BILL REQ. #:  H-2188.1 

READ FIRST TIME 02/23/09.   

     AN ACT Relating to creating a state student loan program with a dedicated revenue source; amending RCW 67.70.340 and 67.70.040; adding a new section to chapter 67.70 RCW; adding a new section to chapter 28B.76 RCW; 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 legislature finds that providing broad access to higher education is key to assuring that Washingtonians can find and keep living wage jobs. Assuring access requires that people not only have the required preparation and desire, but also requires the financial means.
     The legislature further finds that the federal and state governments, in combination with the institutions of higher education, have invested significant resources in student financial assistance. Even with this investment, many students still cannot finance the remaining cost of attendance.
     It is therefore the intent of the legislature to create a state student loan program to help bridge the gap between falling just short of attending college and being able to achieve one's educational goals. Offering an affordable means to help cover the cost of attendance will ensure broad access.
     However, offering this assurance will require a steady, predictable funding stream. If students begin to rely on the existence of state loans, then the state must provide a dedicated revenue source to guarantee the supply of credit. Therefore, it is the further intent of the legislature to dedicate a percentage of profits from the state lottery to fund the new state student loan program.

NEW SECTION.  Sec. 2   (1) The Washington higher education loan program is created. The program is created to assist students in need of additional low-cost student loans and related loan benefits. The program shall be funded from proceeds from the Washington state lottery as provided in RCW 67.70.340.
     (2) The program shall be administered by the board. In administering the program, the board must:
     (a) Periodically assess the needs and target the benefits to selected groups of students;
     (b) Devise a program to address the following issues related to loans:
     (i) Issuance of low-interest educational loans;
     (ii) Determining loan repayment obligations and options;
     (iii) Borrowing educational loans at low interest rates;
     (iv) Developing conditional loans that can be forgiven in exchange for service; and
     (v) Creating an emergency loan fund to help students until other state and federal long-term financing can be secured;
     (c) Work with public depositories to implement the provisions in this chapter;
     (d) Accept public and private contributions into the higher education loan program account;
     (e) Publicize the program in partnership with the public depositories; and
     (f) Work with public and private colleges and universities, the state board for community and technical colleges, the workforce training and education coordinating board, and with students, to conduct periodic assessment of program needs. The board may also consult with other groups and individuals as needed.

NEW SECTION.  Sec. 3   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Board" means the higher education coordinating board.
     (2) "Institution of higher education" means a college or university in the state of Washington that is accredited by an accrediting association recognized as such by rule of the board.     
     (3) "Needy student" has the definition in RCW 28B.92.030.
     (4) "Program" means the Washington higher education loan program.
     (5) "Resident student" has the definition in RCW 28B.15.012(2) (a) through (d).

NEW SECTION.  Sec. 4   The Washington higher education loan program account is created in the custody of the state treasurer. Receipts from the state lottery account, as provided in RCW 67.70.340, must be deposited in the account. Expenditures from the account may be used only for the Washington higher education loan program including costs associated with program administration by the board. Only the director of the board or the director's designee may authorize expenditures from the account. The account is subject to the allotment procedures under chapter 43.88 RCW, except for moneys used for program administration. An appropriation is not required for expenditures from the account.

NEW SECTION.  Sec. 5   (1) The state treasurer shall establish a higher education loan program for investment of deposits in qualified public depositories. As a condition of participating in the program, qualified public depositories must make qualifying loans as provided in this section. The state treasurer may purchase a certificate of deposit that is equal to the amount of the qualifying loan made by the qualified public depository or may purchase a certificate of deposit that is equal to the aggregate amount of two or more qualifying loans made by one or more qualified public depositories.
     (2) Qualifying loans made under this section are those:
     (a) Having terms that do not exceed ten years commencing six months from the date the participant completes or discontinues the course of study;
     (b)(i) Where an individual loan does not exceed resident undergraduate tuition and state-mandated fees at the most expensive Washington public institution of higher education for loans granted to students pursuing an undergraduate degree; or
     (ii) Where an individual loan does not exceed resident graduate or professional tuition and state-mandated fees at the most expensive Washington public institution of higher education for loans granted to students pursuing a graduate or professional degree;
     (c) That are made to resident students who are needy students;
     (d) That are made to students attending an institution of higher education; and
     (e) Where the interest rate on the loan to the student does not exceed an interest rate that is two hundred basis points below the interest rate the qualified public depository would charge for a loan for a similar purpose and a similar term, except that, if the preference given by the state treasurer to the qualified public depository under subsection (3) of this section is less than two hundred basis points, the qualified public depository may reduce the preference given on the loan by an amount that corresponds to the reduction in preference below two hundred basis points given to the qualified public depository.
     (3) In setting interest rates of time certificate of deposits, the state treasurer shall offer rates so that a two hundred basis point preference will be given to the qualified public depository, except that the treasurer shall lower the amount of the preference to ensure that the effective interest rate on the time certificate of deposit is not less than zero.
     (4) The board may adopt rules to:
     (a) Further restrict program eligibility based on financial need;
     (b) Ensure that when making a qualified loan under the program, students who have never received a loan under the program are given first priority;
     (c) Limit the total principal loan amount that any one student receives in qualified loans under the program over the span of enrollment in institutions of higher education;
     (d) Limit the total amount of any one qualified loan made under the program; and
     (e) Limit the points or fees charged at loan closing.

NEW SECTION.  Sec. 6   A new section is added to chapter 67.70 RCW to read as follows:
     The Washington higher education loan program is added as a beneficiary of the lottery under section 2 of this act. The commission shall work with the higher education coordinating board to promote students as a beneficiary of the lottery.

NEW SECTION.  Sec. 7   A new section is added to chapter 28B.76 RCW to read as follows:
     The board shall work with the lottery commission to promote students as a beneficiary of the lottery.

Sec. 8   RCW 67.70.340 and 2005 c 369 s 4 are each amended to read as follows:
     (1) The legislature recognizes that creating a shared game lottery could result in less revenue being raised by the existing state lottery ticket sales. The legislature further recognizes that the two funds most impacted by this potential event are the student achievement fund and the education construction account. Therefore, it is the intent of the legislature to use some of the proceeds from the shared game lottery to make up the difference that the potential state lottery revenue loss would have on the student achievement fund and the education construction account. The legislature further intends to use some of the proceeds from the shared game lottery to fund programs and services related to problem and pathological gambling.
     (2) The student achievement fund and the education construction account are expected to collectively receive one hundred two million dollars annually from state lottery games other than the shared game lottery. For fiscal year 2003 and thereafter, if the amount of lottery revenues earmarked for the student achievement fund and the education construction account is less than one hundred two million dollars, the commission, after making the transfer required under subsection (3) of this section, must transfer sufficient moneys from revenues derived from the shared game lottery into the student achievement fund and the education construction account to bring the total revenue up to one hundred two million dollars. The funds transferred from the shared game lottery account under this subsection must be divided between the student achievement fund and the education construction account in a manner consistent with RCW 67.70.240(3).
     (3)(a) The commission shall transfer, from revenue derived from the shared game lottery, to the problem gambling account created in RCW 43.20A.892, an amount equal to the percentage specified in (b) of this subsection of net receipts. For purposes of this subsection, "net receipts" means the difference between (i) revenue received from the sale of lottery tickets or shares and revenue received from the sale of shared game lottery tickets or shares; and (ii) the sum of payments made to winners.
     (b) In fiscal year 2006, the percentage to be transferred to the problem gambling account is one-tenth of one percent. In fiscal year 2007 and subsequent fiscal years, the percentage to be transferred to the problem gambling account is thirteen one-hundredths of one percent.
     (4) The remaining net revenues, if any, in the shared game lottery account after the transfers pursuant to this section shall be deposited into: (a) The Washington higher education loan program account created in section 4 of this act up to a maximum annual transfer of ten million dollars; and (b) after transfers under (a) of this subsection, the general fund.

Sec. 9   RCW 67.70.040 and 2006 c 290 s 3 are each amended to read as follows:
     The commission shall have the power, and it shall be its duty:
     (1) To adopt rules governing the establishment and operation of a state lottery as it deems necessary and desirable in order that such a lottery be initiated at the earliest feasible and practicable time, and in order that such lottery produce the maximum amount of net revenues for the state consonant with the dignity of the state and the general welfare of the people. Such rules shall include, but shall not be limited to, the following:
     (a) The type of lottery to be conducted which may include the selling of tickets or shares, but such tickets or shares may not be sold over the internet. Previously purchased tickets and shares that secondarily allow for voluntary registration of those tickets or shares for the opportunity to receive additional prizes at no additional cost may also be registered via the internet and that registration does not constitute a sale. The use of electronic or mechanical devices or video terminals which allow for individual play against such devices or terminals shall be prohibited. An affirmative vote of sixty percent of both houses of the legislature is required before offering any game allowing or requiring a player to become eligible for a prize or to otherwise play any portion of the game by interacting with any device or terminal involving digital, video, or other electronic representations of any game of chance, including scratch tickets, pull-tabs, bingo, poker or other cards, dice, roulette, keno, or slot machines. Approval of the legislature shall be required before entering any agreement with other state lotteries to conduct shared games;
     (b) The price, or prices, of tickets or shares in the lottery;
     (c) The numbers and sizes of the prizes on the winning tickets or shares;
     (d) The manner of selecting the winning tickets or shares, except as limited by (a) of this subsection;
     (e) The manner and time of payment of prizes to the holder of winning tickets or shares which, at the director's option, may be paid in lump sum amounts or installments over a period of years;
     (f) The frequency of the drawings or selections of winning tickets or shares. Approval of the legislature is required before conducting any online game in which the drawing or selection of winning tickets occurs more frequently than once every twenty-four hours;
     (g) Without limit as to number, the type or types of locations at which tickets or shares may be sold;
     (h) The method to be used in selling tickets or shares, except as limited by (a) of this subsection;
     (i) The licensing of agents to sell or distribute tickets or shares, except that a person under the age of eighteen shall not be licensed as an agent;
     (j) The manner and amount of compensation, if any, to be paid licensed sales agents necessary to provide for the adequate availability of tickets or shares to prospective buyers and for the convenience of the public;
     (k) The apportionment of the total revenues accruing from the sale of lottery tickets or shares and from all other sources among: (i) The payment of prizes to the holders of winning tickets or shares, which shall not be less than forty-five percent of the gross annual revenue from such lottery, (ii) transfers to the lottery administrative account created by RCW 67.70.260, and (iii) transfer to the state's general fund. Transfers to the state general fund shall be made in compliance with RCW 43.01.050;
     (l) Such other matters necessary or desirable for the efficient and economical operation and administration of the lottery and for the convenience of the purchasers of tickets or shares and the holders of winning tickets or shares.
     (2) To ensure that in each place authorized to sell lottery tickets or shares, on the back of the ticket or share, and in any advertising or promotion there shall be conspicuously displayed an estimate of the probability of purchasing a winning ticket.
     (3) To amend, repeal, or supplement any such rules from time to time as it deems necessary or desirable.
     (4) To advise and make recommendations to the director for the operation and administration of the lottery.

NEW SECTION.  Sec. 10   Sections 1 through 5 of this act constitute a new chapter in Title 28B RCW.