HOUSE BILL REPORT

HB 2612

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

As Reported by House Committee On:

Higher Education

Appropriations Subcommittee on Education

Title: An act relating to the opportunity scholarship program.

Brief Description: Changing provisions relating to the opportunity scholarship.

Sponsors: Representatives Hansen, Haler, Zeiger and Seaquist.

Brief History:

Committee Activity:

Higher Education: 1/28/14 [DP];

Appropriations Subcommittee on Education: 2/6/14 [DPS].

Brief Summary of Substitute Bill

  • Authorizes the Board to elect to have the Washington State Investment Board (WSIB) invest funds in the scholarship and endowment accounts with other funds subject to investment by the WSIB.

  • Requires the Washington Student Achievement Council to manage the Opportunity Scholarship Match Transfer Account and to enter into an agreement with the Program Administrator of the Opportunity Scholarship Program to demonstrate exchange of consideration for the matching funds.

  • Corrects the definition related to "Board" and adds a definition for "Council" to mean the Washington Student Achievement Council.

HOUSE COMMITTEE ON HIGHER EDUCATION

Majority Report: Do pass. Signed by 17 members: Representatives Seaquist, Chair; Pollet, Vice Chair; Haler, Ranking Minority Member; Zeiger, Assistant Ranking Minority Member; Gregerson, Hansen, Hargrove, Johnson, Magendanz, Muri, Reykdal, Sawyer, Sells, Tarleton, Walkinshaw, Walsh and Wylie.

Minority Report: Do not pass. Signed by 2 members: Representatives Scott and Smith.

Staff: Megan Wargacki (786-7194).

Background:

In 2011 the Legislature established the Opportunity Scholarship Program (Program) to support low- and middle-income students pursuing eligible high-demand majors in science, technology, engineering, mathematics, and health care, and to encourage scholarship recipients to work in the state upon completion of their degrees.

The Program is overseen by the Opportunity Scholarship Board (Board), which consists of seven members appointed by the Governor. Currently, for two of the appointments, the Governor must consider names submitted by the leadership of the Senate and the House of Representatives. Four of the appointments must be foundation or business and industry representatives from aerospace, manufacturing, health sciences, information technology, and other industries, nominated by private sector donors. Five members of the Board constitutes a quorum for the transaction of business.

The Program Administrator of the Program administers two separate accounts to receive grants and contributions from private sources and state matching funds, and to distribute scholarship funds to participants:

Scholarships must be disbursed May 1, annually.

The Opportunity Scholarship Match Transfer Account (Match Transfer Account) is a nonapproprated account, in the custody of the State Treasurer, used to provide matching funds for the Program. The Match Transfer Account is managed by the Executive Director of the Board.

The Washington State Investment Board (WSIB) has a fiduciary duty to manage public trust funds with the highest standard of professional conduct for the exclusive benefit of fund beneficiaries.

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Summary of Bill:

The membership of the Opportunity Scholarship Board (Board) is increased to 11 members as follows:

The quorum requirement is increased to seven members.

The date for the annual disbursements of scholarship funds is changed to October 1.

A section is added authorizing the Board to elect to have the WSIB invest funds in the Scholarship and Endowment Accounts with other funds subject to investment by the WSIB. It is specified that members of the WSIB are not insurers of the funds and are not liable for action or inaction, unless they act with willful dishonesty or intentional violation of law.

Clarifications are made that the state acts in a fiduciary, rather than ownership capacity, once monies in the Match Transfer Account are deposited in the Scholarship and Endowment Accounts, and that assets in the Scholarship and Endowment Accounts are not considered state money, common cash, or revenue to the state.

A provision is added that requires the Washington Student Achievement Council (WSAC) to enter into an agreement with the Program Administrator of the Program to demonstrate exchange of consideration for the matching funds. The management of the Match Transfer Account is given to the Executive Director of the WSAC.

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Appropriation: None.

Fiscal Note: Available.

Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.

Staff Summary of Public Testimony:

(In support) The Board provides scholarships to low-income kids who are studying science, technology, engineering, and mathematics (STEM) fields. The Board leverages a lot of private funds, about five private dollars for every state dollar. This bill expands the Board, so there are more people to go out and hustle money. It changes the date of the distribution of funds, so money flows better. The scholarship helps provide trained and skilled employees in high demand fields. Funds come from private and public sources. This bill includes administrative revisions that will help improve programs. An expanded board will better reflect high demand industries. There will be better meeting attendance and it will be easier to meet quorum requirements and fundraising goals. This bill moves the date of disbursement to a time when funds are distributed from colleges and universities. The Board has been researching new management for its funds; they would like the Investment Board to be manager of the funds. There is assurance that funds would be managed in a separate fund. This bill is more effective and more efficient. Low-income students and first generation college students are greatly benefitted by these scholarships. The scholarship allows these students to participate in research, extracurricular activities, and outreach for K-12 students. They can spend time studying instead of working. The scholarship motivates students to achieve short and long-term goals.

(Opposed) None.

Persons Testifying: Representative Hansen, prime sponsor; Viviana Barona and Rutha Nuguse, the University of Washington; and Yolanda Spiva, College Success Foundation.

Persons Signed In To Testify But Not Testifying: None.

HOUSE COMMITTEE ON APPROPRIATIONS SUBCOMMITTEE ON EDUCATION

Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. Signed by 9 members: Representatives Haigh, Chair; Fagan, Ranking Minority Member; Carlyle, Haler, Lytton, Pettigrew, Seaquist, Sullivan and Wilcox.

Minority Report: Without recommendation. Signed by 1 member: Representative Dahlquist.

Staff: Catrina Lucero (786-7192).

Summary of Recommendation of Committee On Appropriations Subcommittee on Education Compared to Recommendation of Committee On Higher Education:

The substitute bill removes the changes to the Board's membership and quorum size. It also changes the definition of the "Board" to mean the Opportunity Scholarship Board, rather than the Higher Education Board or its successor. The substitute bill adds a definition for "Council" to mean the Washington Student Achievement Council. The definitions are updated and corrected throughout.

Appropriation: None.

Fiscal Note: Available.

Effective Date of Substitute Bill: The bill takes effect 90 days after adjournment of the session in which the bill is passed.

Staff Summary of Public Testimony:

(In support) This bill passed unanimously out of the House Higher Education Committee and had no fiscal note. It will facilitate the administration of the Opportunity Scholarship Program (Program), more easily allows for a quorum, and supports more members to fundraise for the program. The bill also increases the representation from across the state by increasing the membership from seven to 11. The bill supports program fund investments by allowing the Board to opt to have the Washington State Investment Board invest program funds.

(Opposed) None.

Persons Testifying: Representative Hansen, prime sponsor; and Yolanda Spiva, College Success Foundation.

Persons Signed In To Testify But Not Testifying: None.