BILL REQ. #:  S-1715.1 

READ FIRST TIME 02/21/11.   

     AN ACT Relating to the Washington advanced college tuition payment program; amending RCW 28B.95.020, 28B.95.030, and 28B.95.110; and adding new sections to chapter 28B.95 RCW.

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

Sec. 1   RCW 28B.95.020 and 2007 c 405 s 8 are each amended to read as follows:
     The definitions in this section apply throughout this chapter, unless the context clearly requires otherwise.
     (1) "Academic year" means the regular nine-month, three-quarter, or two-semester period annually occurring between August 1st and July 31st.
     (2) "Account" means the Washington advanced college tuition payment program account established for the deposit of all money received by the board from eligible purchasers and interest earnings on investments of funds in the account, as well as for all expenditures on behalf of eligible beneficiaries for the redemption of tuition units and for the development of any authorized college savings program pursuant to RCW 28B.95.150.
     (3) "Board" means the higher education coordinating board as defined in chapter 28B.76 RCW.
     (4) "Committee on advanced tuition payment" or "committee" means a committee of the following members: The state treasurer, the director of the office of financial management, the executive director of the higher education coordinating board, or their designees, and two members to be appointed by the governor for four-year terms, one representing program participants and one private business representative with marketing, public relations, or financial expertise.
     (5) "Governing body" means the committee empowered by the legislature to administer the Washington advanced college tuition payment program.
     (6) "Contractual obligation" means a legally binding contract of the state with the purchaser and the beneficiary establishing that purchases of tuition units will be worth the same number of tuition units at the time of redemption as they were worth at the time of the purchase.
     (7) "Eligible beneficiary" means the person for whom the tuition unit will be redeemed for attendance at an institution of higher education. The beneficiary is that person named by the purchaser at the time that a tuition unit contract is accepted by the governing body. Qualified organizations, as allowed under section 529 of the federal internal revenue code, purchasing tuition unit contracts as future scholarships need not designate a beneficiary at the time of purchase.
     (8) "Eligible purchaser" means an individual or organization that has entered into a tuition unit contract with the governing body for the purchase of tuition units for an eligible beneficiary. The state of Washington may be an eligible purchaser for purposes of purchasing tuition units to be held for granting Washington college bound scholarships.
     (9) "Full-time tuition charges" means resident tuition charges at a state institution of higher education for enrollments between ten credits and eighteen credit hours per academic term.
     (10) "Institution of higher education" means an institution that offers education beyond the secondary level and is recognized by the internal revenue service under chapter 529 of the internal revenue code.
     (11) "Investment board" means the state investment board as defined in chapter 43.33A RCW.
     (12) "State institution of higher education" means institutions of higher education as defined in RCW 28B.10.016.
     (13)(a) "Tuition and fees," for tuition units purchased or contracted for purchase on a custom monthly plan before August 1, 2011, means undergraduate tuition and services and activities fees as defined in RCW 28B.15.020 and 28B.15.041 rounded to the nearest whole dollar. For purposes of this chapter, services and activities fees do not include fees charged for the payment of bonds heretofore or hereafter issued for, or other indebtedness incurred to pay, all or part of the cost of acquiring, constructing, or installing any lands, buildings, or facilities.
     (b) "Tuition and fees," for eligible purchasers who have entered into a tuition unit contract on or after August 1, 2011, means tuition fees as defined in RCW 28B.15.020 rounded to the nearest whole dollar.
     (14)(a) "Tuition unit contract" means a contract, for tuition units purchased or contracted for purchase on a custom monthly plan before August 1, 2011, between an eligible purchaser and the governing body, or a successor agency appointed for administration of this chapter, for the purchase of tuition units for a specified beneficiary that may be redeemed at a later date for an equal number of tuition units.
     (b) "Tuition unit contract" for eligible purchasers who have entered into a tuition unit contract on or after August 1, 2011, means a contract between an eligible purchaser and the governing body, or a successor agency appointed for administration of this chapter, for the purchase of tuition units for a specified beneficiary that may be redeemed at a later date for a value that is equivalent to the price of tuition and fees at the time a purchaser enters into a tuition unit contract multiplied by the average percentage increase of resident undergraduate tuition and fees at all state institutions of higher education weighted by the number of full-time equivalent resident undergraduate students.
     (15) "Unit purchase price" means the minimum cost to purchase one tuition unit for an eligible beneficiary. Generally, the minimum purchase price is one percent of the undergraduate tuition and fees for the current year, rounded to the nearest whole dollar, adjusted for the costs of administration and adjusted to ensure the actuarial soundness of the account. The analysis for price setting shall also include, but not be limited to consideration of past and projected patterns of tuition increases, program liability, past and projected investment returns, and the need for a prudent stabilization reserve.

Sec. 2   RCW 28B.95.030 and 2005 c 272 s 2 are each amended to read as follows:
     This section applies to tuition units purchased or contracted for purchase on a custom monthly plan before August 1, 2011.
     (1) The Washington advanced college tuition payment program shall be administered by the committee on advanced tuition payment which shall be chaired by the executive director of the board. The committee shall be supported by staff of the board.
     (2)(a) The Washington advanced college tuition payment program shall consist of the sale of tuition units, which may be redeemed by the beneficiary at a future date for an equal number of tuition units regardless of any increase in the price of tuition, that may have occurred in the interval.
     (b) Each purchase shall be worth a specific number of or fraction of tuition units at each state institution of higher education as determined by the governing body.
     (c) The number of tuition units necessary to pay for a full year's, full-time undergraduate tuition and fee charges at a state institution of higher education shall be set by the governing body at the time a purchaser enters into a tuition unit contract.
     (d) The governing body may limit the number of tuition units purchased by any one purchaser or on behalf of any one beneficiary, however, no limit may be imposed that is less than that necessary to achieve four years of full-time, undergraduate tuition charges at a state institution of higher education. The governing body also may, at its discretion, limit the number of participants, if needed, to ensure the actuarial soundness and integrity of the program.
     (e) While the Washington advanced college tuition payment program is designed to help all citizens of the state of Washington, the governing body may determine residency requirements for eligible purchasers and eligible beneficiaries to ensure the actuarial soundness and integrity of the program.
     (3)(a) No tuition unit may be redeemed until two years after the purchase of the unit. Units may be redeemed for enrollment at any institution of higher education that is recognized by the internal revenue service under chapter 529 of the internal revenue code.
     (b) Units redeemed at a nonstate institution of higher education or for graduate enrollment shall be redeemed at the rate for state public institutions in effect at the time of redemption.
     (4) The governing body shall determine the conditions under which the tuition benefit may be transferred to another family member. In permitting such transfers, the governing body may not allow the tuition benefit to be bought, sold, bartered, or otherwise exchanged for goods and services by either the beneficiary or the purchaser.
     (5) The governing body shall administer the Washington advanced college tuition payment program in a manner reasonably designed to be actuarially sound, such that the assets of the trust will be sufficient to defray the obligations of the trust including the costs of administration. The governing body may, at its discretion, discount the minimum purchase price for certain kinds of purchases such as those from families with young children, as long as the actuarial soundness of the account is not jeopardized.
     (6) The governing body shall annually determine current value of a tuition unit.
     (7) The governing body shall promote, advertise, and publicize the Washington advanced college tuition payment program.
     (8) In addition to any other powers conferred by this chapter, the governing body may:
     (a) Impose reasonable limits on the number of tuition units or units that may be used in any one year;
     (b) Determine and set any time limits, if necessary, for the use of benefits under this chapter;
     (c) Impose and collect administrative fees and charges in connection with any transaction under this chapter;
     (d) Appoint and use advisory committees as needed to provide program direction and guidance;
     (e) Formulate and adopt all other policies and rules necessary for the efficient administration of the program;
     (f) Consider the addition of an advanced payment program for room and board contracts and also consider a college savings program;
     (g) Purchase insurance from insurers licensed to do business in the state, to provide for coverage against any loss in connection with the account's property, assets, or activities or to further insure the value of the tuition units;
     (h) Make, execute, and deliver contracts, conveyances, and other instruments necessary to the exercise and discharge of its powers and duties under this chapter;
     (i) Contract for the provision for all or part of the services necessary for the management and operation of the program with other state or nonstate entities authorized to do business in the state;
     (j) Contract for other services or for goods needed by the governing body in the conduct of its business under this chapter;
     (k) Contract with financial consultants, actuaries, auditors, and other consultants as necessary to carry out its responsibilities under this chapter;
     (l) Solicit and accept cash donations and grants from any person, governmental agency, private business, or organization; and
     (m) Perform all acts necessary and proper to carry out the duties and responsibilities of this program under this chapter.

Sec. 3   RCW 28B.95.110 and 2005 c 272 s 4 are each amended to read as follows:
     This section applies to tuition units purchased or contracted for purchase on a custom monthly plan before August 1, 2011.
     (1) The intent of the Washington advanced college tuition payment program is to redeem tuition units for attendance at an institution of higher education. Refunds shall be issued under specific conditions that may include the following:
     (a) Certification that the beneficiary, who is eighteen years of age or older, will not attend an institution of higher education, will result in a refund not to exceed the current value, as determined by the governing body, in effect at the time of such certification minus a penalty at the rate established by the governing body. The refund shall be made no sooner than ninety days after such certification, less any administrative processing fees assessed by the governing body;
     (b) If there is certification of the death or disability of the beneficiary, the refund shall be equal to one hundred percent of any remaining unused tuition units at the current value, as determined by the governing body, at the time that such certification is submitted to the governing body, less any administrative processing fees assessed by the governing body;
     (c) If there is certification by the student of graduation or program completion, the refund shall be as great as one hundred percent of any remaining unused tuition units at the current value, as determined by the governing body, at the time that such certification is submitted to the governing body, less any administrative processing fees assessed by the governing body. The governing body may, at its discretion, impose a penalty if needed to comply with federal tax rules;
     (d) If there is certification of other tuition and fee scholarships, which will cover the cost of tuition for the eligible beneficiary. The refund shall be equal to one hundred percent of the current value of tuition units, as determined by the governing body, in effect at the time of the refund request, less any administrative processing fees assessed by the governing body. The refund under this subsection may not exceed the value of the scholarship;
     (e) Incorrect or misleading information provided by the purchaser or beneficiaries may result in a refund of the purchaser's investment, less any administrative processing fees assessed by the governing body. The value of the refund will not exceed the actual dollar value of the purchaser's contributions; and
     (f) The governing body may determine other circumstances qualifying for refunds of remaining unused tuition units and may determine the value of that refund.
     (2) With the exception of subsection (1)(b), (e), and (f) of this section no refunds may be made before the units have been held for two years.

NEW SECTION.  Sec. 4   A new section is added to chapter 28B.95 RCW to read as follows:
     This section applies to eligible purchasers who have entered into a tuition unit contract on or after August 1, 2011.
     (1) The Washington advanced college tuition payment program shall be administered by the committee on advanced tuition payment which shall be chaired by the executive director of the board. The committee shall be supported by staff of the board.
     (2)(a) The Washington advanced college tuition payment program shall consist of the sale of tuition units, which may be redeemed by the beneficiary at a future date. The value of each tuition unit at the time of redemption shall be the price of tuition and fees at the time a purchaser enters into a tuition unit contract multiplied by the average percentage increase of resident undergraduate tuition and fees at all state institutions of higher education weighted by the number of full-time equivalent resident undergraduate students.
     (b) The governing body may limit the number of tuition units purchased by any one purchaser or on behalf of any one beneficiary. The governing body also may, at its discretion, limit the number of participants, if needed, to ensure the actuarial soundness and integrity of the program.
     (c) While the Washington advanced college tuition payment program is designed to help all citizens of the state of Washington, the governing body may determine residency requirements for eligible purchasers and eligible beneficiaries to ensure the actuarial soundness and integrity of the program.
     (3)(a) No tuition unit may be redeemed until two years after the purchase of the unit. Units may be redeemed for enrollment at any institution of higher education that is recognized by the internal revenue service under chapter 529 of the internal revenue code.
     (b) Units redeemed at a nonstate institution of higher education or for graduate enrollment shall be redeemed at the rate for state public institutions in effect at the time of redemption.
     (4) The governing body shall determine the conditions under which the tuition benefit may be transferred to another family member. In permitting such transfers, the governing body may not allow the tuition benefit to be bought, sold, bartered, or otherwise exchanged for goods and services by either the beneficiary or the purchaser.
     (5) The governing body shall administer the Washington advanced college tuition payment program in a manner reasonably designed to be actuarially sound, such that the assets of the trust will be sufficient to defray the obligations of the trust including the costs of administration.
     (6) The governing body shall annually determine current value of a tuition unit in accordance with subsection (2)(a) of this section.
     (7) The governing body shall promote, advertise, and publicize the Washington advanced college tuition payment program.
     (8) In addition to any other powers conferred by this chapter, the governing body may:
     (a) Impose reasonable limits on the number of tuition units or units that may be used in any one year;
     (b) Determine and set any time limits, if necessary, for the use of benefits under this chapter, however after redemption of the first tuition unit the remaining units must be used within six years;
     (c) Impose and collect administrative fees and charges in connection with any transaction under this chapter;
     (d) Appoint and use advisory committees as needed to provide program direction and guidance;
     (e) Formulate and adopt all other policies and rules necessary for the efficient administration of the program;
     (f) Consider the addition of an advanced payment program for room and board contracts and also consider a college savings program;
     (g) Purchase insurance from insurers licensed to do business in the state, to provide for coverage against any loss in connection with the account's property, assets, or activities or to further insure the value of the tuition units;
     (h) Make, execute, and deliver contracts, conveyances, and other instruments necessary to the exercise and discharge of its powers and duties under this chapter;
     (i) Contract for the provision for all or part of the services necessary for the management and operation of the program with other state or nonstate entities authorized to do business in the state;
     (j) Contract for other services or for goods needed by the governing body in the conduct of its business under this chapter;
     (k) Contract with financial consultants, actuaries, auditors, and other consultants as necessary to carry out its responsibilities under this chapter;
     (l) Solicit and accept cash donations and grants from any person, governmental agency, private business, or organization; and
     (m) Perform all acts necessary and proper to carry out the duties and responsibilities of this program under this chapter.

NEW SECTION.  Sec. 5   A new section is added to chapter 28B.95 RCW to read as follows:
     This section applies to eligible purchasers who have entered into a tuition unit contract on or after August 1, 2011.
     (1) The intent of the Washington advanced college tuition payment program is to redeem tuition units for attendance at an institution of higher education. Refunds shall be issued under specific conditions that shall include the following:
     (a)(i) Certification that the beneficiary, who is eighteen years of age or older, will not attend an institution of higher education, will result in a refund not to exceed the lesser of:
     (A) The actual dollar value of the purchaser's contributions plus any interest earned as reported by the state investment board; or
     (B) The price of tuition and fees at the time a purchaser enters into a tuition unit contract multiplied by the average percentage increase of resident undergraduate tuition and fees at all state institutions of higher education weighted by the number of full-time equivalent resident undergraduate students in attendance;
     (ii) The refund shall be made no sooner than ninety days after the certification in this subsection (1)(a), less any administrative processing fees assessed by the governing body;
     (b) If there is certification of the death or disability of the beneficiary, the refund shall be equal to one hundred percent of any remaining unused tuition units at the current value, as determined by the governing body, at the time that such certification is submitted to the governing body, less any administrative processing fees assessed by the governing body;
     (c) If there is certification by the student of graduation or program completion, the refund shall be as great as one hundred percent of any remaining unused tuition units at the current value, as determined by the governing body, at the time that the certification under this subsection (1)(c) is submitted to the governing body, less any administrative processing fees assessed by the governing body. The governing body may, at its discretion, impose a penalty if needed to comply with federal tax rules;
     (d) If there is certification of other tuition and fee scholarships, which will cover the cost of tuition for the eligible beneficiary, the refund shall be equal to one hundred percent of the current value of tuition units, as determined by the governing body, in effect at the time of the refund request, less any administrative processing fees assessed by the governing body. The refund under this subsection (1)(d) may not exceed the value of the scholarship;
     (e) Incorrect or misleading information provided by the purchaser or beneficiaries may result in a refund of the purchaser's investment, less any administrative processing fees assessed by the governing body. The value of the refund will not exceed the actual dollar value of the purchaser's contributions; and
     (f) The governing body may determine other circumstances qualifying for refunds of remaining unused tuition units provided that the value of the refund does not exceed the lesser of:
     (i) The actual dollar value of the purchaser's contributions plus any interest earned as reported by the state investment board; or
     (ii) The price of tuition and fees at the time a purchaser enters into a tuition unit contract multiplied by the average percentage increase of resident undergraduate tuition and fees at all state institutions of higher education weighted by the number of full-time equivalent resident undergraduate students in attendance.
     (2) With the exception of subsection (1)(b), (e), and (f) of this section no refunds may be made before the units have been held for two years.