(a) The Office of Higher Education may establish and administer a fund to be known as the Endowed Chair Investment Fund. Within the limits of funds available, the office may approve an application, submitted pursuant to subsection (b) of this section, for the establishment of an endowed chair and deposit state funds for such endowed chair to an account within said fund in an amount not less than five hundred thousand dollars.

(b) The Board of Trustees of The University of Connecticut and the Board of Trustees of the Connecticut State University System may submit an application for the establishment of an endowed chair to be supported by a grant of not less than five hundred thousand and not more than one million dollars from the Endowed Chair Investment Fund and a matching nonstate contribution. Applications for endowed chairs shall be accepted on October first and April first in each year in which funds are available. To apply for the state grant, the board of trustees shall notify the office that it has raised a matching nonstate contribution and that it is eligible for a grant of state funds to establish an endowed chair in a specific academic discipline. The board of trustees shall submit for the office’s review and approval evidence that the chair will be established in a center of excellence, as defined in subsection (b) of § 10a-25h.

(c) Following approval of an application for an endowed chair by the office, the board of trustees of the institution at which such endowed chair is established shall select candidates to fill such endowed chair and shall develop a budget for expenditures associated with such endowed chair.

(d) Any state funds deposited by the office to the Endowed Chair Investment Fund shall be invested by the State Treasurer, except a duly established foundation of The University of Connecticut or the Connecticut State University System, as appropriate, may request the office to transfer any state funds relating to an approved application for an endowed chair to such duly established foundation for the purpose of investing such state funds in accordance with the provisions of subsection (f) of this section.

(e) Any interest income earned on state funds invested by the State Treasurer pursuant to subsection (d) of this section shall be deposited to the Endowed Chair Investment Fund and, following establishment of an endowed chair under this section shall be allocated annually, upon request, to The University of Connecticut or to the Connecticut State University System, as appropriate, to support the endowed chair. Nonstate matching contributions shall be held by a duly established foundation of The University of Connecticut or the Connecticut State University System and the interest on such contributions shall be used to support the endowed chair.

(f) For the fiscal year ending June 30, 2018, and each fiscal year thereafter, The University of Connecticut or the Connecticut State University System may request, and the office shall transfer, any state funds deposited in the Endowed Chair Investment Fund to a duly established foundation of The University of Connecticut or the Connecticut State University System, as appropriate, for an endowed chair established under this section. Such duly established foundation shall invest such state funds, and any interest income earned on such state funds shall be used to support the endowed chair. Such duly established foundation shall (1) account for such state funds separately from the nonstate matching contributions, (2) hold such state funds as a permanently restricted asset for the endowed chair, and (3) manage such state funds in accordance with the Connecticut Uniform Prudent Management of Institutional Funds Act (UPMIFA), pursuant to sections 45a-535 to 45a-535i, inclusive, and in a manner consistent with such foundation’s investment and expenditure policies. No interest income earned from the state funds in any fiscal year shall be used to support the endowed chair when, at the close of the fiscal year, the market value of such state funds is less than the principal value. At the close of the fiscal year, such duly established foundation shall restore the original amount of state funds deposited in the Endowed Chair Investment Fund to a duly established foundation of The University of Connecticut or the Connecticut State University System, as appropriate, at the beginning of the next fiscal year.

(g) The boards of trustees shall submit annual reports, in accordance with the provisions of § 11-4a, to the office and the joint standing committee of the General Assembly having cognizance of matters relating to higher education concerning the management of the endowed chair. For a duly established foundation administering an endowed chair in a manner described in subsection (e) of this section, such report shall include, but not be limited to, the expenditures of the endowed chair. For a duly established foundation administering an endowed chair in a manner described in subsection (f) of this section, such report shall include, but not be limited to, (1) expenditures, (2) the balance of state funds in each of the two previous fiscal years, (3) the balance of nonstate matching contributions in each of the two previous fiscal years, and (4) the amount of interest income earned for the state funds and nonstate matching contributions for the previous fiscal year.