S 0339 General Bill, By Wilson and M.T. Rose
 A Bill to amend Title 11, Code of Laws of South Carolina, 1976, relating to
 public finance, by adding Chapter 38 so as to require a percentage of state
 capital improvement bonds to be issued in the form of capital appreciation
 bonds designated college savings bonds.

   12/03/90  Senate Prefiled
   12/03/90  Senate Referred to Committee on Finance
   01/08/91  Senate Introduced and read first time SJ-116
   01/08/91  Senate Referred to Committee on Finance SJ-116

A BILL

TO AMEND TITLE 11, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO PUBLIC FINANCE, BY ADDING CHAPTER 38 SO AS TO REQUIRE A PERCENTAGE OF STATE CAPITAL IMPROVEMENT BONDS TO BE ISSUED IN THE FORM OF CAPITAL APPRECIATION BONDS DESIGNATED COLLEGE SAVINGS BONDS.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. The General Assembly finds that:

(1) From time to time it may be advantageous for the State to issue general obligation bonds designated college savings bonds at a substantial discount and on which all or a portion of the interest of them is deferred and paid at the maturity or redemption of them;

(2) Capital appreciation bonds are known as zero coupon bonds, compound interest bonds, municipal multiplier bonds, capital accumulator bonds and, as such, are sometimes attractive to purchasers in that the value of the capital appreciation bonds increases over the years, based upon an internal compounding of interest, in whole or in part, without requiring an owner to reinvest any interest compounded on the bonds;

(3) The purchase of capital appreciation bonds in the form of college savings bonds may assist parents in paying the cost of higher education for children which will occur at a time substantially in the future; and

(4) It is desirable to facilitate the issuance and purchase of such bonds in circumstances where it is in the best interests of the State and its people.

SECTION 2. Title 11 of the 1976 Code is amended by adding:

Section 11-38-10. The State shall issue a percentage of its capital improvement bonds in the form of capital appreciation bonds designated 'college savings bonds'. The percentage must be determined by the State Budget and Control Board and based on the board's best estimate of demand.

Section 11-38-20. (A) For purposes of this chapter, the term 'college savings bond' means a capital appreciation bond sold directly by the State Treasurer, or by agents he designates without an underwriter, to individuals at a price substantially less, as determined by the State Treasurer, than the principal amount and interest payable at maturity. College savings bonds are redeemable before maturity after six months from their date of original purchase with thirty days written notice to the State Treasurer upon payment of a redemption fee equal to three percent of the bond's value at redemption based on tables prescribed by the State Treasurer showing the current values of each series of college savings bonds. No redemption fee is payable at maturity.

(B) No one individual may purchase more than five thousand dollars of college savings bonds in a year, based on their discounted value at the time of purchase. College savings bonds may be sold only to individuals who are residents of this State.

(C) For all purposes of constitutional and statutory debt and debt service limitations, and for all other purposes except where their particular nature otherwise requires, college savings bonds are state capital improvement bonds.

(D) The State Treasurer may promulgate regulations and prescribe forms and procedures to implement the provisions of this chapter."

SECTION 3. This act takes effect upon approval by the Governor.