BP BHEAD INT S [atlas:bill]

AN ACT Relating to the Washington state endowment for higher education; amending RCW 43.84.092; 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 intent of this chapter is to provide a permanent funding source for quality improvements in Washington state's public higher education system. The legislature recognizes that the state's public higher education system can be strengthened by additional partnerships among individual donors, private corporations, and public institutions of higher education. The legislature further recognizes that partnerships among donors, the business community, and higher education can form the basis for direct accountability to achieve common goals. The legislature intends to create a matching fund program to assist public institutions of higher education in creating endowments financed jointly by public and private moneys.

The endowments are intended to recruit and retain the best faculty and students; to increase student scholarships, graduate fellowships, and distinguished professorships; to provide new ways to recognize quality teaching and public service; to fund quality initiatives for curriculum development and service delivery; to provide incentives for innovative approaches to faculty development; and to secure the most advanced equipment, library resources, and technological innovations for higher education in our state. The legislature further recognizes that the demands for increased access to the state's public higher education system may constrain the state's higher education budget for the foreseeable future. However, the legislature also finds that the emergency reserve fund was established to benefit education in the state. Therefore, it is the intent of the legislature to augment the way in which the emergency reserve fund benefits education by dedicating the interest earned by the fund to a newly established endowment fund to be used solely for higher education quality improvements. The legislature intends that the endowments created by this chapter shall be used solely for those purposes for which state funds may be unavailable or limited in the normal biennial budget process.

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

(1) "Comprehensive universities" means Central Washington University, Eastern Washington University, and Western Washington University.

(2) "Institution of higher education" means an institution of higher education as defined in RCW 28B.10.016.

(3) "Trust fund" means the Washington state endowment for higher education trust fund.

NEW SECTION. Sec. 3. (1) The Washington state endowment for higher education trust fund is established. Beginning June 1, 1998, interest earnings on the balance of the emergency reserve fund under RCW 43.135.045 shall be deposited in the trust fund. Emergency reserve fund interest earnings that are deposited in the trust fund shall be deposited in separate accounts in the state treasury for each four-year institution of higher education and the state board for community and technical colleges. The state treasurer shall administer the trust fund. Moneys in each of the accounts created in the trust fund are not subject to appropriation.

(2) State matching funds from the trust fund for quality improvements in public higher education, when combined with private donations, may be used for one or more of the following purposes: Student scholarships, including undergraduate scholarships, graduate fellowships, distinguished professorships, faculty teaching awards, innovative approaches to faculty development, quality initiatives for curriculum development and service delivery, equipment, and library resources.

(3) The principal of the invested endowment fund shall not be invaded; only earnings or a portion thereof may be spent.

(4) Washington state endowment for higher education disbursements are eligible to match qualifying private contributions to institutions of higher education designated under this chapter if one of the two following conditions are met:

(a) The funds were received by the institution of higher education or its foundation after April 1, 1998; or

(b) The funds were received or pledged for the distinguished professorship or graduate fellowship matching grant programs, and certified for state matching dollars by the higher education coordinating board and for which public matching dollars have not been received.

(5) Endowment funds shall not be used to supplant state appropriations.

NEW SECTION. Sec. 4. The higher education coordinating board shall certify that private matching funds have been obtained by a four-year institution of higher education or its foundation for the purposes of this chapter. For the community and technical colleges, the state board for community and technical colleges shall certify that a community or technical college has obtained private matching funds for the purposes of this chapter. Upon notice of certification, the treasurer shall release the state matching funds to the designated institution's local endowment fund or its foundation, or to the state board for community and technical colleges.

NEW SECTION. Sec. 5. (1) All institutions of higher education are eligible for matching funds from the trust fund. Any appropriation to the trust fund by the legislature shall be allocated in the following manner:

(a) Thirty-two percent for the state board for community and technical colleges;

(b) Thirty-two percent for the University of Washington;

(d) Fourteen percent for the comprehensive institutions and The Evergreen State College.

(2) The state board for community and technical colleges shall determine the allocation of funds for the two-year colleges.

(3) By written agreement, the comprehensive four-year universities and The Evergreen State College shall decide how the allocation of the percentage designated for the comprehensive institutions and The Evergreen State College shall be distributed among each of the institutions for any appropriation made by the legislature.

(4) No moneys may be released from the trust fund to an individual comprehensive institution or The Evergreen State College until a written agreement of the allocation distribution is filed with the state treasurer.

(5) Within the following higher education sectors, any unmatched funds shall be available to the other institution or institutions within that sector for match on a first-come basis if the following percentages are not met within the specified time periods:

(a) For the University of Washington and Washington State University, at least sixty percent of their allocation after three years from the effective date of the legislative appropriation, eighty percent after four years, and one hundred percent after five years.

(b) For the comprehensive institutions and The Evergreen State College, at least sixty percent of their allocation after four years from the effective date of the appropriation, eighty percent after five years, and one hundred percent after six years.

(c) For the state board for community and technical colleges at least sixty percent of their allocation after four years from the effective date of the appropriation, eighty percent after five years, and one hundred percent after six years.

(6) After seven years, any remaining unmatched funds residing in any of the three sectors' pools shall revert to a common pool and shall be eligible for match on a first-come basis by any of the institutions.

NEW SECTION. Sec. 6. Each institution of higher education or its foundation is responsible for soliciting private donations, investing and maintaining all endowment funds, administering the uses of the funds, and reporting to the governor and the legislature. Each institution or its foundation may augment the endowment fund with additional private donations. The principal of the invested endowment fund shall not be invaded; only earnings or a portion thereof may be spent.

Each institution of higher education shall develop or designate an advisory committee, of which a majority of its members shall be private donors and business representatives. Each advisory committee shall include at least one student representative. The advisory committee shall review and approve the institution's endowment for higher education program and develop specific, measurable goals for the institution's endowment program. Each institution shall report annually to the governor and the legislature on progress made toward its goals.

NEW SECTION. Sec. 7. This chapter may be known and cited as the Washington state endowment for higher education act.

Sec. 8. RCW 43.84.092 and 1997 c 218 s 5 are each amended to read as follows:

(1) All earnings of investments of surplus balances in the state treasury shall be deposited to the treasury income account, which account is hereby established in the state treasury.

(2) The treasury income account shall be utilized to pay or receive funds associated with federal programs as required by the federal cash management improvement act of 1990. The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for refunds or allocations of interest earnings required by the cash management improvement act. Refunds of interest to the federal treasury required under the cash management improvement act fall under RCW 43.88.180 and shall not require appropriation. The office of financial management shall determine the amounts due to or from the federal government pursuant to the cash management improvement act. The office of financial management may direct transfers of funds between accounts as deemed necessary to implement the provisions of the cash management improvement act, and this subsection. Refunds or allocations shall occur prior to the distributions of earnings set forth in subsection (4) of this section.

(3) Except for the provisions of RCW 43.84.160, the treasury income account may be utilized for the payment of purchased banking services on behalf of treasury funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasury and affected state agencies. The treasury 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) Monthly, the state treasurer shall distribute the earnings credited to the treasury income account. The state treasurer shall credit the general fund with all the earnings credited to the treasury income account except:

(a) The following accounts and funds shall receive their proportionate share of earnings based upon each account's and fund's average daily balance for the period: The capitol building construction account, the Cedar River channel construction and operation account, the Central Washington University capital projects account, the charitable, educational, penal and reformatory institutions account, the common school construction fund, the county criminal justice assistance account, the county sales and use tax equalization account, the data processing building construction account, the deferred compensation administrative account, the deferred compensation principal account, the department of retirement systems expense account, the drinking water assistance account, the Eastern Washington University capital projects account, the education construction fund, the ((~~emergency reserve fund~~)) Washington state endowment for higher education trust fund, the federal forest revolving account, the health services account, the public health services account, the health system capacity account, the personal health services account, the highway infrastructure account, the industrial insurance premium refund account, the judges' retirement account, the judicial retirement administrative account, the judicial retirement principal account, the local leasehold excise tax account, the local real estate excise tax account, the local sales and use tax account, the medical aid account, the mobile home park relocation fund, the municipal criminal justice assistance account, the municipal sales and use tax equalization account, the natural resources deposit account, the perpetual surveillance and maintenance account, the public employees' retirement system plan I account, the public employees' retirement system plan II account, the Puyallup tribal settlement account, the resource management cost account, the site closure account, the special wildlife account, the state employees' insurance account, the state employees' insurance reserve account, the state investment board expense account, the state investment board commingled trust fund accounts, the supplemental pension account, the teachers' retirement system plan I account, the teachers' retirement system plan II account, the transportation infrastructure account, the tuition recovery trust fund, the University of Washington bond retirement fund, the University of Washington building account, the volunteer fire fighters' relief and pension principal account, the volunteer fire fighters' relief and pension administrative account, the Washington judicial retirement system account, the Washington law enforcement officers' and fire fighters' system plan I retirement account, the Washington law enforcement officers' and fire fighters' system plan II retirement account, the Washington state patrol retirement account, the Washington State University building account, the Washington State University bond retirement fund, the water pollution control revolving fund, and the Western Washington University capital projects account. Earnings derived from investing balances of the agricultural permanent fund, the normal school permanent fund, the permanent common school fund, the scientific permanent fund, and the state university permanent fund shall be allocated to their respective beneficiary accounts. All earnings to be distributed under this subsection (4)(a) shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.

(b) 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 aeronautics account, the aircraft search and rescue account, the central Puget Sound public transportation account, the city hardship assistance account, the county arterial preservation account, the department of licensing services account, the economic development account, the essential rail assistance account, the essential rail banking account, the ferry bond retirement fund, the gasohol exemption holding account, the grade crossing protective fund, the high capacity transportation account, the highway bond retirement fund, the highway construction stabilization account, the highway safety account, the marine operating fund, the motor vehicle fund, the motorcycle safety education account, the pilotage account, the public transportation systems account, the Puget Sound capital construction account, the Puget Sound ferry operations account, the recreational vehicle account, the rural arterial trust account, the safety and education account, the small city account, the special category C account, the state patrol highway account, the transfer relief account, the transportation capital facilities account, the transportation equipment fund, the transportation fund, the transportation improvement account, the transportation revolving loan account, and the urban arterial trust account.

(c) Interest earned on the emergency reserve fund shall be credited to the Washington state endowment for higher education trust fund.

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

NEW SECTION. Sec. 9. Sections 1 through 7 of this act constitute a new chapter in Title 28B RCW.