HOUSE BILL REPORT

SSB 5221

As Amended by the House

BYSenate Committee on Higher Education (originally sponsored by Senators Saling, Bauer, Patterson, Rinehart, Smitherman, Bailey, Lee, West and Warnke)

Establishing the advance college payment program.

House Committe on Higher Education

Majority Report:  Do pass with amendments.  (14)

      Signed by Representatives Jacobsen, Chair; Spanel, Vice Chair; Van Luven, Ranking Republican Member; Basich, Doty, Fraser, Heavey, Inslee, Jesernig, Miller, H. Myers, Prince, Rector and Wood.

House Staff:Susan Hosch (786-7120) and Joan Elgee (786-7166)

AS PASSED HOUSE APRIL 4, 1989

BACKGROUND:

Proposals to help parents save for their children's college education have been appearing on the legislative agendas of most states during the last three years.  The intensity of interest in these proposals reflects society's underlying fear that rising costs will put college out of reach of today's young children. The proposals also reflect a concern about the relatively small amount of savings that many American families have.

Strategies to help parents save for their children's college education tend to fall into one of two broad categories:  savings plans and guaranteed tuition plans.  To date, 15 states have adopted college savings plans.  Six of the 15 states:  Washington, Illinois, Oregon, Connecticut, North Carolina, and North Dakota, have implemented a college savings plan.

Nine states have passed guaranteed tuition bills.  Those states include:  Florida, Indiana, Maine, Michigan, Missouri, Oklahoma, Tennessee, West Virginia, and Wyoming. Michigan is considered the forerunner in this category, and most of the states have used the Michigan bill as a model for their own.  Wyoming, Michigan, and Florida have begun program implementation.

Under the Michigan approach, a state trust is created into which parents pay a fixed amount based on forecasted tuition levels.  The pooled funds are invested to build a balance, and the proceeds are used to guarantee tuition at any public institution included in the program for the beneficiaries of the trust.

SUMMARY:

The Treasurer shall study the feasibility of instituting an advance college payment program and shall submit a report, including recommendations, to the legislature by January 1, 1990.

The study shall include an examination of tax consequences, constitutional issues, whether private investment opportunities will do as well or better for purchasers, who should bear the risk under different scenarios, policy issues such as those raised by the education commission of the states and the college board, and other specified issues.

Fiscal Note:      Available.

House Committee ‑ Testified For:    Senator Nita Rinehart.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    The advance college payment program is a good plan, but a study is needed.  Nothing could happen until the study is complete.

House Committee - Testimony Against:      None Presented.

VOTE ON FINAL PASSAGE:

      Yeas 97; Excused 1

Excused:    Representative Wang