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General Assembly Raised Bill No. 384
February Session, 2022
LCO No. 2683
Referred to Committee on FINANCE, REVENUE AND
BONDING
Introduced by:
(FIN)
AN ACT IMPLEMENTING THE TREASURER'S RECOMMENDATIONS
CONCERNING THE CONNECTICUT BABY BOND TRUST PROGRAM.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. Section 3-36b of the 2022 supplement to the general statutes 1
is repealed and the following is substituted in lieu thereof (Effective from 2
passage): 3
(a) There is established the Connecticut Baby Bond Trust. The trust 4
shall constitute an instrumentality of the state and shall perform 5
essential governmental functions as provided in sections 3-36a to 3-36h, 6
inclusive, as amended by this act. The trust shall receive and hold all 7
payments and deposits or contributions intended for the trust, as well 8
as gifts, bequests, endowments or federal, state or local grants and any 9
other funds from any public or private source and all earnings until 10
disbursed in accordance with section 3-36c, as amended by this act, 3-11
36d or 3-36g, as amended by this act. 12
(b) The amounts on deposit in the trust shall not constitute property 13
of the state and the trust shall not be construed to be a department, 14 Raised Bill No. 384
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institution or agency of the state. Amounts on deposit in the trust shall 15
not be commingled with state funds and the state shall have no claim to 16
or against, or interest in, such funds. Any contract entered into by or any 17
obligation of the trust shall not constitute a debt or obligation of the state 18
and the state shall have no obligation to any designated beneficiary or 19
any other person on account of the trust and all amounts obligated to be 20
paid from the trust shall be limited to amounts available for such 21
obligation on deposit in the trust. The amounts on deposit in the trust 22
may only be disbursed in accordance with the provisions of section 3-23
36c, as amended by this act, 3-36d or 3-36g, as amended by this act. The 24
trust shall continue in existence as long as it holds any deposits or has 25
any obligations and until its existence is terminated by law and upon 26
termination any unclaimed assets shall return to the state. Property of 27
the trust shall not be governed by section 3-61a. 28
(c) The Treasurer shall be responsible for the receipt, maintenance, 29
administration, investing and disbursements of amounts from the trust. 30
The trust shall not receive deposits in any form other than cash. 31
Sec. 2. Section 3-36c of the 2022 supplement to the general statutes is 32
repealed and the following is substituted in lieu thereof (Effective from 33
passage): 34
The Treasurer, on behalf of the trust and for purposes of the trust, 35
may: 36
(1) Receive and invest moneys in the trust in any instruments, 37
obligations, securities or property in accordance with section 3-36d; 38
(2) Enter into one or more contractual agreements, including 39
contracts for legal, actuarial, accounting, custodial, advisory, 40
management, administrative, advertising, marketing and consulting 41
services for the trust and pay for such services from the assets of the 42
trust; 43
(3) Procure insurance in connection with the trust's property, assets, 44
activities or deposits to the trust; 45 Raised Bill No. 384
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(4) Apply for, accept and expend gifts, grants or donations from 46
public or private sources to enable the trust to carry out its objectives; 47
(5) Adopt regulations in accordance with chapter 54 for purposes of 48
[public act 21-111] sections 3-36b to 3-36i, inclusive, as amended by this 49
act; 50
(6) Sue and be sued; 51
(7) Establish one or more funds within the trust; and 52
(8) Take any other action necessary to carry out the purposes of 53
[public act 21-111] sections 3-36b to 3-36i, inclusive, as amended by this 54
act, and incidental to the duties imposed on the Treasurer pursuant to 55
[public act 21-111] said sections. 56
Sec. 3. Section 3-36e of the 2022 supplement to the general statutes is 57
repealed and the following is substituted in lieu thereof (Effective from 58
passage): 59
[The property of the trust and the earnings on] Disbursements from 60
the trust shall be exempt from all taxation by the state and all political 61
subdivisions of the state. 62
Sec. 4. Section 3-36f of the 2022 supplement to the general statutes is 63
repealed and the following is substituted in lieu thereof (Effective from 64
passage): 65
(a) Notwithstanding any provision of the general statutes, to the 66
extent permitted by federal law, no [moneys invested in] disbursements 67
from the Connecticut Baby Bond Trust shall be considered to be an asset 68
or income for purposes of determining an individual's eligibility for 69
assistance under any program administered by the [Department of 70
Social Services] state. 71
(b) Notwithstanding any provision of the general statutes, no 72
[moneys invested in] disbursements from the trust shall be considered 73
to be an asset for purposes of determining an individual's eligibility for 74 Raised Bill No. 384
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need-based, institutional aid grants offered to an individual at the 75
public eligible educational institutions in the state. 76
Sec. 5. Section 3-36g of the 2022 supplement to the general statutes is 77
repealed and the following is substituted in lieu thereof (Effective from 78
passage): 79
[(a) The Treasurer shall establish in the Connecticut Baby Bond Trust 80
an accounting for each designated beneficiary. Each such accounting 81
shall include the amount transferred to the trust pursuant to section 3-82
36h, plus the designated beneficiary's pro rata share of total net earnings 83
from investments of sums held in the trust.] 84
[(b)] (a) Upon a designated beneficiary's eighteenth birthday and 85
completion of a financial literacy requirement as prescribed by the 86
Treasurer, such beneficiary shall become eligible to [receive] request an 87
amount, to be used for payment of an eligible expenditure, of up to the 88
total sum of the [accounting under subsection (a) of this section to be 89
used for an eligible expenditure. The Treasurer may adopt regulations, 90
in accordance with the provisions of chapter 54, to carry out the 91
purposes of this section] amount transferred on behalf of the designated 92
beneficiary pursuant to section 3-36h, as amended by this act, and 93
adjusted, if applicable, in accordance with said section, plus the 94
designated beneficiary's pro rata share of total net earnings from 95
investments of sums held in the trust at the time of disbursement. 96
[(c)] (b) A designated beneficiary may submit a claim [for such 97
accounting] pursuant to subsection (a) of this section, in such form and 98
manner as prescribed by the Treasurer, until his or her thirtieth 99
birthday, [as prescribed by the Treasurer,] provided such designated 100
beneficiary is a resident of the state at the time of such claim. If a 101
designated beneficiary (1) is deceased before submitting a valid claim, 102
or (2) fails to submit a valid claim, as determined by the Treasurer, 103
before his or her thirtieth birthday, [such accounting] the sum such 104
designated beneficiary was eligible to claim shall be [credited back to 105
the assets of] retained by the trust for use to credit to designated 106 Raised Bill No. 384
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beneficiaries born in subsequent years. 107
[(d)] (c) Subject to obtaining adequate consent authorizing the 108
disclosure of confidential information related to designated 109
beneficiaries in accordance with all applicable state or federal laws, the 110
Treasurer and the Department of Social Services shall enter into a 111
memorandum of understanding to establish information sharing 112
practices in order to carry out the purposes of [public act 21-111] sections 113
3-36b to 3-36h, inclusive, as amended by this act. 114
Sec. 6. Section 3-36h of the 2022 supplement to the general statutes is 115
repealed and the following is substituted in lieu thereof (Effective from 116
passage): 117
[Upon] After the birth of a designated beneficiary, the Treasurer may 118
transfer up to three thousand two hundred dollars [from the bond 119
proceeds issued pursuant to section 3-36i] to the trust. [to be credited 120
toward the accounting of such designated beneficiary as described in 121
section 3-36g.] For any year in which the funds [made available] 122
authorized pursuant to section 3-36i, as amended by this act, [is] are 123
insufficient to provide such amount per designated beneficiary, the 124
amount so transferred shall be reduced pro rata and the Treasurer shall 125
adjust the shares of each designated beneficiary accordingly. For any 126
year in which such funds are in excess of the amount sufficient to 127
provide such amount per designated beneficiary, the excess funds shall 128
be retained by the trust for use to credit to designated beneficiaries born 129
in subsequent years. 130
Sec. 7. Section 3-36i of the 2022 supplement to the general statutes is 131
repealed and the following is substituted in lieu thereof (Effective from 132
passage): 133
(a) The State Bond Commission may authorize the issuance of bonds 134
of the state, in accordance with the provisions of section 3-20, in 135
principal amounts not exceeding in the aggregate six hundred million 136
dollars. The proceeds of the sale of bonds described in this section shall 137
be used for the purpose of funding the transfers provided for under 138 Raised Bill No. 384
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section 3-36h, as amended by this act. The amount authorized for the 139
issuance and sale of such bonds in each of the following fiscal years shall 140
not exceed the following corresponding amount for each such fiscal 141
year, except that, to the extent the State Bond Commission does not 142
provide for the use of all or a portion of such amount in any such fiscal 143
year, such amount not provided for shall be carried forward and added 144
to the authorized amount for the next two succeeding fiscal years, and 145
provided further, the costs of issuance, including expenses of 146
implementing the provisions of sections 3-36b to 3-36h, inclusive, as 147
amended by this act, and capitalized interest, if any, may be added to 148
the capped amount in each fiscal year, and each of the authorized 149
amounts shall be effective on July first of the fiscal year indicated as 150
follows: 151
T1 Fiscal Year Ending Amount
T2 June Thirtieth
T3
2023
[$50,000,000]
$100,000,000
T4 2024 $50,000,000
T5 2025 $50,000,000
T6 2026
7
$50,000,000
T7 2027 $50,000,000
T8 2028 $50,000,000
T9 2029 $50,000,000
T10 2030 $50,000,000
T11 2031 $50,000,000
T12 2032 $50,000,000
T13 2033 $50,000,000
T14 [2034 $50,000,000]
(b) [On or before the first day of September in each year, commencing 152
September 1, 2022] Commencing with the fiscal year ending June 30, 153 Raised Bill No. 384
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2023, not later than the first day of September of each fiscal year, the 154
Department of Social Services shall inform the Treasurer of the number 155
of designated beneficiaries born in the prior fiscal year. Promptly 156
thereafter, the Treasurer shall submit to the Governor and the Secretary 157
of the Office of Policy and Management, by certified mail, a report of 158
and a calculation of the total amount required to [deposit] be transferred 159
to the trust [for crediting] to credit three thousand two hundred dollars 160
[for the account of] to each such designated beneficiary born in the prior 161
fiscal year. [as described in section 3-36g.] 162
(c) All provisions of section 3-20, or the exercise of any right or power 163
granted thereby which are not inconsistent with the provisions of this 164
section, are hereby adopted and shall apply to all bonds authorized by 165
the State Bond Commission pursuant to this section, and temporary 166
notes in anticipation of the money to be derived from the sale of any 167
such bonds so authorized may be issued in accordance with section 3-168
20 and from time to time renewed. Such bonds shall mature at such time 169
or times not exceeding twenty years from their respective dates as may 170
be provided in or pursuant to the resolution or resolutions of the State 171
Bond Commission authorizing such bonds. All such bonds, notes or 172
other obligations shall be general obligations of the state and the full 173
faith and credit of the state of Connecticut are pledged for the payment 174
of the principal of and interest on such bonds, notes or other obligations 175
as the same shall become due, and accordingly and as part of the 176
contract of the state with the holders of such bonds, notes or other 177
obligations, appropriation of all amounts necessary for punctual 178
payment of such principal and interest is hereby made, and the 179
Treasurer shall pay such principal and interest as the same become due. 180
[All such bonds, notes or other obligations shall be sold at not less than 181
par and accrued interest in such manner and on such terms as the 182
Treasurer may determine is in the best interest of the state, and shall be 183
signed in the name of the state and on its behalf by the Treasurer. All 184
such bonds, notes or other obligations shall mature at such time or times 185
not later than twenty years after their respective issuance, in such 186
principal amounts and at such times, bear such date or dates, be payable 187 Raised Bill No. 384
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at such place or places, bear interest at such rate or different or varying 188
rates, payable at such time or times, be in such denominations, be in 189
such form with or without interest coupons attached, carry such 190
registration and transfer privileges, be payable in such medium of 191
payment, be subject to such terms of redemption with or without 192
premium and have such additional security, covenant or contract 193
provisions, as appropriate or necessary to improve their marketability, 194
as the Treasurer shall determine prior to their issuance. In connection 195
with such bonds, notes or other obligations, the Treasurer may enter 196
into such paying agent agreements, indentures of trust, escrow 197
agreements or other agreements, with such parties and with such 198
provisions as the Treasurer determines are appropriate or necessary. 199
(d) The Treasurer may obtain from a commercial bank or insurance 200
company authorized to do business within or without this state a letter 201
of credit, line of credit or other liquidity facility or credit facility for the 202
purpose of providing funds for the payments in respect of bonds, notes 203
or other obligations required by the holder thereof to be redeemed or 204
repurchased prior to maturity or for providing additional security for 205
such bonds, notes or other obligations. In connection with any such 206
liquidity facility or credit facility, the Treasurer may enter into any 207
reimbursement agreements, remarketing agreements, standby purchase 208
agreements or any other necessary or appropriate agreements on behalf 209
of the state in connection with securing, insuring or remarketing such 210
bonds, notes or other obligations, on such terms and conditions as the 211
Treasurer determines to be in the best interest of the state. The Treasurer 212
is authorized to pledge the full faith and credit of the state to the state's 213
payment obligations under any such agreement and the Treasurer is 214
authorized to include such pledge in any such agreement as part of the 215
contract with the provider of such liquidity facility or credit facility. The 216
Treasurer shall apply any appropriation for the payment of such bonds, 217
notes or other obligations to such reimbursement repayment if such 218
liquidity facility or credit facility is drawn upon. As part of the contract 219
of the state with the other parties to any agreement entered into 220
pursuant to this subsection for which the full faith and credit of the state 221 Raised Bill No. 384
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is pledged to the state's payment obligations under such agreement, 222
appropriation of all amounts necessary for the punctual payment of the 223
obligations of the state under any such agreement is hereby made and 224
the Treasurer shall pay such amounts as the same become due. 225
(e) In connection with or incidental to the carrying of such bonds, 226
notes or other obligations, or in connection with or incidental to the sale 227
and issuance of such bonds, notes or other obligations, the Treasurer 228
may enter into such contracts as the Treasurer may determine to be 229
necessary or appropriate to place the obligation of the state, as 230
represented by the bonds, notes or other obligations, in whole or in part, 231
on such interest rate or cash flow basis as the Treasurer may determine, 232
including without limitation, interest rate swap agreements, insurance 233
agreements, forward payment conversion agreements, futures 234
contracts, contracts providing for payments based on levels of, or 235
changes in, interest rates or market indices, contracts to manage interest 236
rate risk, including without limitation, interest rate floors or caps, 237
options, puts, calls and similar arrangements. Such contracts shall 238
contain such payment, security, default, remedy and other terms and 239
conditions as the Treasurer may deem appropriate and shall be entered 240
into with such party or parties as the Treasurer may select, after giving 241
due consideration, where applicable, for the creditworthiness of the 242
counter party or counter parties, including any rating by a nationally 243
recognized rating agency, the impact on any rating on outstanding 244
bonds, notes or other obligations or any other criteria as the Treasurer 245
may deem appropriate, provided the unsecured long-term obligations 246
of the counter party or counter parties are rated the same or higher than 247
the underlying rating of the state on the applicable bonds, notes or other 248
obligations by at least one nationally recognized rating agency. The 249
Treasurer is authorized to pledge the full faith and credit of the state to 250
the state's payment obligations under any contract entered into 251
pursuant to this subsection. As part of the contract of the state with the 252
other parties to any agreement entered into pursuant to this subsection 253
for which the full faith and credit of the state is pledged to the state's 254
payment obligations under such agreement, appropriation of all 255 Raised Bill No. 384
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amounts necessary for the punctual payment of the obligations of the 256
state under any such agreement is hereby made and the Treasurer shall 257
pay such amounts as the same become due. 258
(f) The Superior Court shall have jurisdiction to enter judgment 259
against the state founded (1) upon any express contract between the 260
state and the purchasers and subsequent owners and transferees of any 261
bonds, notes or other obligations issued or contracted to be issued by 262
the state pursuant to this section, and (2) upon any agreement entered 263
into pursuant to subsection (c) or (d) of this section. Any action brought 264
under this subsection shall be brought in the superior court for the 265
judicial district of Hartford. The jurisdiction conferred upon the 266
Superior Court by this subsection includes any set-off, claim or demand 267
on the part of the state against any plaintiff commencing an action under 268
this subsection. Such action shall be tried to the court without a jury. All 269
legal defenses, except governmental immunity, shall be reserved to the 270
state. Any action brought under this subsection shall be privileged in 271
respect to assignment for trial upon motion of either party. 272
(g) Any expense incurred in connection with the issuance or renewal 273
of the bonds, notes or other obligations issued pursuant to this section 274
shall be paid from the accrued interest and premiums on such bonds, 275
notes or other obligations, from the proceeds of the sale of such bonds, 276
notes or other obligations or otherwise from the General Fund. The 277
Treasurer is authorized to issue such bonds, notes or other obligations 278
in such form and manner that the interest on such bonds, notes or other 279
obligations may be includable or excludable under the Internal Revenue 280
Code of 1986, or any subsequent corresponding internal revenue code 281
of the United States, as amended from time to time, in the gross income 282
of the holders or owners of such bonds, notes or other obligations. The 283
Treasurer may make representations and agreements for the benefit of 284
the holders or owners of any such bonds, notes or other obligations 285
which are necessary or appropriate to ensure the inclusion or exclusion 286
of interest on such bonds, notes or other obligations of the state from 287
taxation under the Internal Revenue Code of 1986 or any subsequent 288
corresponding internal revenue code of the United States, as amended 289 Raised Bill No. 384
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from time to time, including agreements to pay rebates to the federal 290
government of investment earnings derived from the investment of the 291
proceeds of bonds, notes or other obligations. The Treasurer may make 292
representations and agreements for the benefit of the holders or owners 293
of such bonds, notes or other obligations on behalf of the state to provide 294
secondary market disclosure information. Any such agreement may 295
include: (1) Covenants to provide secondary market disclosure 296
information, (2) arrangements for such information to be provided with 297
the assistance of a paying agent, trustee or other agent, and (3) remedies 298
for breach of such agreement, which remedies may be limited to specific 299
performance. The state shall protect and save harmless any official or 300
former official of the state from financial loss and expense, including 301
legal fees and costs, if any, arising out of any claim, demand, suit or 302
judgment by reason of alleged negligence on the part of such official, 303
while acting in the discharge of his or her official duties, in providing 304
secondary market disclosure information or performing any other 305
duties set forth in any agreement to provide secondary market 306
disclosure information. Nothing in this section shall be construed to 307
preclude the defense of governmental immunity to any such claim, 308
demand or suit. For purposes of this subsection "official" means any 309
person elected or appointed to office or any state employee. This 310
indemnity provision shall not apply to cases of wilful and wanton fraud. 311
(h) All such bonds, notes or other obligations, their transfer and the 312
income therefrom, including any profit on the sale or transfer thereof, 313
shall at all times be exempt from all taxation by the state or under its 314
authority, except for estate or succession taxes, but the interest on such 315
bonds, notes or other obligations shall be included in the computation 316
of any excise or franchise tax. Such bonds, notes or other obligations are 317
hereby made and declared to be (1) legal investments for savings banks 318
and trustees unless otherwise provided in the instrument creating the 319
trust, (2) securities in which all public officers and bodies, all insurance 320
companies and associations and persons carrying on an insurance 321
business, all banks, bankers, trust companies, savings banks and savings 322
associations, including savings and loan associations, building and loan 323 Raised Bill No. 384
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associations, investment companies and persons carrying on a banking 324
or investment business, all administrators, guardians, executors, 325
trustees and other fiduciaries and all persons who are or may be 326
authorized to invest in bonds, notes or other obligations of the state, 327
may properly and legally invest funds, including capital in their control 328
or belonging to them, and (3) securities that may be deposited with and 329
shall be received by all public officers and bodies for any purpose for 330
which the deposit of bonds, notes or other obligations of the state is or 331
may be authorized.] 332
Sec. 8. Section 3-13c of the 2022 supplement to the general statutes is 333
repealed and the following is substituted in lieu thereof (Effective from 334
passage): 335
[Trust funds as] As used in sections 3-13 to 3-13e, inclusive, and 3-336
31b, [shall be construed to include] "trust funds" includes the 337
Connecticut Municipal Employees' Retirement Fund A, the Connecticut 338
Municipal Employees' Retirement Fund B, the Soldiers, Sailors and 339
Marines Fund, the Family and Medical Leave Insurance Trust Fund, the 340
State's Attorneys' Retirement Fund, the Teachers' Annuity Fund, the 341
Teachers' Pension Fund, the Teachers' Survivorship and Dependency 342
Fund, the School Fund, the State Employees Retirement Fund, the 343
Hospital Insurance Fund, the Policemen and Firemen Survivor's Benefit 344
Fund, any trust fund described in subdivision (1) of subsection (b) of 345
section 7-450 that is administered, held or invested by the State 346
Treasurer, the Connecticut Baby Bond Trust and all other trust funds 347
administered, held or invested by the State Treasurer. 348
This act shall take effect as follows and shall amend the following
sections:
Section 1 from passage 3-36b
Sec. 2 from passage 3-36c
Sec. 3 from passage 3-36e
Sec. 4 from passage 3-36f
Sec. 5 from passage 3-36g
Sec. 6 from passage 3-36h Raised Bill No. 384
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Sec. 7 from passage 3-36i
Sec. 8 from passage 3-13c
Statement of Purpose:
To implement the Treasurer's recommendations concerning the
Connecticut Baby Bond Trust program.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]