5.__Cost of attendance.__"Cost of attendance" means the tuition and required fees applicable to a student, together with other educational expenses reasonably related to the cost of attendance at an institution, including the cost of room and board, transportation, books and supplies as defined by rules adopted by the foundation.

6.__Duly enrolled.__"Duly enrolled" means the status of the eligible college student who has attended the first class meeting.

7.__Education loan.__"Education loan" means a supplemental loan in accordance with chapter 417-A that is made by the Finance Authority of Maine or by, or on behalf of, an institution to a student or to parents of a student, or both, in amounts not in excess of the maximum amounts specified by the Finance Authority of Maine to finance a part or all of the student's cost of attendance at an institution.__An education loan constitutes a Finance Authority of Maine loan.

8.__Eligible program of study.__"Eligible program of study" means a certificate program of at least one year, an associate's degree program or a baccalaureate degree program.

9.__Endowment.__"Endowment" means the Maine Education Endowment Fund established in section 11703, subsection 1.

10.__Foundation.__"Foundation" means the Maine Education Foundation or its successors or assigns.

11.__Institution; institution of higher education.__ "Institution" or "institution of higher education" means any public or private nonprofit educational institution located within this State that is attended by residents of the State and any proprietary educational institution within the State for which loan guarantee services are readily and conveniently available to the Finance Authority of Maine, both of which:

A.__Provide a program of education beyond the high school level;

B.__Award an associate, bachelor or advanced degree; and

C.__Meet the conditions of applicable rules adopted by the foundation.

12.__Internship service.__"Internship service" means service in a business or enterprise in the State approved by the chief executive officer in consultation with the commissioner for a full school year.

13.__Nonloan, student financial assistance.__"Nonloan, student financial assistance" means scholarships, grants, work-study programs, loan forgiveness for qualified internships and all other available sources, except an education loan, as determined by the Finance Authority of Maine by rules adopted in accordance with Title 5, chapter 375.

14.__Qualified recipients.__"Qualified recipients" means private, nonprofit organizations qualified under the United States Internal Revenue Code of 1986, Section 501(c)(3) that are related to public institutions of higher education in this State or are not related to private institutions of higher education in this State and that have the principal purpose of providing scholarships to and otherwise enhancing the postsecondary educational opportunities of college students enrolled in eligible programs of study.

15.__Rule.__"Rule" means a rule adopted by the foundation pursuant to section 11706, subsection 2.

16.__Supplemental incentive grant.__"Supplemental incentive grant" means a grant of tuition assistance pursuant to section 11714 to an eligible student by a qualified recipient on behalf of the State.

17.__Unmet need.__"Unmet need" means the difference between the cost of attendance for a student for an academic year at an institution of higher education and the total of all a student's sources of financial assistance, including loans, grants, work- study programs and all other available sources, as determined by the foundation by rules adopted in accordance with section 11706, subsection 2.

18.__Workforce shortage area.__"Workforce shortage area" means a geographic region of the State for which there is an insufficient supply of qualified workers, as determined by the chief executive officer in consultation with the Commissioner of Labor and the Commissioner of Economic and Community Development.

§11703.__Purpose

The foundation shall foster, assist and participate in efforts that support increased levels of enrollment in

postsecondary education programs and postsecondary educational attainment for residents of the State, including efforts to expand employment opportunities in this State and to assist in economic revitalization efforts in the State, in coordination with existing state, federal, regional and local agencies and public and private sector institutions.__The foundation shall enter into a contract or contracts for services to carry out the purposes described in this chapter.__The foundation must operate in accordance with the following provisions.

1.__Maine Education Endowment Fund.__The foundation shall strive to expand access to and enrollment in postsecondary education programs and participation in internship service opportunities in this State for resident students by providing for the management and governance of the Maine Education Endowment Fund, which is established as a permanent endowment consisting of certain funds dedicated by the Legislature and by other private and public sources for the purposes described in this chapter.__Any unexpended funds appropriated by the Legislature to carry out the purposes of the endowment do not lapse, but must be carried forward for continued use in the endowment.

2.__Analysis of postsecondary participation, educational attainment and economic development.__The foundation may:

A.__Develop, propose and recommend new ideas and changes to State Government, institutions of higher education and other programs and activities that can support and sustain the growth of postsecondary participation and educational attainment of state residents and the development of the State's economy, including financing and student financial assistance strategies and programs and workforce development strategies and economic development programs to best meet the economic needs, problems and conditions of the State;

B.__Analyze opportunities to improve the participation and enrollment of state residents in postsecondary education and training programs, including participation in internship service and career development activities, especially with businesses and public sector organizations and agencies across the State; and

C.__Analyze opportunities to promote private sector and business investment in the postsecondary education and training programs offered by institutions of higher education in the State.

3.__Clearinghouse for postsecondary education programs and student financial assistance; public, private partnerships.__The foundation shall strive to:

A.__Provide a clearinghouse for all postsecondary education programs in the State and all available public and private sources of student financial assistance;

B.__Expand the traditional government and higher education sector partnership in providing postsecondary education financing, student financial assistance and educational attainment to include other significant public and private sectors of the economy; and

C.__Build the leadership capacity of public and private sector agencies and organizations and the capacity of institutions of higher education to accomplish the postsecondary enrollment, educational attainment and economic development goals of the State.

§11704.__Board of directors; chief executive officer

The Board of Directors of the Maine Education Foundation consists of 11 directors appointed to serve in that capacity in accordance with this section.__The board of directors shall elect a vice-chair and a treasurer from among the members of the board.

1.__Chief executive officer.__The board of directors shall appoint a chief executive officer of the foundation.__The chief executive officer may not be appointed from among the directors.__ Upon appointment, the chief executive officer becomes a nonvoting, ex officio member of the board of directors of the foundation.__The appointment and compensation of the chief executive officer is subject to the civil service law.__The board of directors shall provide advice to the chief executive officer on the operation and investment of the endowment.

2.__Membership.__Membership of the board of directors is as follows:

A.__The Treasurer of State;

B.__Two members appointed by the Governor from the membership of a statewide organization representing the chief executive officers of public and private postsecondary institutions in the State, one representing the public institutions of higher education and one representing the private institutions of higher education;

C.__One member appointed by the Governor from the members of the Finance Authority of Maine;

D.__Two members appointed by the President of the Senate representing institutions of higher education with experience in and knowledge of institutional investment of funds and higher education finance policies who must be trustees, directors, officers or employees of an institution of higher education in the State.__One member must be appointed to represent public institutions of higher education and one member must be appointed to represent private institutions of higher education;

E.__Two members appointed by the Speaker of the House who must be student financial aid administrators at postsecondary institutions in the State, one representing the public institutions of higher education and one representing the private institutions of higher education;

F.__One member appointed by the Speaker of the House who must be a chief executive officer or serve in a leadership position in a private sector partnership, firm or corporation in the State;

G.__One member appointed by the President of the Senate who must be a representative of a state financial institution that is active in student lending; and

H.__One member appointed by the Speaker of the House who must represent the interests of students, parents and other members of the public who use student financial assistance programs.

Each year the Governor, President of the Senate and Speaker of the House shall jointly select a chair of the board from among the members of the board.

3.__Terms.__Members of the board of directors are appointed for terms as follows.

A.__Two members appointed by the Governor, 2 members appointed by the President of the Senate and 3 members appointed by the Speaker of the House under subsection 2 must be appointed for initial terms of 2 years, and the remaining members must be appointed for initial terms of 4 years.__Thereafter, members must be appointed for terms of 4 years.__Members may be removed for cause.

B.__Except for members appointed to an initial term of 2 years under paragraph A, who may serve their initial term

plus one full term in succession, and except for the chief executive officer of the foundation, a person may not serve as a director for more than 4 years in succession.

C.__Members representing state agencies and institutions of higher education and the member representing a state financial institution serve until their successors are appointed and qualified or until their association with the respective agencies or institutions ends, whichever occurs first.

4.__Appointment.__In the case that a member leaves the board of directors, the respective appointing authority shall appoint a new member to serve out the remainder of the term.

5.__Organization. Each year the board of directors shall elect from among its members a vice-chair and any other officers it requires other than the chair.__The board shall meet at the call of the chair or at the request of 3 of its members.__Eight members constitute a quorum and no official action of the board may be taken unless supported by at least 5 members of the board.

6.__Conflict of interest. The board of directors shall establish conflict-of-interest provisions as part of its bylaws.__ These provisions must include a requirement that a board member is not considered to have a conflict of interest or the appearance of a conflict of interest because of that member's use of the programs of or association with a postsecondary educational institution, high school or financial institution, as long as no member participates in an official capacity with respect to any matter that has an effect on that member or on the institution with which that member is associated that is unique and distinct from the effect on the general public or persons engaged in similar professions, trades, businesses or employment or associated with similar institutions.

7.__Expenses.__Members of the board of directors must be compensated according to the provisions of Title 5, chapter 379, subchapter I.

8.__Staffing assistance.__The Treasurer of State shall provide appropriate staff support to the board of directors.

§11705.__General powers

The foundation may:

1.__Sue or be sued. Sue or be sued in its own name;

2.__Apply for and receive funds.__Apply for and receive funds from any private source or governmental entity, whether by way of grant, donation or loan or in any other manner;

3.__Administer programs.__Administer programs and contract for services with the Finance Authority of Maine, financial institutions, educational institutions, business enterprises, nonprofit institutions and organizations or individuals for such assistance in administering the programs as the foundation may require;

4.__Postsecondary education participation and economic development services; fees. Provide services to public or private institutions or organizations to assist their efforts in postsecondary education and economic development in the State and to charge such fees for these services as it may consider appropriate;

5.__Real and personal property.__Purchase, receive, hold, lease or acquire by foreclosure, operate, manage, license and sell, convey, transfer, grant or lease real and personal property, together with such rights and privileges as may be incidental and appurtenant to that real or personal property and the use of that real or personal property, including, but not limited to, any real or personal property acquired by the foundation from time to time in the satisfaction of debts or enforcement of obligations;

6.__Expenditures and obligations regarding real and personal property.__Make all expenditures and incur any obligations reasonably required in the exercise of sound business principles to secure possession of, preserve, maintain, insure and improve real and personal property or interests in real or personal property acquired by the foundation;

7.__Securities.__Acquire, subscribe for, own, hold, sell, assign, transfer, mortgage or pledge the stock, shares, bonds, debentures, notes or other securities and evidences of interest in or indebtedness of any person, firm, corporation, joint stock company, partnership, association or trust and, while the owner or holder of such an interest or indebtedness, exercise all the rights, powers and privileges of ownership, including the right to vote;

8.__Encumbrance of property.__Mortgage, pledge or otherwise encumber any property right or thing of value acquired pursuant to the powers contained in subsection 5, 6 or 7 as security for the payment of any part of the purchase price of such a property right or thing of value;

9.__Officers, agents and employees.__Elect, appoint or hire officers, agents and employees of the foundation and define their duties and fix their compensation;

10.__Contracts and liabilities.__Make contracts and incur liabilities for any of the purposes authorized in this chapter;

11.__Debt.__Borrow money and incur debt for any of the purposes authorized in this chapter, including the power to issue its bonds, debentures, notes or other evidences of indebtedness, whether secured or unsecured; and secure the same by mortgage, pledge, deed of trust or other lien on its property, rights and privileges of every kind and nature, or any part of or interest in its property, rights and privileges;

12.__Collaborate and cooperate with agencies, organizations and corporations.__Collaborate with and avail itself of the services of governmental agencies and instrumentalities of the State, including the State Planning Office within the Executive Department, the Department of Economic and Community Development, the Finance Authority of Maine, the Maine Development Foundation and the institutions of higher education in the State to coordinate the programs of the foundation; and cooperate and assist and otherwise encourage organizations, local or regional, private or public, in the various communities of the State in the promotion, assistance and development of individual and community prosperity and economic welfare of citizens of the State, communities and public and private institutions and corporations;

13.__Bylaws.__Adopt bylaws not inconsistent with this chapter for the governance of its affairs or with the laws of this State, have the general powers accorded corporations under Title 13-B, section 202 and do all other things necessary or convenient to carry out the lawful purposes of the foundation; and

14.__Foundation costs and expenses.__Fund all costs and expenses incurred in connection with the exercise of powers granted under this chapter as administrative costs of the foundation and the endowment.__The foundation may not assess the endowment a fee in excess of 1% of the balance in the endowment in any year for the administrative costs and expenses of the foundation and the endowment.

§11706.__Limitation of powers

Notwithstanding any other provision of this chapter, the foundation does not have power or authority to enter into contracts, obligations or commitments of any kind on behalf of the State or any of its agencies, nor does it have the power of eminent domain or any other power not provided to nonprofit

corporations generally. Bonds, notes and other evidences of indebtedness of the foundation are not in any way a debt or liability of the State and do not constitute a pledge of the faith and credit of the State.

1.__Public meetings and records.__Except for records containing specific and identifiable personal information acquired from applicants for or recipients of financial assistance, the books and records of the foundation are public records and its meetings are public proceedings within the meaning of Title 1, chapter 13, subchapter I.

2.__Rulemaking.__The foundation shall, by rulemaking, establish requirements and limitations for each program governed by or operated pursuant to this chapter in accordance with this subsection.__The foundation shall adopt rules to ensure that each program maintains maximum feasible collaboration and cooperation with any current or future agency, department, authority, instrumentality or corporation created, designated or established by the State, including, but not limited to, the State Planning Office within the Executive Department, the Department of Economic and Community Development, the Finance Authority of Maine, the Maine Development Foundation, the University of Maine System, the Maine Maritime Academy and the Maine Technical College System.__In adopting or amending rules, the foundation shall consider to the extent possible the rule-making procedures set forth in Title 5, chapter 375, subchapter II.__The foundation may not adopt or amend rules without providing the opportunity for interested persons to make public comment on the proposed rules.__The foundation shall provide public notice at least 14 days prior to the date of a public hearing or at least 30 days prior to the last date on which views and arguments may be submitted to the foundation for consideration if no public hearing is scheduled.__Public notice must provide to the extent possible the procedures for public notice set forth in Title 5, section 8053.__For the purposes of this subsection, the foundation shall provide written notice to the State Planning Office within the Executive Department, the Department of Economic and Community Development, the Finance Authority of Maine, the Maine Development Foundation, the University of Maine System, the Maine Maritime Academy, the Maine Technical College System and any other agencies, departments, authorities and instrumentalities of the State identified by the board of directors.__Any rule must be approved by the board of directors after review of the rule and an accompanying fairness opinion prepared by an independent 3rd party.

3.__Use of competitive bidding.__The foundation may enter into contracts for services through an open, competitive bidding process in accordance with this subsection.__The foundation shall

adopt rules requiring that contracts may not be entered into without prior public notice and opportunity for interested persons to make proposals, and the foundation may not adopt the rules until after providing public notice and opportunity for public comment on the proposed rules in accordance with subsection 2.__In adopting those rules, the foundation shall consider to the extent possible the rules and procedures with respect to the competitive bidding process set forth in Title 5, chapter 155, subchapter I-A.__Any contract must be reviewed by the board of directors and an accompanying fairness opinion prepared by an independent 3rd party prior to board approval.

§11707.__Liability of officers; directors

All officers, directors, employees and other agents of the foundation entrusted with the custody of the securities of or authorized to disburse the funds of the foundation must be bonded, either by a blanket bond or by individual bonds, with a surety bond or bonds with a minimum limitation of $100,000 coverage for each person covered, conditioned upon the faithful performance of their duties, the premiums for which must be paid out of the assets of the foundation.

§11708.__Prohibited interests of officers, directors and employees

An officer, director or employee of the foundation or the spouse or dependent child of an officer, director or employee may not receive any direct personal benefit from the activities of the foundation in assisting any private entity.__This provision does not prohibit corporations or other entities with which an officer or director is associated by reason of ownership or employment from participating in educational attainment and economic development activities with the foundation, as long as such ownership or employment is made known to the board of directors and the officer or director abstains from voting on matters relating to such participation.

§11709.__Donations to State

The State, through the Treasurer of State, may accept donations, bequests, devises, grants or other interests of any nature on behalf of the foundation and transfer such funds, property or other interests to the foundation.

§11710.__Annual report; audit

The foundation shall provide an annual report and an independent audit of its activities to the Governor, the Legislature and its board of directors.__The foundation is subject to further audit and review if considered necessary by

the Governor or the Legislative Council at the expense of the State.

§11711.__General conditions; dissolution

The foundation operates as a nonprofit organization consistent with its composition and broad public purposes.__The following conditions apply to the operation or dissolution of the foundation.

1.__Net earnings of the foundation.__No part of the net earnings of the foundation inure to the benefit of any officer, director or employee, except that the foundation is authorized and empowered to pay reasonable compensation for services rendered and otherwise hold, manage and dispose of its property in furtherance of the purposes of the foundation.

2.__Dissolution of foundation.__Upon dissolution of the foundation, the directors and chief executive officer shall, after paying or making provision for the payment of all liabilities of the foundation, cause all of the remaining assets of the foundation to be transferred to the State.

§11712.__Liberal construction

This chapter must be construed liberally to effect the interest and purposes of the foundation for improved educational attainment and economic development efforts in the State and must be broadly interpreted to effect such intent and purposes and not as a limitation of powers.

§11713.__Maine Education Endowment Fund; purpose

1.__Generally.__The purpose of the endowment is to provide financial assistance to and for the benefit of eligible residents of the State to attend an institution of higher education in the State by providing funds appropriated or allocated by the Legislature for the creation and maintenance of a permanent endowment to carry out the purposes of this chapter.

2.__Finances of endowment; nonlapsing fund.__The endowment includes all assets, funds and holdings held in trust in the name of, on behalf of or for the benefit of the endowment.__This is a nonlapsing fund, the sources of which include all appropriations and allocations by the Legislature to the endowment; money from any other source, whether public or private, designated for deposit into or credited to the endowment; and interest or other income or assets of the endowment.__Any funds appropriated and allocated by the Legislature to carry out the purposes of this

chapter may not lapse and must be carried forward for continued use in the endowment.

3.__Maine Education Endowment Fund Reserve; established.__The Maine Education Endowment Fund Reserve, referred to as the "reserve" in this chapter, is established beginning the fiscal year ending June 30, 2001 and continuing in each fiscal year thereafter in the General Fund for the purpose of accumulating funds to provide student financial assistance for citizens in this State to enroll in postsecondary educational programs in this State and to continue their participation in such programs until they have attained a postsecondary education degree at an institution of higher education in this State.__Subject to the requirements of this section and subsections 4, 5 and 6, funds in the reserve may be made available in fiscal year 2001-02 and each fiscal year thereafter to the General Fund Maine Education Endowment Fund program in the Maine Education Foundation through allotment by financial order, upon the recommendation of the State Budget Officer and approval of the Governor, to be used for providing student financial assistance to eligible citizens of this State pursuant to this chapter.

4.__Excess General Fund revenue; transfer of funds.__ Notwithstanding any other provision of law, as the first priority before any other transfer, at the close of fiscal year 2000-01 following the end of that fiscal year and at the close of each fiscal year thereafter and following the end of each fiscal year, the State Controller shall transfer any excess General Fund revenue in an amount not to exceed $15,000,000 over accepted revenue estimates for fiscal year 2000-01 and each fiscal year thereafter to the reserve.

5.__Transfer to the reserve.__Notwithstanding any other provision of law, as the next priority after any transfer pursuant to subsection 4, at the close of fiscal year 2000-01 following the end of that fiscal year and at the close of each fiscal year thereafter and following the end of each fiscal year, the State Controller shall transfer to the reserve the available balance remaining from the unappropriated surplus of the General Fund.

6.__Limitation of General Fund transfers.__Beginning in the fiscal year ending June 30, 2001 and continuing in each fiscal year thereafter, the aggregate amount of transfer of General Fund available balances in subsections 4 and 5 may not exceed $125,000,000.

7.__Treasurer of State authority for deposit of state funds; interest earned on endowment; disbursement of endowment funds.__ The Treasurer of State is responsible for the custodial care of

the endowment and may deposit into the endowment state funds pursuant to Title 5, section 135.__Interest earned on the investment of the endowment must be credited to the qualified recipients pursuant to sections 11714 and 11715 or must be deposited in the endowment to be invested with other assets.__The Treasurer of State is responsible for disbursement of the endowment assets to qualified recipients upon certification by the chief executive officer that the provisions established under sections 11714 and 11715 are met.

8.__Investment of endowment; fiduciary roles and responsibilities.__The chief executive officer shall act as fiduciary and financial agent with respect to the management and administration of the endowment.__The chief executive officer, with the advice of the board of directors, shall direct the Treasurer of State to invest endowment funds in any investments determined by the foundation to be appropriate, notwithstanding any general statutory limitations on investments of public funds.__ The chief executive officer shall treat the endowment as held in trust on behalf of the State only for the purposes specified in this chapter and no other and shall separately account for the endowment as investment assets, attributing to the endowment its proportional share of investment returns and investment management costs and expenses, including costs and expenses of the foundation arising because of its investment of the endowment.

9.__Annual plan; investment, administration and allocation of endowment funds.__The use of the endowment must be based on a plan developed annually by the chief executive officer, after consultation with the Treasurer of State and the board of directors.__Prior to June 15th of each year, the chief executive officer shall present the annual plan for the investment, administration and allocation of the endowment and endowment investment return to qualified recipients in accordance with sections 11714 and 11715.__The annual plan must also include the related investment accounting, investment return and expense attribution in accordance with section 11705, subsection 14.

10.__Use of endowment.__Until otherwise provided by the Legislature, and subject to the limitations in section 11705, subsection 14, the endowment may be used for necessary audit services, legal expenses, investment management fees and services and general administrative expenses related to the management and administration of the endowment.

11.__Audit of endowment.__The chief executive officer shall ensure adequate audit of the investment management of the endowment and the expenditures of the endowment each state fiscal year within the scope of the annual audit of the foundation or

through separate audit as considered appropriate by the board of directors.__Any separate audit must be reported to the Governor, the Legislature, the chief executive officer and the State Controller in as timely a manner as possible after the close of each state fiscal year.

12.__Annual report.__The chief executive officer shall provide an annual report of its activities related to the endowment to the Governor and the Legislature. The foundation activities related to the endowment are subject to further review if considered necessary by the Governor or the Legislative Council at the expense of the State.

13.__Reduction prohibited.__Allocations from endowment assets must be in addition to any other funds appropriated to the University of Maine System, the Maine Technical College System and the Maine Maritime Academy and may not be used to reduce appropriations for other purposes.

§11714.__Allocation of endowment assets; loan forgiveness

program; eligibility

1.__Allocation of endowment assets.__In July of each year, beginning in the year 2002, the Treasurer of State shall withdraw at least 5% of the assets that were in the fund on the previous June 30th, and in accordance with the annual plan approved by the board of directors under section 11713, subsection 9, shall allocate the amounts necessary to qualified recipients for the purposes of providing student financial assistance in accordance with the provisions of this chapter.__Endowment assets must be distributed to eligible students enrolled in an eligible program of study in institutions of higher education as follows:

A.__The primary disbursal of the annual withdrawal of endowment assets must be distributed to eligible students enrolled at institutions of higher education in this State who have been approved to participate in a loan forgiveness program for qualified internships as defined in section 11717; and

B.__The secondary disbursal of the annual withdrawal of endowment assets must be distributed to qualified recipients, which must receive these funds solely for the purpose of providing state matching funds as described in section 11715.

Upon determination that the provisions under this section and section 11715 have been met, the Treasurer of State shall provide that endowment funds are made available to qualified recipients.__ At least 5% of the endowment assets must be annually allocated pursuant to this section, provided that the amount appropriated

under this allocation may not exceed an amount that would bring the endowment balance below the allocation made in fiscal year 2002.

2.__Primary disbursal of endowment assets; loan forgiveness program for qualified internships.__In accordance with the annual plan approved by the board of directors under section 11713, subsection 9 and upon determination that the provisions under section 11717, subsection 2 have been met, the Treasurer of State shall disburse the necessary amounts to qualified recipients for the purposes of providing a loan forgiveness program for qualified internships pursuant to section 11717.

3.__Eligibility.__Loan forgiveness for qualified internships may be awarded only to residents of the State who:

A.__Have graduated from an approved secondary school or matriculated at a postsecondary school prior to high school graduation, or have successfully completed a general educational development examination or its equivalent;

B.__Have been accepted for enrollment as full-time or part- time undergraduates or are in good standing as undergraduates at institutions of higher education in an eligible program of study pursuant to section 11702 and have not received a previous baccalaureate degree;

C.__Have applied for a qualified student internship program according to schedules and procedures and on forms developed by the foundation;

D.__Have been determined by the foundation to have satisfied a financial need according to the criteria set forth in rules; and

E.__Meet the state residency requirements that must be established by rules adopted by the foundation.

Eligible students may accept student financial assistance pursuant to this section in addition to any other types of student aid, except that in no case may a student receive additional student financial assistance that would exceed 100% of the total cost of attendance at an institution of higher education.__Recipients of a state student incentive scholarship may be eligible to receive student financial assistance pursuant to this section.__The foundation shall adopt rules for awarding student financial assistance and determining award amounts pursuant to this section.

§11715.__Secondary disbursal of endowment assets; state

matching fund program; qualified recipients;

administration of endowment allocations

1.__Secondary disbursal of endowment assets.__In accordance with the provisions of section 11714, the secondary disbursal of the annual withdrawal of endowment assets must be distributed to qualified recipients for the purposes of providing state matching funds to qualified institutions in accordance with the requirements of subsections 2 and 3.__Upon determination that the provisions under subsection 3 have been met, the Treasurer of State shall provide that endowment funds are made available to qualified recipients who have had a match certified by the board of directors.

2.__Private, nonprofit organizations.__Private, nonprofit organizations that are qualified recipients may receive endowment funds solely for the purpose of matching qualifying private gifts or grants that must be used for providing scholarships to eligible students pursuant to this section.__A qualifying matching grant must be a gift of $500,000 or more from a single donor to the qualifying private, nonprofit organization.

3.__Administration of endowment allocations.__The respective governing boards of qualified recipients shall adopt criteria establishing qualifications for public and private gifts and grants to be matched from the endowment; and may establish any other qualifications determined by the respective boards to provide the greatest incentive for encouraging private endowment gifts for scholarship or student financial assistance purposes.

4.__Use of matching funds by qualified recipients.__The qualified recipients that are private, nonprofit institutions not related to a private institution of higher education may establish cooperative arrangements with private institutions of higher education to use the funds allocated under this section to provide student financial assistance to resident students of this State enrolled in eligible programs of study in private institutions of higher education consistent with the requirements of this section.__Qualified recipients that have been certified by the board of directors to have available a qualifying matching gift shall use the funds allocated under this section in accordance with the terms of their scholarship program, provided that the funds be used solely for the purposes described in this section.

Funds provided to eligible students pursuant to this section must be based on financial need and must be applied to the student's unmet need for financial assistance or to replace a supplemental

education loan included in the student's financial assistance package in accordance with rules established by the foundation.__ An institution of higher education or a qualified recipient that is a private, nonprofit institution may not supplant or reduce the existing level of nonloan, student financial assistance awarded to students with matching funds provided by the State.

5.__Eligibility.__Student financial assistance provided by state matching funds may be awarded only to residents of the State who meet the eligibility requirements of section 11714, subsection 3.__Eligible students may receive State matching funds pursuant to this section in addition to any other types of student financial assistance, except that in no case may a student receive state matching funds that combined with the student's existing financial assistance would exceed 100% of the total cost of attendance at an institution of higher education.__ Recipients of a state student incentive scholarship may also be eligible to receive state matching funds pursuant to this section.__The foundation may adopt or amend rules for awarding student financial assistance and determining supplemental incentive grant award amounts pursuant to this section.

6.__Prorated grants.__A recipient of state matching funds whose course load is reduced from full time must receive a prorated level of student financial assistance for that term of the recipient's enrollment.

7.__Withdrawal.__If a recipient of state matching funds withdraws from an institution and the student is entitled to a refund of tuition, fees or other charges, the institution shall retain the amount of state matching funds awarded in accordance with the institution's refund policy and shall carry such funds forward for continued use in the program.

8.__Length of awards.__State matching funds are for a period not to exceed one academic year.__A recipient of state matching funds who remains eligible must be considered in the succeeding award year.

9.__Period of study.__An eligible student may receive state matching funds for a period not to exceed 8 semesters or its equivalent for a full-time student and 16 semesters or 120 credit hours, whichever is completed first, for a part-time student.__ The period may be extended for not more than one additional academic year, if:

A.__The student is pursuing a course of study leading to a first degree in a program of study that is designed by the institution offering it to extend over 5 academic years; or

B.__The student will be unable to complete a course of study within 4 academic years because of a requirement of the institution that the student enroll in a noncredit remedial course of study.__"Noncredit remedial course of study" means a course of study for that no credit is given toward an academic degree and that is designed to increase the ability of the student to engage in an undergraduate course of study leading to that degree.

10. Nonlapsing funds.__Any unexpended funds appropriated by the Legislature to carry out the purposes of this section do not lapse, but must be carried forward for continued use in the program.

§11716.__Request for proposal; endowment programs

The foundation shall develop a process for requesting proposals to provide technical assistance and operational support for the development and implementation of endowment scholarship and internship programs pursuant to this chapter.__A proposal for a personal services contract or contracts must follow the competitive bidding procedures required in section 11706, subsection 3.__A proposal must contain at a minimum:

1.__Types of technical assistance, research and operational support services.__The types of technical assistance and research, administrative and operational support services that can assist the foundation in fulfilling its mission to provide student financial assistance for students in the State through the development and implementation of endowment programs;

2.__Definition of services.__A clear description of how the bidder will provide technical assistance and research, administrative and operational support services that include, but are not limited to, strategic planning for and research in identifying nonstate sources of scholarship and grant aid from the private and philanthropic sectors, the identification and recruitment strategies for private and public sector businesses and enterprises that may provide qualified internship opportunities for postsecondary education students in the State and the assessment of how endowment funds are used to fulfill its established purposes;

3.__ Student financial assistance administration services.__A clear description of how the bidder will provide technical assistance and administrative support services to enhance the ability of the foundation to develop a public-private partnership that will implement student financial assistance programs that include, but are not limited to, scholarship, grant, internship,

service-learning, work-study, loan and loan forgiveness programs; and

4.__Assessment program.__A clear description of how the bidder will develop an assessment program that includes, but is not limited to, tracking the outcomes of the student financial assistance programs funded by the endowment on the recipients of the aid, the institutions of higher education in the State and businesses and economic development regions across the State.__ The assessment program description must include estimated costs of full implementation of the assessment program.

§11717.__Interns for Maine Program

There is established the Interns for Maine Program to provide financial assistance to full-time and part-time college students pursuing an associate's degree or a baccalaureate degree and who demonstrate an interest in pursuing a career in this State.__The program recognizes outstanding college students.__The chief executive officer shall administer the program and shall establish by rule the rates of interest or fees to be charged.__ The chief executive officer may contract for services with the Finance Authority of Maine, financial institutions, educational institutions, business enterprises, nonprofit institutions and organizations or individuals for such assistance in administering the programs as the foundation may require.

1.__Nonlapsing, revolving fund.__The Interns for Maine fund is created as a nonlapsing, interest-earning, revolving fund to carry out the purposes of this section.__Any unexpended balance in the Interns for Maine fund carries over for continued use under this section.__The foundation may receive, invest and expend, on behalf of the Interns for Maine funds money from gifts, grants, bequests, loans and donations, in addition to money appropriated or allocated by the State.__Loan repayments under this section or other repayments to the foundation must be invested by the foundation, as provided by law, with the earned income to be added to the fund.__Money received by the foundation on behalf of the fund, except interest income, must be used for the designated purpose; interest income may be used for the designated purpose or to pay student financial assistance administrative costs incurred by the foundation as determined appropriate by the foundation.

2.__Interns for Maine loan recipients.__Each year, full-time and part-time college students who show evidence of academic achievement may be considered for recognition as Interns for Maine loan recipients.__Applications must be submitted to the chief executive officer at a time and in a format to be determined by rule of the foundation.__The Governor, after

consultation with the chief executive officer, shall announce the names of those individuals selected by the chief executive officer to be Interns for Maine loan recipients.

3.__Allocation of funds.__The foundation shall establish by rule the allocation of funds available under this section.

A.__Interns for Maine loans of up to $3,000 per academic year or $12,000 total may be made to eligible college students pursuing a bachelor's degree.

B.__Interns for Maine loans of up to $3,000 per academic year or $6,000 total may be made to eligible students pursuing an associate's degree.

C.__Interns for Maine loans for undergraduate students are for one academic year and are automatically renewed if the recipient maintains a grade point average of 2.5 based on a 4.0 grade point system or the equivalent.

In no event may an individual receive Interns for Maine loans totaling more than $12,000.

4.__Eligibility for postsecondary education loans.__A postsecondary education loan under this section may be given only to a high school graduate, or the equivalent, who is a resident of the State, who has been recognized as an Interns for Maine loan recipient and who has met other eligibility criteria established by rule of the foundation.__Preference must be given to students enrolled in an educational program that has been determined to be in a workforce shortage area.

5. Payment provisions.__Payment of Interns for Maine loans must be made directly to the institution for credit to the student's account and be made within 60 days following evidence that the student has become duly enrolled at the postsecondary institution.__These loans may be used only to substitute or replace a family contribution or interest-accruing loans. If a recipient of a loan withdraws from an institution and if the student is entitled to a refund of tuition, fees or other charges, the institution shall pay directly to the foundation from that refund a sum that represents the portion of the loan paid to the student for the portion of the academic year that the student did not complete.

6.__Repayment; internship service provisions; deferment.__Each college student who receives an Interns for Maine loan may cancel the total amount of the loan by completing one year of internship services in a qualified internship project in the State for each year the individual receives a loan.__The

internship service requirement is one year of internship service for every 2 years or less that the individual receives a loan if the internship service is performed in a workforce shortage area.__ Internship service for this purpose must be performed during the period of time when the college student is enrolled in an eligible program of study as defined in this chapter.__If the chief executive officer grants a deferment, the time period for performance of internship service may be extended for the same period as the deferment.__Internship service may not be credited for the same semester for which an individual receives an Interns for Maine loan pursuant to this section.__Failure to fulfill the internship service option necessitates repayment of the loan to the foundation as follows.

A.__The debt must include the total amount of the loan and interest at the rate established by rule of the foundation, less the amount, if any, that has been cancelled by internship service.

B.__The total debt must be repaid to the foundation within 10 years of graduation from the institution of higher education according to a schedule established by the chief executive officer.__Due dates for repayments are set by the chief executive officer and may be extended for the same period of any deferment granted by the chief executive officer.

C.__A recipient of a loan may seek a deferment of the annual payments for a period or periods as established by rule of the foundation.__A request for deferment must be made to the chief executive officer who shall make a determination on a case-by-case basis.__The chief executive officer may grant a deferment in the event that a recipient of a loan evidences intent to participate in a qualified internship project but is unable to establish a qualified internship project necessary to obtain forgiveness of the loan at the time the deferment is sought.__The chief executive officer shall require certification of the intent annually and grant a one-year deferment for each approved request for deferment.__ A recipient may not receive more than 5 one-year deferments.__ The decision of the chief executive officer is final.

7.__Qualified internship projects.__In order for an internship project to be eligible for financial assistance under the program, the following criteria must be met.

A.__The qualifying internship project must be engaged in or involve at least one of the following enterprises:

(1)__Marine science;

(2)__Biotechnology;

(3)__Manufacturing;

(4)__Export of goods or services to locations outside the State or activities that result in significant amounts of capital being imported into the State;

(5)__Software development;

(6)__Provision or development of environmental services or technologies;

(7)__Provision or development of financial or insurance products or services;

(8)__Provision or development of health care products or services;

(9)__Production of value-added goods from natural resources; or

(10)__Other enterprises that the board of directors determines will further the purposes and intent of the program.

B.__The qualifying internship project must have a direct relationship to the intern's academic program, must demonstrate the potential for the intern's skill development and must benefit the public as determined by the chief executive officer.

C.__The prospective intern for the qualifying internship project must submit to the chief executive officer an internship project plan, including adequate mechanisms to monitor the accomplishment of the internship project plan as proposed.

D.__The foundation shall require that each institution of higher education report on the qualifying internship projects engaged in by the institution's students at least annually on each of the following factors:

(1)__Enterprises providing qualifying internship projects and their satisfaction with the projects;

(2)__Student satisfaction with the qualifying internship projects;

(3)__Student academic progress;

(4)__Job creation; and

(5)__Any other factors as the foundation may require.

Sec. 2. Report. The Maine Education Foundation shall submit a report to the Joint Standing Committee on Education and Cultural Affairs by January 30, 2002 on the rules and rule-making process to implement the Maine Education Endowment Fund.

SUMMARY

This bill establishes the Maine Education Foundation and the Maine Education Endowment Fund to provide eligible Maine residents with the financial resources to access postsecondary education opportunities and achieve higher levels of educational attainment. The bill accomplishes the following.

1. It establishes a 11-member board of directors to advise the Chief Executive Officer of the Maine Education Foundation on the operation of the foundation programs and investment of the endowment fund.

2. It provides that endowment funds be allocated to qualified institutions of higher education in the State and qualifying nonprofit corporations for the purpose of implementing a supplemental incentive grant program that targets these funds to a student's unmet need or supplemental education loan balance. These funds may not supplant scholarships, grants or other nonloan sources of financial assistance, but must be applied to an eligible student's unmet need or supplemental education loan balance.

3. It establishes an internship program for postsecondary education students with public and private sector organizations and institutions throughout the State. Students who participate in a qualified internship may be eligible for forgiveness of all or part of their student loans.

4. It authorizes the foundation to establish a clearinghouse for postsecondary education programs and student financial assistance, and to foster the leadership capacity of public and private sector agencies and organizations and the capacity of institutions of higher education in the State to accomplish the postsecondary education enrollment, educational attainment and economic development goals of the State.

5. It authorizes the foundation to establish a request for proposal process for administering student financial assistance programs with proceeds from the endowment fund, including researching and tracking the outcomes of the student financial assistance programs.