BP BHEAD INT H

AN ACT Relating to a business and occupation or public utility tax credit for persons making contributions to public institutions of higher education in this state; adding a new chapter to Title 82 RCW; providing an effective date; and declaring an emergency.

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

NEW SECTION. Sec. 1. The legislature finds that providing adequate educational opportunities for the state’s citizens is essential to the economic, intellectual, and social well-being of the state and its people.

The legislature further finds that the people of the state have made it clear that they support high-quality, affordable higher education. As costs for higher education continue to grow, the demand for financial aid by low and moderate-income residents who wish to attend the state’s institutions of higher education has also continued to grow.

Therefore, it is the policy of the legislature to provide incentives to increase the resources available for the state need-grant program, the state work-study program, and other types of student financial aid programs.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Board" means the higher education coordinating board.

(2) "Contribution" means cash contributed directly to eligible institutions of higher education.

(3) "Department" means the department of revenue.

(4) "Eligible institutions of higher education" means public institutions of higher education as that term is defined in RCW 28B.10.016(4).

(5) "Financial aid" means aid provided to needy students in accordance with guidelines adopted by the respective eligible institutions for their use.

(6) "Need-grant aid" means aid provided to needy students as authorized under chapter 28B.10 RCW.

(7) "Person" has the meaning given in RCW 82.04.030.

(8) "Work-study aid" means aid provided to needy students in order to provide part-time employment opportunities.

NEW SECTION. Sec. 3. (1) There may be credited against the taxes imposed under chapter 82.04 or 82.16 RCW an amount equal to the value of contributions given by persons directly to eligible institutions of higher education for the purposes of providing need-grant, work-study, and other types of financial aid to undergraduate students.

(2) A credit allowed under this chapter may only be taken by a person against tax liabilities incurred for the same calendar year that the contribution is made. A credit is not allowed in excess of the person’s tax liability for that calendar year. A contribution made before the effective date of this act may not be credited against any tax liability under this chapter.

NEW SECTION. Sec. 4. (1) An eligible institution of higher education shall use fifty percent of the amount of contributions received under this chapter for the purpose of providing need-grant aid as authorized under RCW 28B.10.800 through 28B.10.824. This amount must be offset against any allocations made by the board to the respective institution. An institution shall account for and report to the board all contributions received under this chapter in order for the board to perform this offset.

(2) An eligible institution of higher education shall use sixteen and seven-tenths percent of the amount of contributions received under this chapter for the purpose of providing work-study aid.

(3) An eligible institution of higher education shall use the remaining amounts contributed under this chapter for the purpose of providing financial aid. The institution may use amounts under this subsection for additional need-grant aid, additional work-study aid, or for other types of financial aid in accordance with guidelines established by the individual institution for its use. However, no amount used under this subsection for need-grant aid may be offset against any allocations from the board.

(4) An eligible institution of higher education may only use contributions received under this chapter for the assistance of Washington residents as that term is defined in accordance with RCW 28B.15.015.

(5) An eligible institution of higher education may not receive more than twenty million dollars per biennium under this chapter.

(6) The total amount of credits authorized under this chapter may not exceed sixty million dollars in any biennium.

NEW SECTION. Sec. 5. (1) A person must reserve tax credits with the board before making a contribution. The board shall set the conditions and procedures governing the reservation and reports by recipient institutions concerning the receipt of contributions under this chapter.

(2) A person claiming a credit authorized under this chapter shall sign an affidavit form prescribed by the department stating the amount of the contribution and that the contribution is to be used as required under section 4 of this act. The recipient institution shall verify the information included in the affidavit, sign the affidavit, and send a copy to the board for the purpose of monitoring the limitations set forth in section 4 (5) and (6) of this act. The person shall include the affidavit signed by the recipient institution with the person's tax reporting information in order to claim the credits authorized under this chapter.

(3) The state auditor shall ensure that all moneys are used as required under section 4 of this act.

NEW SECTION. Sec. 6. For the purposes of this chapter, when a gift is made by a person to a foundation, or other charitable gifting conduit organization, associated with the person or with an eligible institution of higher education and a subsequent gift of an equal amount is made by the associated foundation, or other charitable gifting conduit organization, to an eligible institution of higher education, this is considered a contribution by the original person giving the contribution, thereby entitling the person to the credits authorized under this chapter. A foundation, or other charitable gifting conduit organization, may not concurrently claim credit for the same contribution. All amounts contributed in accordance with this section must be distributed under section 4 of this act.

NEW SECTION. Sec. 7. Chapter 82.32 RCW applies to the administration of this chapter.

NEW SECTION. Sec. 8. The department and the board may adopt such rules as are necessary or desirable to carry out the purposes of this chapter.

NEW SECTION. Sec. 9. 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.

NEW SECTION. Sec. 10. Sections 1 through 8 of this act shall constitute a new chapter in Title 82 RCW

NEW SECTION. Sec. 11. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1995.