Utah's college savings plan has been so successful attracting investors from out of state that other so-called 529 plans are trying to learn how it works, prompting legislation to exempt the program from open-government laws.

SB145 is intended to prevent other states from luring away Utah Educational Savings Plan (UESP) account holders by mining its data and imitating its practices, according to sponsor Sen. Wayne Niederhauser, R-Sandy. It also would allow UESP to conduct business in languages other than English.

In recent years, UESP has attracted more than$3 billion in out-of-state money into tax-deferred 529 accounts it manages, thanks to strong returns and low fees.

"You are able to negotiate these costs down when you have a large amount of money to invest," Niederhauser told the Senate Education Committee last week. "So some of the difficulty UESP faces is other states have caught on to this. Other states are getting information about what we're doing and trying to duplicate it."

The committee advanced the bill, with chairman Sen. Howard Stephenson casting the only no vote.

"Why should we care about other states' funds learning our special sauce?" said Stephenson, R-Draper. "I would think we would want to share that with other states. If you follow our pattern you can make these kinds of returns for your students' savings accounts."

Nationwide, 85 college savings plans compete with one another. Part of UESP's success is the number of out-of-state savers who give it money. The bigger its portfolio, the greater leverage it has negotiating favorable terms, which are passed along to account holders, according to the plan's executive director, Lynne Ward.

"This is a program we run like a business. Money can be moved from one 529 plan to another," Ward said. "That's good pressure on us to make sure we're sharp, our fees are low, and we're running a good program."

Many state plans are run on contract by private companies, which are not obligated to divulge much information.

"We don't have the ability to get their secret sauce from them," Ward told Stephenson. "For them to get our secret sauce puts us at a distinct disadvantage."

Media advocates are concerned the bill would carve out yet another exemption to open-meetings laws and give a state agency a blanket exemption from the Government Records Access and Management Act.

Shielding public business from the public's view invites mischief, critics say, and UESP has a troubled history, suggesting that more transparency, not less, is in order.

A UESP employee caught Ward's predecessor, Dale Hatch, stealing $85,000 from the agency in 2004. The U.S. Securities and Exchange Commission later determined the incident jeopardized account holders, alleging in court filings that UESP falsely reported that college savers accounts weren't compromised. As her first assignment as UESP director, Ward put new safeguards in place and the allegations were resolved with UESP admitting wrongdoing.

UESP is overseen by the Utah Higher Education Assistance Authority, whose board meets quarterly. SB145 would allow the board to meet in closed session when "fiduciary or commercial information" is discussed. But the related GRAMA exemption is of the most concern to Utah news organizations.

This exception should be tailored to protect only sensitive information, not everything the agency does, said Brigham Young University journalism professor Joel Campbell, a lobbyist for the Utah Press Association and a Salt Lake Tribune columnist.

Niederhauser said his bill ensures transparency by requiring UESP to post its administrative costs and payroll on a website.

"We need to be concerned about accountability, but we also have to be concerned about the health of UESP and having a strong fund here in Utah," he said.

But Campbell said those measures don't go far enough to ensure balance.

"There's no doubt it's well-intentioned. Apparently they [UESP] are getting poached," Campbell said. "But there are areas I might want to still look at. If you look at investment programs with problems in the past, it wasn't the books we were looking at, it was the stuff happening off the books."

bmaffly@sltrib.com Utah Educational Savings Plan

Every day another $1 million, mostly from out of state, is invested in Utah's top-rated 529 college savings plan. UESP manages 174,000 accounts totaling $3.9 billion. Ninety-two percent of the money and 75 percent of the account holders are from out of state, a large pool that helps the plan secure the nation's lowest costs for tax-deferred college saving accounts, less than .25 percent.

But media advocates are concerned that proposed legislation to exempt UESP from the state's open-government laws, intended to keep competing plans from mining its data, would result in less public scrutiny.