AN ACT Relating to the creation of the college savings bond program; and adding a new chapter to Title 28B RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that it is essential that this and future generations of children be allowed the fullest opportunity to learn and to develop their intellectual and mental capacities and skills at the postsecondary level. The legislature is greatly concerned about the ever-increasing costs of obtaining postsecondary higher education in Washington. The legislature finds that to assist Washington residents in their quest for postsecondary higher education, it is of the utmost importance that Washington residents be provided with investment options designed to enhance their financial access to Washington institutions of higher education. The legislature also intends to foster enrollment in Washington institutions of higher education.

NEW SECTION. Sec. 2. The following definitions shall apply throughout this chapter, unless the context clearly indicates otherwise:

(1) "College savings bonds" or "bonds" are Washington state general obligation bonds, issued under the authority of and in accordance with this chapter.

(2) "Board" means the higher education coordinating board, or any successor thereto.

NEW SECTION. Sec. 3. For the purpose of providing funds for the acquisition, construction, remodeling, furnishing, and equipping of state buildings and facilities for the state institutions of higher education, including facilities for the state community college system, and to provide for the administrative costs of such projects, including costs of bond issuance and retirement, salaries and related costs of officials and employees of the state, costs of credit enhancement agreements, and other expenses incidental to the administration of capital projects, the state finance committee is authorized to issue college savings bonds of the state of Washington in the sum of fifty million dollars, or so much thereof as may be required, to finance these projects and all costs incidental thereto.

Bonds authorized in this section shall be sold in such a manner, at such time or times, in such amounts, and at such price as the state finance committee shall determine. The bonds shall not be offered for sale without prior legislative appropriation of the net proceeds of the sale of the bonds. The state finance committee may obtain insurance or letters of credit and may authorize the execution and delivery of agreements, promissory notes, and other obligations for the purpose of insuring the payment or enhancing the marketability of college savings bonds authorized in this section. Promissory notes or other obligations issued pursuant to this section shall not constitute a debt or the contracting of indebtedness under any constitutional or statutory indebtedness limitation if their payment is conditioned upon the failure of the state to pay the principal of or interest on the bonds with respect to which the same relate.

If, and to the extent that the state finance committee determines it is economically feasible and in the best interest of the state, the bonds shall be sold at a deep discount from their par value.

College savings bonds authorized under this section shall be sold in accordance with chapter 39.42 RCW.

NEW SECTION. Sec. 4. The proceeds from the sale of the bonds authorized in section 3 of this act shall be deposited in the state building construction account of the general fund in the state treasury, and shall be used exclusively for the purposes specified in section 3 of this act and for the payment of expenses incurred in the issuance and sale of the college savings bonds.

NEW SECTION. Sec. 5. The state higher education bond retirement fund of 1988 is hereby created in the state treasury, and shall be used for the payment of principal and interest on the college savings bonds.

The state finance committee shall, on or before June 30th of each year, certify to the state treasurer the amount required for principal and interest on such bonds in accordance with the provisions of the bond proceedings. The state treasurer shall withdraw from any general state revenues received in the state treasury and deposit in the state higher education bond retirement fund of 1988, such amounts and at such times as are required by the bond proceedings.

The owner and holder of each of the college savings bonds or the trustee for the owner and holder of any of the college savings bonds may by mandamus or other appropriate proceeding require the transfer and payment of funds as directed in this section.

NEW SECTION. Sec. 6. The legislature may provide additional means for raising moneys for the payment of the principal of and interest on the college savings bonds. Section 5 of this act shall not be deemed to provide an exclusive method for the payment thereof.

NEW SECTION. Sec. 7. The college savings bonds shall be a legal investment for all state funds or funds under state control and for all funds of any other public body.

NEW SECTION. Sec. 8. The board and the state finance committee shall evaluate the effectiveness of the college savings bond program created by this chapter, and shall submit a report about the program, and recommended changes, to the governor and the appropriate standing committees of the senate and house of representatives on or before December 1, 1990.

NEW SECTION. Sec. 9. The board shall create and implement marketing strategies and educational programs designed to publicize the college savings bond program to Washington residents.

NEW SECTION. Sec. 10. Any interest earned on the bonds shall not be income for the purposes of any state income tax.

NEW SECTION. Sec. 11. This act may be known and cited as the college savings bond act of 1988.

NEW SECTION. Sec. 12. Sections 1 through 11 of this act shall constitute a new chapter in Title 28B RCW.

NEW SECTION. Sec. 13. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.