SB 996 — AN ACT CONCERNING FUNDRAISING BY THE FOUNDATION OF THE UNIVERSITY OF CONNECTICUT.

Senate GeneralBill Assembly File No.

195996 JanuaryPublic Session,Act 2021 Senate Bill No.

99621-19 Senate,AN MarchACT 29,CONCERNING 2021FUNDRAISING TheBY CommitteeTHE onFOUNDATION HigherOF EducationTHE andUNIVERSITY EmploymentOF AdvancementCONNECTICUT. reported through SEN.

SLAP of the 5th Dist., Chairperson of the Committee on the part of the Senate, that the bill ought to pass.

AN ACT CONCERNING FUNDRAISING BY THE FOUNDATION OF THE UNIVERSITY OF CONNECTICUT.

(10) There shall be a written agreement between the state agency and the foundation that (A) addresses any use by the foundation of the agency's facilities and resources including, but not limited to, office space, storage space, office furniture and equipment, utilities, photocopying services, computer systems and the maintenance by the state agency of the books and records of the foundation, provided any such books and records maintained by the state agency shall not be deemed to be public records and shall not be subject to disclosure pursuant to the provisions of section 1-210, (B) provides that the state agency shall have no liability for the obligations, acts or omissions of the SB996foundation, /(C) Filerequires the foundation to reimburse the state agency for expenses the agency incurs as a result of foundation operations, if the agency would not have otherwise incurred such expenses, (D) in the case of foundations established for a constituent unit of the state system of higher education or for a public institution of higher education, Senate Bill No.

195996 1requires SB996the Filefoundation to establish and adhere to an investment policy and a spending policy that are consistent with sections 45a-535 to 45a- 535i, inclusive, (E) on and after July 1, 2017, if the state agency is The University of Connecticut, provides that (i) the total cash compensation to be paid in a fiscal year by the state agency to the foundation shall decrease from the amount paid in the preceding fiscal year or the amount paid in the fiscal year ending June 30, 2016, whichever is greater, by (I) one million dollars when the market value of the foundation's endowment fund as of January first of the preceding fiscal year isequalto or greater thanfive hundredmilliondollarsbut lessthan seven hundred million dollars, (II) one million five hundred thousand dollars when the market value of such fund as of January first of the preceding fiscal year is equal to or greater than seven hundred million dollars but less than nine hundred million dollars, or (III) three million dollars when the market value of such fund as of January first of the preceding fiscal year is equal to or greater than nine hundred million dollars but less than one billion two hundred fifty million dollars, (ii) no cash compensation shall be paid by the state agency to the foundation when the amount in such foundation's endowment fund as of January first of the preceding fiscal year is equal to or greater than one billion two hundred fifty million dollars, [and] (iii) if the market value of the foundation's endowment fund as of January first of the preceding fiscal year decreases below any of the thresholds stated in subclause (I), (II) or (III) of clause (i) of this subparagraph, then the amount of the cash payment to the foundation shall be increased to equal the same amount that was paid to the foundation prior to exceeding the threshold in subclause (I), (II) or (III) of clause (i) of this subparagraph, until the July first following a January first on which the market value of the foundation's endowment fund again exceeds such threshold, and (iv) in any fiscal year, if the two-year average of total gifts and commitments reported by the foundation, pursuant to subparagraph (B) of subdivision (9) of this section, for the preceding two fiscal years is not lessthanfivetimestheaveragetotalcashcompensationpaidbythestate Public Act No.

19521-19 foundation,2 (C) requires the foundation to reimburse the state agency for expenses the agency incurs as a result of foundation3 operations,Senate ifBill the agency would not have otherwise incurred such expenses, (D) in the case of foundations established for a constituent unit of the state system of higher education or for a public institution of higher education, requires the foundation to establish and adhere to an investment policy and a spending policy that are consistent with sections 45a-535 to 45a- 535i, inclusive, (E) on and after July 1, 2017, if the state agency is The University of Connecticut, provides that (i) the total cash compensation to be paid in a fiscal year by the state agency to the foundation shall decrease from the amount paid in the preceding fiscal year or the amount paid in the fiscal year ending June 30, 2016, whichever is greater, by (I) one million dollars when the market value of the foundation's endowment fund as of January first of the preceding fiscal year isequalto or greater thanfive hundredmilliondollarsbut lessthan seven hundred million dollars, (II) one million five hundred thousand dollars when the market value of such fund as of January first of the preceding fiscal year is equal to or greater than seven hundred million dollars but less than nine hundred million dollars, or (III) three million dollars when the market value of such fund as of January first of the preceding fiscal year is equal to or greater than nine hundred million dollars but less than one billion two hundred fifty million dollars, (ii) no cash compensation shall be paid by the state agency to the foundation when the amount in such foundation's endowment fund as of January first of the preceding fiscal year is equal to or greater than one billion two hundred fifty million dollars, [and] (iii) if the market value of the foundation's endowment fund as of January first of the preceding fiscal year decreases below any of the thresholds stated in subclause (I), (II) or (III) of clause (i) of this subparagraph, then the amount of the cash payment to the foundation shall be increased to equal the same amount that was paid to the foundation prior to exceeding the threshold in subclause (I), (II) or (III) of clause (i) of this subparagraph, until the July first following a January first on which the market value of the foundation's endowment fund again exceeds such threshold, and (iv) in any fiscal year, if the two-year average of total gifts and commitments SB996 / File No.

195996 2agency SB996during Filethe No.same period, the provisions of clauses (i) to (iii), inclusive, of this subparagraph shall not be applicable to the cash compensation paid by the state agency to the foundation in such fiscal year, (F) on and after July 1, 2017, requires the foundation to use reasonable efforts to raise gifts and commitments each fiscal year for student support, including, but not limited to, scholarships, assistantships, fellowships, awards and prizes, that equal not less than fifteen per cent of the total amount of all gifts and commitments raised by the foundation in the same fiscal year, and (G) provides that if the foundation ceases to exist or ceases to be a foundation, as defined in section 4-37e, (i) the foundation shall be prohibited from using the name of the state agency, (ii) the records of the foundation, or copies of such records, shall be made available to and may be retained by the state agency, provided any such records or copies which are retained by the state agency shall not be deemed to be public records and shall not be subject to disclosure pursuant to the provisions of section 1-210, and (iii) there are procedures for the disposition of the financial and other assets of the foundation.

195 reported by the foundation, pursuant to subparagraph (B) of subdivision (9) of this section, for the preceding two fiscal years is not lessthanfivetimestheaveragetotalcashcompensationpaidbythestate agency during the same period, the provisions of clauses (i) to (iii), inclusive, of this subparagraph shall not be applicable to the cash compensation paid by the state agency to the foundation in such fiscal year, (F) on and after July 1, 2017, requires the foundation to use reasonable efforts to raise gifts and commitments each fiscal year for student support, including, but not limited to, scholarships, assistantships, fellowships, awards and prizes, that equal not less than fifteen per cent of the total amount of all gifts and commitments raised by the foundation in the same fiscal year, and (G) provides that if the foundation ceases to exist or ceases to be a foundation, as defined in section 4-37e, (i) the foundation shall be prohibited from using the name of the state agency, (ii) the records of the foundation, or copies of such records, shall be made available to and may be retained by the state agency, provided any such records or copies which are retained by the state agency shall not be deemed to be public records and shall not be subject to disclosure pursuant to the provisions of section 1-210, and (iii) there are procedures for the disposition of the financial and other assets of the foundation.

and ThisApproved actMay shall26, take2021 effectPublic asAct followsNo. and shall amend the following sections:

Section21-19 13 Julyof 1,3 2021 4-37f(10) HED Joint Favorable SB996 / File No.

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195 The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

In general, fiscal impacts are based upon a variety of informational sources, including the analyst’s professional knowledge.

Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note State Impact:

Agency Affected Fund-Effect FY 22 $ FY 23 $ UConn Various - Cost 1 million 1 million Note:

Various=Various Municipal Impact:

None Explanation The bill,whichwould preventtheUniversityofConnecticut (UConn) from reducing its support to the university's foundation under certain conditions, results in a cost to UConn of $1 million in each of FY 22 and FY 23.

The bill's cost to UConn is a revenue gain of the same amount to UConn's foundation, which is not a state entity.

Under current law, UConn is required to decrease its support to the foundation by $1 million in the next fiscal year whenever the endowment value has equaled or exceeded $500 million on January 1.

This is the first step of statutory schedule that would gradually decrease UConn support to the foundation as the endowment value rises.

The reduction would take effect in FY 22 because the endowment value on January 1, 2021 reached approximately $517.8 million, according to UConn.

TheloweredcostwouldbeasavingstoUConn.

Inrecentyears, UConn's support to thefoundation has been slightly less than half of the foundation's total operating revenue.

The bill prevents the decrease in support in the new biennium, thereby generating a $1 million annual cost to UConn, by imposing a new condition that will not be met in FY 22 or FY 23.

The bill specifies that in order for UConn to be required to reduce its support, the two- SB996 / File No.

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195 year average of total gifts and commitments generated by the foundation (over the two prior fiscal years) must be less than five times the average UConn support to the foundation for the same years.

For FY 20 and FY 21, average UConn support to the foundation (approximately $12.2 million) multiplied by five results in a threshold of nearly $60.8 million.

The annual average of total gifts and commitments for FY 20 and FY 21 is expected to far exceed this threshold, based on data from FY 20 and other recent years.

Therefore, the bill's condition will not be met, and consequently UConn support to the foundation will not decline, in FY 22.

It is similarly anticipated the condition will not be met in FY 23 The Out Years The annualized ongoing fiscal impact identified above would continue into the future subject to changes in the support UConn provides to the foundation, total gifts and commitments generated by the foundation, and the endowment value.

SB996 / File No.

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195 OLR Bill Analysis SB 996 AN ACT CONCERNING FUNDRAISING BY THE FOUNDATION OF THE UNIVERSITY OF CONNECTICUT.

SUMMARY By law, UConn must have a written operating agreement with the UConn Foundation (“the foundation”) that governs their relationship, with specific provisions about the cash compensation paid by the university to the foundation.

These provisions generally require UConn to (1) decrease and eventually eliminate payments to the foundation as the market value of its endowment exceeds specified thresholds and (2) increase payments if the endowment’s market value falls below those thresholds.

This bill requires the agreement to include a provision by which existinglaw’spaymentreductionschedulewouldnotapplyinanyfiscal year when the foundation’s average fundraising for the previous two years is at least five times its average compensation from UConn during the same period.