(a)(1) There is hereby created a Special External Gift Fund to encourage special eligible gifts from the private sector, to be used by the university in furtherance of UConn 2000 pursuant to sections 10a-109a to 10a-109y, inclusive. The fund shall be administered by the board of trustees, or by the finance committee if so delegated by the board of trustees. Notwithstanding the provisions of subsection (b) of § 10a-105 or any other provision of the general statutes, there shall be deposited into the fund: (A) Special eligible external gift fund moneys in an amount equal to the special eligible gifts, and (B) interest or other income earned on the investment of moneys in the Special External Gift Fund pending transfer or use of such moneys pursuant to sections 10a-109a to 10a-109y, inclusive.

(2) Moneys in the Special External Gift Fund may be used to pay costs in connection with any UConn 2000 project or projects and may be added to state or other moneys available or becoming available for any such project; any moneys in the Special External Gift Fund not used to pay costs in connection with any such project or projects may be used to meet special debt service requirements on outstanding securities or for purchase or redemption and cancellation of such securities or by payment thereof at maturity.

(3) The board of trustees shall adopt guidelines with respect to the solicitation of special eligible gifts from private donors. The adoption of such guidelines shall not constitute regulation making as defined in and prescribed by chapter 54.

(b) (1) A permanent Endowment Fund for The University of Connecticut shall be confirmed, established or created to encourage donations from the private sector, with an incentive in the form of an endowment fund state grant, which shall be deposited in the university or in a foundation operating pursuant to sections 4-37e and 4-37f consistent with the deposit of endowment fund eligible gifts, and the net earnings on the principal of which are to be dedicated and made available to the university for endowed professorships, scholarships and programmatic enhancements. The fund shall be administered by the board of trustees, or by a nonprofit entity entrusted for such purpose and created or to be created and qualified as a Section 501(c)(3) organization under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, and preferably constituted and controlled independent of the state and university so as to qualify the interest on state bonds the proceeds of which have been granted for deposit in the endowment fund as excludable from federal taxation under such code and shall, in any event, be held in a trust fund with a bank or trust company separate and apart from all other funds and accounts of the state and university. There shall be deposited into the fund: (A) Endowment fund eligible gifts, (B) endowment fund state grants and (C) interest or other income earned on the investment of moneys in the endowment fund pending application or transfer or use of earnings on the principal thereof for the purposes identified in this subdivision (1) of subsection (b) of this section.

(2) (A) For each of the fiscal years ending June 30, 1999, to June 30, 2006, inclusive, as part of the state contract with donors of endowment fund eligible gifts, the Office of Higher Education, in accordance with § 10a-8b, shall deposit in the endowment fund for the university a grant in an amount equal to half of the total amount of endowment fund eligible gifts, except as provided in this subparagraph, received by the university or for the benefit of the university for the calendar year ending the December thirty-first preceding the commencement of such fiscal year, as certified by the chairperson of the board of trustees by February fifteenth to (i) the Secretary of the Office of Policy and Management, (ii) the joint standing committee of the General Assembly having cognizance of matters relating to appropriations and the budgets of state agencies, and (iii) the executive director of the Office of Higher Education, provided such sums do not exceed the endowment fund state grant maximum commitment for the fiscal year in which the grant is made. For the fiscal years ending June 30, 1999, and June 30, 2000, the Office of Higher Education shall deposit in the endowment fund for the university grants in total amounts which shall not exceed the endowment fund state grant, as defined in subdivision (7) of § 10a-109c of the general statutes, revision of 1958, revised to January 1, 1997, and which shall be equal to the amounts certified by the chairperson of the board of trustees for each such fiscal year of endowment fund eligible gifts received by the university or for the benefit of the university and for which written commitments were made prior to July 1, 1997. For the fiscal year ending June 30, 1999, the funds required to be deposited in the endowment fund pursuant to this subparagraph shall be appropriated to the university for such purpose and not appropriated to the fund established pursuant to § 10a-8b.

(B) For each of the fiscal years ending June 30, 2007, to June 30, 2014, inclusive, as part of the state contract with donors of endowment fund eligible gifts, the Office of Higher Education, in accordance with § 10a-8b, shall deposit in the endowment fund for the university a grant in an amount equal to one-quarter of the total amount of endowment fund eligible gifts, except as provided in this subdivision, received by the university or for the benefit of the university for the calendar year ending the December thirty-first preceding the commencement of such fiscal year, as certified by the chairperson of the board of trustees by February fifteenth to (i) the Secretary of the Office of Policy and Management, (ii) the joint standing committee of the General Assembly having cognizance of matters relating to appropriations and the budgets of state agencies, and (iii) the executive director of the Office of Higher Education, provided such sums do not exceed the endowment fund state grant maximum commitment for the fiscal year in which the grant is made. Endowment fund eligible gifts that meet the criteria set forth in this subdivision, made by donors during the period from January 1, 2005, to June 30, 2005, shall continue to be matched by the Office of Higher Education in an amount equal to one-half of the total amount of endowment fund eligible gifts received. Commitments by donors to make endowment fund eligible gifts for two or more years that meet the criteria set forth in this subdivision and that are made for the period prior to December 31, 2004, but ending before December 31, 2012, shall continue to be matched by the Office of Higher Education in an amount equal to one-half of the total amount of endowment fund eligible gifts received through the commitment.

(C) In any such fiscal year in which the eligible gifts received by the university exceed the endowment fund state grant maximum commitment for such fiscal year, the amount in excess of such endowment fund state grant maximum commitment for such fiscal year shall be carried forward and be eligible for a matching state grant in any succeeding fiscal year, from the fiscal year ending June 30, 1999, to the fiscal year ending June 30, 2014, inclusive, subject to the endowment fund state grant maximum commitment for such fiscal year. Any endowment fund eligible gifts that are not included in the total amount of endowment fund eligible gifts certified by the chairperson of the board of trustees pursuant to this subparagraph may be carried forward and be eligible for a matching state grant in any succeeding fiscal year from the fiscal year ending June 30, 2000, to the fiscal year ending June 30, 2014, inclusive, subject to the endowment fund state matching grant maximum commitment for such fiscal year.

(3) Moneys in the endowment fund shall be invested pursuant to subdivision (1) of subsection (b) of § 10a-109i in such obligations as are eligible for investment of pension funds by the Treasurer provided any deposit in a bank or money market or other banking or money market arrangement, such as repurchase agreement, shall be fully secured unless otherwise insured by a federal corporation and the net earnings of the endowment fund shall be used solely for the purposes for which the fund has been established. There shall be no commingling of the investments of the endowment fund with any other fund or account of the state or the university.

(4) The board of trustees shall adopt guidelines with respect to the solicitation of endowment fund eligible gifts from private donors. Private donations shall not be construed to include proceeds of federal grants but may include proceeds of municipal grants.