House Bill 102 proposes several clarifications to the Utah Educational Savings Plan Trust, which last year faced public and legal scrutiny after administrators discovered that the trust's then-director had diverted nearly $506,000 into accounts he controlled.

More than $85,000 was paid out to Dale C. Hatch directly, according to the trust's current administrators. The Salt Lake County District Attorney's Office is investigating Hatch.

Rep. Scott Wyatt's legislation doesn't necessarily address systematic holes that allowed the dubious transactions to take place, but it does explain more explicitly how savings accounts are invested, managed and taxed.

"It's really important for us to provide integrity for this program," said Wyatt, a Republican from Logan.

The measure makes several clarifications:

* Contributions may be invested in mutual funds.

* The trust's board may hire investment advisers who meet certain criteria.

* Accounts may not be used to secure loans.

* Contributions made on accounts set up before a beneficiary turns 19 can be deducted from federal taxable income.

* Account owners may not borrow from their accounts.

* Account owners may keep the balance of their accounts, less administrative fees, if they have to close the account because of the death or permanent disability of the beneficiary.

The bill also changes the disbursement of interest income in a separate endowment fund within the trust.

Instead of splitting about $8,000 in annual earnings to 53,000 account holders, plan leaders want to use the money to enhance the savings of low-income account holders.

"We thought there was a better purpose," said Lynne Ward, director of the savings plan.

rlynn@sltrib.com