[atlas:bill]

AN ACT Relating to higher education financing; amending RCW 43.84.092, 43.84.092, and 28B.15.067; adding a new chapter to Title 28B RCW; providing an effective date; and providing an expiration date.

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

NEW SECTION. Sec. 1. The legislature finds that the presence of a high quality, yet affordable, system of public colleges and universities is critical to Washington's long-term economic and civic health. The legislature further finds that both the quality and affordability of higher education has been jeopardized during the last decade when eroding state funding levels have resulted in growing pressure for tuition increases to help maintain quality. The result has been a decade of tuition increases that exceed the rate of inflation.

The legislature intends to both keep higher education affordable and maintain its quality. The legislature intends to keep higher education affordable by capping tuition increases at no more than the rate of inflation as defined by the consumer price index. However, the legislature recognizes that maintaining and improving the quality of higher education requires finding sources beyond the state general fund. Therefore, the legislature intends to create an endowment fund program financed jointly by public and private moneys. The source of the public moneys will be one-fourth of the moneys from the November 23, 1998 settlement with major manufacturers of tobacco products. The source of private moneys will be in the form of matching funds provided by individual and business donors.

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 July 1, 1999, one-fourth of the moneys from the November 23, 1998, settlement with major manufacturers of tobacco products shall be deposited in the trust fund. Moneys 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 June 1, 1999; 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 higher education affordability and quality 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~~)) 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.

(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.

Sec. 9. RCW 43.84.092 and 1998 c 341 s 708 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.

(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~~)) 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 combined plan II and plan III 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 school employees' retirement system combined plan II and III 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.

(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.

Sec. 10. RCW 28B.15.067 and 1997 c 403 s 1 are each amended to read as follows:

(1) Tuition fees shall be established under the provisions of this chapter.

(2) Academic year tuition for full-time students at the state's institutions of higher education for the 1997-98 academic year, other than the summer term, shall be as provided in this subsection.

(a) At the University of Washington and Washington State University:

(i) For resident undergraduate students and other resident students not in graduate, law, or first professional programs, two thousand nine hundred eighty-eight dollars;

(ii)(A) For nonresident undergraduate students and other nonresident students at the University of Washington not in graduate, law, or first professional programs, ten thousand two hundred seventy-eight dollars;

(B) For nonresident undergraduate students and other nonresident students at Washington State University not in graduate or first professional programs, nine thousand eight hundred seventy dollars;

(iii) For resident graduate students, four thousand eight hundred fifty-four dollars;

(iv) For nonresident graduate students, twelve thousand five hundred eighty-eight dollars;

(v) For resident law students, five thousand ten dollars;

(vi) For nonresident law students, twelve thousand nine hundred fifteen dollars;

(vii) For resident first professional students, eight thousand one hundred twelve dollars; and

(viii) For nonresident first professional students, twenty-one thousand twenty-four dollars.

(b) At the regional universities and The Evergreen State College:

(i) For resident undergraduate and all other resident students not in graduate programs, two thousand two hundred eleven dollars;

(ii) For nonresident undergraduate and all other nonresident students not in graduate programs, eight thousand six hundred forty-six dollars;

(iii) For resident graduate students, three thousand seven hundred twenty-six dollars; and

(iv) For nonresident graduate students, eleven thousand nine hundred seventy-six dollars.

(i) For resident students, one thousand three hundred eleven dollars; and

(ii) For nonresident students, five thousand five hundred eighty-six dollars.

(3) Academic year tuition for full-time students at the state's institutions of higher education ((~~beginning with~~)) for the 1998-99 academic year, other than the summer term, shall be as provided in this subsection unless different rates are adopted in the omnibus appropriations act.

(a) At the University of Washington and Washington State University:

(i) For resident undergraduate students and other resident students not in graduate, law, or first professional programs, three thousand one hundred eight dollars;

(ii)(A) For nonresident undergraduate students and other nonresident students at the University of Washington not in graduate, law, or first professional programs, eleven thousand one hundred thirty dollars;

(B) For nonresident undergraduate students and other nonresident students at Washington State University not in graduate or first professional programs, ten thousand two hundred sixty-six dollars;

(iii) For resident graduate students, five thousand forty-six dollars;

(iv) For nonresident graduate students, thirteen thousand ninety-two dollars;

(v) For resident law students, five thousand three hundred seventy-six dollars;

(vi) For nonresident law students, thirteen thousand seven hundred eighty-two dollars;

(vii) For resident first professional students, eight thousand four hundred thirty-six dollars; and

(viii) For nonresident first professional students, twenty-one thousand eight hundred sixty-four dollars.

(b) At the regional universities and The Evergreen State College:

(i) For resident undergraduate and all other resident students not in graduate programs, two thousand two hundred ninety-eight dollars;

(ii) For nonresident undergraduate and all other nonresident students not in graduate programs, eight thousand nine hundred ninety-one dollars;

(iii) For resident graduate students, three thousand eight hundred seventy-six dollars; and

(iv) For nonresident graduate students, twelve thousand four hundred fifty-six dollars.

(i) For resident students, one thousand three hundred sixty-two dollars; and

(ii) For nonresident students, five thousand eight hundred eight dollars.

(4) Academic year tuition for full-time students at the state's institutions of higher education, beginning with the 1999-01 academic year, other than the summer term, shall be as provided in this subsection. Beginning in 1999-01, annual percentage increases to the tuition rates set forth in subsection (3) of this section shall be no greater than the annual rate of inflation as defined by the consumer price index. The higher education coordinating board shall be responsible for calculating and notifying institutions of the actual annual tuition rates no later than April 15th for the academic year beginning in the fall.

(5) For the 1997-98 and 1998-99 academic years, the University of Washington shall use at least ten percent of the revenue received from the difference between a four percent increase in tuition fees and the actual increase charged to law students to assist needy low and middle-income resident law students. For the 1997-98 and 1998-99 academic years, the University of Washington shall use at least ten percent of the revenue received from the difference between a four percent increase in tuition fees and the actual increase charged to nonresident undergraduate students and all other nonresident students not in graduate, law, or first professional programs to assist needy low and middle-income resident undergraduate students and all other resident students not enrolled in graduate, law, or first professional programs. This requirement is in addition to the deposit requirements of the institutional aid fund under RCW 28B.15.820.

((~~(5)~~)) (6) The tuition fees established under this chapter shall not apply to high school students enrolling in participating institutions of higher education under RCW 28A.600.300 through 28A.600.395.

NEW SECTION. Sec. 11. Sections 1 through 7 of this act constitute a new chapter in Title 28B RCW.

NEW SECTION. Sec. 12. Section 8 of this act expires September 1, 2000.

NEW SECTION. Sec. 13. Section 9 of this act takes effect September 1, 2000.