BP BHEAD INT S

AN ACT Relating to the Washington higher education loan program; reenacting and amending RCW 43.79A.040; adding a new section to chapter 28B.80 RCW; creating a new section; making an appropriation; and declaring an emergency.

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

NEW SECTION. Sec. 1. The legislature finds that the rising costs of higher education and the lack of financial assistance for middle-income families has created a crisis of access to the opportunities that higher education provides. This crisis comes at a time when federal support for financial assistance is flagging and demographic trends are placing unprecedented demands on scarce state resources. The legislature finds that the state's ongoing operating resources are limited and that it is prudent to make a one-time investment of state assets to capitalize a self-sustaining loan fund to supplement existing state and federal financial assistance programs to aid middle-income families.

NEW SECTION. Sec. 2. A new section is added to chapter 28B.80 RCW to read as follows:

The higher education coordinating board shall administer the Washington higher education loan program as established by this section.

(1) To the extent that funds are available for this purpose, the higher education loan program shall provide loans for higher education purposes to students who are residents of the state and are attending institutions of higher education located in the state of Washington. Eligibility for the loans shall be limited to those students who are eligible for, but are not receiving, need-based state financial aid grants administered by the higher education coordinating board and whose family income does not exceed one hundred twenty-five percent of the state median family income.

(2) The higher education loan account is created in the custody of the state treasurer. All moneys appropriated by the legislature or received from other sources for the purpose of the higher education loan program shall be deposited in the account. Expenditures from the account may be used only for the purposes of the program and may be authorized only by the executive director of the board or the executive director's designee. The account is subject to the allotment procedures under chapter 43.88 RCW, but no appropriation is required for expenditures. Investment of moneys in the account shall be managed by the state investment board pursuant to chapter 43.33A RCW. Interest and other earnings of the account shall be retained by the account pursuant to RCW 43.79A.040.

(3) The higher education coordinating board may make direct loans from the account or may provide loan guarantees to financial institutions or other organizations providing higher education loans to eligible students.

(4) To assist the higher education coordinating board in the administration of the higher education loan program, the designation of participating institutions of higher education, and the establishment of eligibility criteria, loan terms, repayment schedules, and other elements of the loan program, the chair of the board shall appoint an advisory committee pursuant to RCW 28B.80.380. The advisory committee shall include, but not be limited to, representatives of institutions of higher education, students, and financial institutions.

(5) The board may receive gifts, grants, and endowments from public or private sources, in trust or otherwise, for the use or benefit of the higher education loan program.

(6) The higher education coordinating board may contract with public or private organizations for the administration or implementation of the higher education loan program.

(7) By December 1st of each year, the board shall submit to the governor and the higher education and fiscal committees of the legislature a report describing the fiscal status of the higher education loan account, the volume of loans made under the program, and a summary of current loan rates, terms, repayments, and defaults.

Sec. 3. RCW 43.79A.040 and 1995 c 394 s 2 and 1995 c 365 s 1 are each reenacted and amended to read as follows:

(1) Money in the treasurer's trust fund may be deposited, invested and reinvested by the state treasurer in accordance with RCW 43.84.080 in the same manner and to the same extent as if the money were in the state treasury.

(2) All income received from investment of the treasurer's trust fund shall be set aside in an account in the treasury trust fund to be known as the investment income account.

(3) The investment income account may be utilized for the payment of purchased banking services on behalf of treasurer's trust funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasurer or affected state agencies. The investment income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.

(4)(a) Monthly, the state treasurer shall distribute the earnings credited to the investment income account to the state general fund except under (b) and (c) of this subsection.

(b) The following accounts and funds shall receive their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The agricultural local fund, the American Indian scholarship endowment fund, the energy account, the fair fund, the game farm alternative account, the grain inspection revolving fund, the higher education loan account, the rural rehabilitation account, and the self-insurance revolving fund. However, the earnings to be distributed shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.

(c) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The advanced right of way revolving fund, the federal narcotics asset forfeitures account, the high occupancy vehicle account, and the local rail service assistance account.

(5) In conformance with Article II, section 37 of the state Constitution, no trust accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

NEW SECTION. Sec. 4. The sum of thirty million dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1997, from the general fund to the higher education loan account for the purposes of section 2 of this act.

NEW SECTION. Sec. 5. 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 immediately.