weight (pounds)

exceeding weight Two consecutive axles Three consecutive axles Four consecutive axles

limitations spaced within spaced within spaced within

on axles 8 feet or less 9 feet or less 14 feet or less

0-2,000 .12 .05 .04

2,001-4,000 .14 .06 .05

4,001-6,000 .18 .07 .06

6,001-8,000 .21 .09 .07

8,001-10,000 .26 .10 .08

10,001-12,000 .30 .12 .09

12,001-14,000 Not permitted .14 .11

14,001-16,000 Not permitted .17 .12

16,001-18,000 Not permitted .19 .15

18,001-20,000 Not permitted Not permitted .16

20,001-22,000 Not permitted Not permitted .20

The amounts added are rounded to the nearest cent for each axle or axle group. The additional cost does not apply to paragraph (c), clauses (1) and (3).

For a vehicle found to exceed the appropriate maximum permitted weight, a cost-per-mile fee of 22 cents per ton, or fraction of a ton, over the permitted maximum weight is imposed in addition to the normal permit fee. Miles must be calculated based on the distance already traveled in the state plus the distance from the point of detection to a transportation loading site or unloading site within the state or to the point of exit from the state.

(f) As an alternative to paragraph (e), an annual permit may be issued for overweight, or oversize and overweight, construction equipment, machinery, and supplies. The fees for the permit are as follows:

Gross Weight (pounds) of Vehicle Annual Permit Fee

90,000 or less $200

90,001 - 100,000 $300

100,001 - 110,000 $400

110,001 - 120,000 $500

120,001 - 130,000 $600

130,001 - 140,000 $700

140,001 - 145,000 $800

If the gross weight of the vehicle is more than 145,000 pounds the permit fee is determined under paragraph (e).

Journal of the House - 44th Day - Monday, April 28, 2003 - Top of Page 2889

(g) For vehicles which exceed the width limitations set forth in section 169.80 by more than 72 inches, an additional cost equal to $120 added to the amount in paragraph (a) when the permit is issued while seasonal load restrictions pursuant to section 169.87 are in effect.

(h) $85 for an annual permit to be issued for a period not to exceed 12 months, for refuse-compactor vehicles that carry a gross weight of not more than: 22,000 pounds on a single rear axle; 38,000 pounds on a tandem rear axle; or, subject to section 169.828, subdivision 2, 46,000 pounds on a tridem rear axle. A permit issued for up to 46,000 pounds on a tridem rear axle must limit the gross vehicle weight to not more than 62,000 pounds.

(i) For vehicles exclusively transporting implements of husbandry, an annual permit fee of $24. A vehicle operated under a permit authorized by this paragraph may be moved at the discretion of the permit holder without prior route approval by the commissioner if:

(1) the total width of the transporting vehicle, including load, does not exceed 14 feet;

(2) the vehicle is operated only between sunrise and 30 minutes after sunset, and is not operated at any time after 12:00 noon on Sundays or holidays;

(3) the vehicle is not operated when visibility is impaired by weather, fog, or other conditions that render persons and other vehicles not clearly visible at 500 feet;

(4) the vehicle displays at the front and rear of the load or vehicle a pair of flashing amber lights, as provided in section 169.59, subdivision 4, whenever the overall width of the vehicle exceeds 126 inches; and

(5) the vehicle is not operated on a trunk highway with a surfaced roadway width of less than 24 feet unless such operation is authorized by the permit.

A permit under this paragraph authorizes movements of the permitted vehicle on an interstate highway, and movements of 75 miles or more on other highways."

Renumber the sections in sequence and correct the internal references

Amend the title accordingly

The motion prevailed and the amendment was adopted.

CALL OF THE HOUSE LIFTED

Juhnke moved that the call of the House be suspended. The motion prevailed and it was so ordered.

Wagenius moved to amend H. F. No. 627, the fourth engrossment, as amended, as follows:

Page 67, delete section 68

Renumber the sections in sequence and correct the internal references

Amend the title accordingly

A roll call was requested and properly seconded.

Journal of the House - 44th Day - Monday, April 28, 2003 - Top of Page 2890

The question was taken on the Wagenius amendment and the roll was called. There were 65 yeas and 67 nays as follows:

Those who voted in the affirmative were: