This has been a great year for Learning Quest, our state's 529 education savings program. Last summer, we surpassed $1 billion in assets, and we currently have over 84,000 accounts. Both Kansans and investors from across the country continue to choose our plan to save for their students' future. During the last 12 months we continued our trend of expanding investment options by adding four Vanguard indexed mutual funds after previously rolling out the Schwab 529 plan. We have also seen the launch of our partnership with Babymint, a loyalty program enabling investors to save for a student when they make everyday purchases. In addition, we initiated our first scholarship program with Washburn University, to incent students to attend Kansas institutions. Later this year, we will have our investment management contract with American Century out for bid. This process will help our plan respond to the many changes that have occurred in the 529 industry since our original contract was signed in 1999.
Although we are very pleased with the recent enhancements to this program, we never stop looking for additional ideas to improve the plan. At the start of the 2006 legislative session we introduced several bills designed to continue to encourage Kansans to save for college. We are thrilled to report the successful passage of three bills that will make Learning Quest even more attractive to Kansans.
The first initiative was signed into law and becomes effective July 1, 2006. It removes the penalty imposed on investors who make a withdrawal from Learning Quest within the first year the account is open. Only one other state continues to impose such a strict penalty and Kansans are well served to see this change. I believe it is unfair to penalize taxpayers who get a late start at saving for college. Although we try hard to promote this great program, some people still don't hear about it until their student is a senior in high school preparing for college. This change will encourage Kansans to save for college, even if they start late in the game.
The second piece of legislation was passed by the legislature just this week and is on its way to the Governor for signature. It allows Kansans to receive the state's tax deduction for 529 contributions regardless of whether they choose the Kansas Learning Quest plan or another state's 529 plan. This makes Kansas the first state in the union to level the playing field and provide tax parity by eliminating a tax deduction preference for in-state contributions. I believe we offer a competitive program, and Kansans should not be penalized if they choose another option that better meets their investment objectives. This deduction is about encouraging Kansans to save for their children's future. It is not about controlling their investment choices by giving them a tax deduction only if they choose our plan.
And finally, a bill authored by Representative O'Malley from Roeland Park, had our endorsement and full support. It creates a pilot program in which up to 400 low income Kansans per year could receive up to $600 in matching funds from the state for each dollar they contribute to a 529 account. When families at this income level save even a modest amount for a student's future it lets the student know that continuing their education is both expected and planned for. I can't think of a better way to encourage saving than to match their college savings with state funds.
We are proud of the Kansas Legislature for recognizing the value in continuing to enhance the Learning Quest program by passing these initiatives. And I appreciate the trust you have given me to manage this plan and will continue to look for ways to make it the best in the nation.
It is an honor to serve as your State Treasurer. If you have any questions or would like additional information about any of the programs we offer, please give us a call or check out our website at www.KansasStateTreasurer.com.
