LB131 LB131
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LEGISLATURE OF NEBRASKA
ONE HUNDRED NINTH LEGISLATURE
FIRST SESSION
LEGISLATIVE BILL 131
Introduced by Sorrentino, 39.
Read first time January 13, 2025
Committee:
1 A BILL FOR AN ACT relating to the Nebraska educational savings plan
2 trust; to amend sections 85-1801, 85-1802, 85-1804, 85-1805,
3 85-1806, 85-1807, 85-1808, 85-1809, 85-1810, 85-1811, 85-1812,
4 85-1813, 85-1814, 85-1815, 85-1816, 85-1817, 85-2802, 85-2803, and
5 85-2804, Reissue Revised Statutes of Nebraska, and sections 68-1201,
6 72-1239.01, 77-3,110, and 77-2716, Revised Statutes Cumulative
7 Supplement, 2024; to include savings plans for elementary and
8 secondary education in the Nebraska educational savings plan trust;
9 to define and redefine terms; to transfer provisions; to harmonize
10 provisions; to provide an operative date; and to repeal the original
11 sections.
12 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Section 68-1201, Revised Statutes Cumulative Supplement,
2 2024, is amended to read:
3 68-1201 (1) In determining eligibility for the program for aid to
4 dependent children pursuant to section 43-512 as administered by the
5 State of Nebraska pursuant to the federal Temporary Assistance for Needy
6 Families program, 42 U.S.C. 601 et seq., for the low-income home energy
7 assistance program administered by the State of Nebraska pursuant to the
8 federal Energy Policy Act of 2005, 42 U.S.C. 8621 to 8630, for the
9 Supplemental Nutrition Assistance Program administered by the State of
10 Nebraska pursuant to the federal Food and Nutrition Act of 2008, 7 U.S.C.
11 2011 et seq., and for the child care subsidy program established pursuant
12 to section 68-1202, the following shall not be included in determining
13 assets or income:
14 (a) Assets in or income from an educational savings account, a
15 Coverdell educational savings account described in 26 U.S.C. 530, a
16 qualified tuition program established pursuant to 26 U.S.C. 529, or any
17 similar savings account or plan established to save for qualified higher
18 education expenses as defined in section 6 of this act 85-1802;
19 (b) Income from scholarships or grants related to postsecondary
20 education, whether merit-based, need-based, or a combination thereof;
21 (c) Income from postsecondary educational work-study programs,
22 whether federally funded, funded by a postsecondary educational
23 institution, or funded from any other source;
24 (d) Assets in or income from an account under a qualified program as
25 provided in section 77-1402;
26 (e) Income received for participation in grant-funded research on
27 the impact that income has on the development of children in low-income
28 families, except that such exclusion of income must not exceed four
29 thousand dollars per year for a maximum of eight years and such exclusion
30 shall only be made if the exclusion is permissible under federal law for
31 each program referenced in this section. No such exclusion shall be made
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1 for such income on or after December 31, 2026; and
2 (f) Income from any tax credits received pursuant to the School
3 Readiness Tax Credit Act.
4 (2) In determining eligibility for the program for aid to dependent
5 children pursuant to section 43-512 as administered by the State of
6 Nebraska pursuant to the federal Temporary Assistance for Needy Families
7 program, 42 U.S.C. 601 et seq., passed-through child support as described
8 in section 43-512.07, shall not be included in determining assets or
9 income.
10 Sec. 2. Section 72-1239.01, Revised Statutes Cumulative Supplement,
11 2024, is amended to read:
12 72-1239.01 (1)(a) The appointed members of the council shall have
13 the responsibility for the investment management of the assets of the
14 retirement systems administered by the Public Employees Retirement Board
15 as provided in section 84-1503, the assets of the Nebraska educational
16 savings plan trust as provided in section 10 of this act created pursuant
17 to sections 85-1801 to 85-1817, the assets of the achieving a better life
18 experience program pursuant to sections 77-1401 to 77-1409, and beginning
19 January 1, 2017, the assets of each retirement system provided for under
20 the Class V School Employees Retirement Act. Except as provided in
21 subsection (4) of this section, the appointed members shall be deemed
22 fiduciaries with respect to the investment of the assets of the
23 retirement systems, of the Nebraska educational savings plan trust, and
24 of the achieving a better life experience program and shall be held to
25 the standard of conduct of a fiduciary specified in subsection (3) of
26 this section. The nonvoting, ex officio members of the council shall not
27 be deemed fiduciaries.
28 (b) As fiduciaries, the appointed members of the council and the
29 state investment officer shall discharge their duties with respect to the
30 assets of the retirement systems, of the Nebraska educational savings
31 plan trust, and of the achieving a better life experience program solely
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1 in the interests of the members and beneficiaries of the retirement
2 systems or the interests of the participants and beneficiaries of the
3 Nebraska educational savings plan trust and the achieving a better life
4 experience program, as the case may be, for the exclusive purposes of
5 providing benefits to members, members' beneficiaries, participants, and
6 participants' beneficiaries and defraying reasonable expenses incurred
7 within the limitations and according to the powers, duties, and purposes
8 prescribed by law.
9 (2)(a) The appointed members of the council shall have the
10 responsibility for the investment management of the assets of state
11 funds. The appointed members shall be deemed fiduciaries with respect to
12 the investment of the assets of state funds and shall be held to the
13 standard of conduct of a fiduciary specified in subsection (3) of this
14 section. The nonvoting, ex officio members of the council shall not be
15 deemed fiduciaries.
16 (b) As fiduciaries, the appointed members of the council and the
17 state investment officer shall discharge their duties with respect to the
18 assets of state funds solely in the interests of the citizens of the
19 state within the limitations and according to the powers, duties, and
20 purposes prescribed by law.
21 (3) The appointed members of the council shall act with the care,
22 skill, prudence, and diligence under the circumstances then prevailing
23 that a prudent person acting in like capacity and familiar with such
24 matters would use in the conduct of an enterprise of a like character and
25 with like aims by diversifying the investments of the assets of the
26 retirement systems, the Nebraska educational savings plan trust, the
27 achieving a better life experience program, and state funds so as to
28 minimize risk of large losses, unless in light of such circumstances it
29 is clearly prudent not to do so. No assets of the retirement systems, the
30 Nebraska educational savings plan trust, or the achieving a better life
31 experience program shall be invested or reinvested if the sole or primary
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1 investment objective is for economic development or social purposes or
2 objectives.
3 (4) Neither the appointed members of the council nor the state
4 investment officer shall be deemed fiduciaries with respect to
5 investments of the assets of a retirement system provided for under the
6 Class V School Employees Retirement Act made by or on behalf of the board
7 of education as defined in section 79-978 or the board of trustees
8 provided for in section 79-980. Neither the council nor any member
9 thereof nor the state investment officer shall be liable for the action
10 or inaction of the board of education or the board of trustees with
11 respect to the investment of the assets of a retirement system provided
12 for under the Class V School Employees Retirement Act, the consequences
13 of any such action or inaction of the board of education or the board of
14 trustees, and any claims, suits, losses, damages, fees, and costs related
15 to such action or inaction or consequences thereof.
16 Sec. 3. Section 77-3,110, Revised Statutes Cumulative Supplement,
17 2024, is amended to read:
18 77-3,110 (1) All funds received pursuant to sections 77-3,109 and
19 77-3,118 shall be remitted to the State Treasurer for credit to the
20 Department of Revenue Miscellaneous Receipts Fund which is hereby
21 created.
22 (2) On or before September 1, 2020, the State Treasurer shall
23 transfer fifty-nine thousand five hundred dollars from the College
24 Savings Plan Expense Fund to the Department of Revenue Miscellaneous
25 Receipts Fund.
26 (2) (3) All money in the Department of Revenue Miscellaneous
27 Receipts Fund shall be administered by the Department of Revenue and
28 shall be used as follows: (a) Any money transferred to the fund under
29 subsection (2) of this section shall be used by the Department of Revenue
30 to defray the costs incurred to implement Laws 2020, LB1042; and (b) All
31 other funds shall be used to defray the cost of production of the
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1 publications listed in section 77-3,109 or of the listings described in
2 section 77-3,118 and to carry out any administrative responsibilities of
3 the department.
4 (3) (4) Transfers may be made from the fund to the General Fund at
5 the direction of the Legislature. Any money in the Department of Revenue
6 Miscellaneous Receipts Fund available for investment shall be invested by
7 the state investment officer pursuant to the Nebraska Capital Expansion
8 Act and the Nebraska State Funds Investment Act.
9 Sec. 4. Section 77-2716, Revised Statutes Cumulative Supplement,
10 2024, is amended to read:
11 77-2716 (1) The following adjustments to federal adjusted gross
12 income or, for corporations and fiduciaries, federal taxable income shall
13 be made for interest or dividends received:
14 (a)(i) There shall be subtracted interest or dividends received by
15 the owner of obligations of the United States and its territories and
16 possessions or of any authority, commission, or instrumentality of the
17 United States to the extent includable in gross income for federal income
18 tax purposes but exempt from state income taxes under the laws of the
19 United States; and
20 (ii) There shall be subtracted interest received by the owner of
21 obligations of the State of Nebraska or its political subdivisions or
22 authorities which are Build America Bonds to the extent includable in
23 gross income for federal income tax purposes;
24 (b) There shall be subtracted that portion of the total dividends
25 and other income received from a regulated investment company which is
26 attributable to obligations described in subdivision (a) of this
27 subsection as reported to the recipient by the regulated investment
28 company;
29 (c) There shall be added interest or dividends received by the owner
30 of obligations of the District of Columbia, other states of the United
31 States, or their political subdivisions, authorities, commissions, or
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1 instrumentalities to the extent excluded in the computation of gross
2 income for federal income tax purposes except that such interest or
3 dividends shall not be added if received by a corporation which is a
4 regulated investment company;
5 (d) There shall be added that portion of the total dividends and
6 other income received from a regulated investment company which is
7 attributable to obligations described in subdivision (c) of this
8 subsection and excluded for federal income tax purposes as reported to
9 the recipient by the regulated investment company; and
10 (e)(i) Any amount subtracted under this subsection shall be reduced
11 by any interest on indebtedness incurred to carry the obligations or
12 securities described in this subsection or the investment in the
13 regulated investment company and by any expenses incurred in the
14 production of interest or dividend income described in this subsection to
15 the extent that such expenses, including amortizable bond premiums, are
16 deductible in determining federal taxable income.
17 (ii) Any amount added under this subsection shall be reduced by any
18 expenses incurred in the production of such income to the extent
19 disallowed in the computation of federal taxable income.
20 (2) There shall be allowed a net operating loss derived from or
21 connected with Nebraska sources computed under rules and regulations
22 adopted and promulgated by the Tax Commissioner consistent, to the extent
23 possible under the Nebraska Revenue Act of 1967, with the laws of the
24 United States. For a resident individual, estate, or trust, the net
25 operating loss computed on the federal income tax return shall be
26 adjusted by the modifications contained in this section. For a
27 nonresident individual, estate, or trust or for a partial-year resident
28 individual, the net operating loss computed on the federal return shall
29 be adjusted by the modifications contained in this section and any
30 carryovers or carrybacks shall be limited to the portion of the loss
31 derived from or connected with Nebraska sources.
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1 (3) There shall be subtracted from federal adjusted gross income for
2 all taxable years beginning on or after January 1, 1987, the amount of
3 any state income tax refund to the extent such refund was deducted under
4 the Internal Revenue Code, was not allowed in the computation of the tax
5 due under the Nebraska Revenue Act of 1967, and is included in federal
6 adjusted gross income.
7 (4) Federal adjusted gross income, or, for a fiduciary, federal
8 taxable income shall be modified to exclude the portion of the income or
9 loss received from a small business corporation with an election in
10 effect under subchapter S of the Internal Revenue Code or from a limited
11 liability company organized pursuant to the Nebraska Uniform Limited
12 Liability Company Act that is not derived from or connected with Nebraska
13 sources as determined in section 77-2734.01.
14 (5) There shall be subtracted from federal adjusted gross income or,
15 for corporations and fiduciaries, federal taxable income dividends
16 received or deemed to be received from corporations which are not subject
17 to the Internal Revenue Code.
18 (6) There shall be subtracted from federal taxable income a portion
19 of the income earned by a corporation subject to the Internal Revenue
20 Code of 1986 that is actually taxed by a foreign country or one of its
21 political subdivisions at a rate in excess of the maximum federal tax
22 rate for corporations. The taxpay