READ FIRST TIME 02/11/14.   

     AN ACT Relating to the opportunity scholarship program; amending RCW 28B.145.010, 28B.145.020, 28B.145.030, 28B.145.050, 28B.145.060, and 28B.145.070; and adding a new section to chapter 28B.145 RCW.

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

Sec. 1   RCW 28B.145.010 and 2013 c 39 s 13 are each amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Board" means the ((higher education coordinating board or its successor)) opportunity scholarship board.
     (2) "Council" means the student achievement council.
     (3) "Eligible education programs" means high employer demand and other programs of study as determined by the ((opportunity scholarship)) board.
     (((3))) (4) "Eligible expenses" means reasonable expenses associated with the costs of acquiring an education such as tuition, books, equipment, fees, room and board, and other expenses as determined by the program administrator in consultation with the ((board)) council and the state board for community and technical colleges.
     (((4))) (5) "Eligible student" means a resident student who received his or her high school diploma or high school equivalency certificate as provided in RCW 28B.50.536 in Washington and who:
     (a)(i) Has been accepted at a four-year institution of higher education into an eligible education program leading to a baccalaureate degree; or
     (ii) Will attend a two-year institution of higher education and intends to transfer to an eligible education program at a four-year institution of higher education;
     (b) Declares an intention to obtain a baccalaureate degree; and
     (c) Has a family income at or below one hundred twenty-five percent of the state median family income at the time the student applies for an opportunity scholarship.
     (((5))) (6) "High employer demand program of study" has the same meaning as provided in RCW 28B.50.030.
     (((6))) (7) "Participant" means an eligible student who has received a scholarship under the opportunity scholarship program.
     (((7))) (8) "Program administrator" means a college scholarship organization that is a private nonprofit corporation registered under Title 24 RCW and qualified as a tax-exempt entity under section 501(c)(3) of the federal internal revenue code, with expertise in managing scholarships and college advising.
     (((8))) (9) "Resident student" has the same meaning as provided in RCW 28B.15.012.

Sec. 2   RCW 28B.145.020 and 2011 1st sp.s. c 13 s 3 are each amended to read as follows:
     (1) The opportunity scholarship board is created. The ((opportunity scholarship)) board consists of ((seven)) eleven members:
     (a) ((Three)) Six members appointed by the governor. For ((two)) three of the ((three)) six appointments, the governor shall consider names from a list provided by the president of the senate and the speaker of the house of representatives; and
     (b) ((Four)) Five foundation or business and industry representatives appointed by the governor from among the state's most productive industries such as aerospace, manufacturing, health ((sciences)) care, information technology, engineering, agriculture, and others, as well as philanthropy. The foundation or business and industry representatives shall be selected from among nominations provided by the private sector donors to the opportunity scholarship and opportunity expansion programs. However, the governor may request, and the private sector donors shall provide, an additional list or lists from which the governor shall select these representatives.
     (2) Board members shall hold their offices for a term of four years from the first day of September and until their successors are appointed. No more than the terms of two members may expire simultaneously on the last day of August in any one year.
     (3) The members of the ((opportunity scholarship)) board shall elect one of the business and industry representatives to serve as chair.
     (4) ((Five)) Seven members of the board constitute a quorum for the transaction of business. In case of a vacancy, or when an appointment is made after the date of expiration of the term, the governor or the president of the senate or the speaker of the house of representatives, depending upon which made the initial appointment to that position, shall fill the vacancy for the remainder of the term of the board member whose office has become vacant or expired.
     (5) The ((opportunity scholarship)) board shall be staffed by the program administrator.
     (6) The purpose of the ((opportunity scholarship)) board is to provide oversight and guidance for the opportunity expansion and the opportunity scholarship programs in light of established legislative priorities and to fulfill the duties and responsibilities under this chapter, including but not limited to determining eligible education programs for purposes of the opportunity scholarship program. Duties, exercised jointly with the program administrator, include soliciting funds and setting annual fund-raising goals.
     (7) The ((opportunity scholarship)) board may report to the governor and the appropriate committees of the legislature with recommendations as to:
     (a) Whether some or all of the scholarships should be changed to conditional scholarships that must be repaid in the event the participant does not complete the eligible education program; and
     (b) A source or sources of funds for the opportunity expansion program in addition to the voluntary contributions of the high technology research and development tax credit under RCW 82.32.800.

Sec. 3   RCW 28B.145.030 and 2011 1st sp.s. c 13 s 4 are each amended to read as follows:
     (1) The program administrator, under contract with the ((board)) council, shall staff the ((opportunity scholarship)) board and shall have the duties and responsibilities provided in this chapter, including but not limited to publicizing the program, selecting participants for the opportunity scholarship award, distributing opportunity scholarship awards, and achieving the maximum possible rate of return on investment of the accounts in subsection (2) of this section, while ensuring transparency in the investment decisions and processes. Duties, exercised jointly with the ((opportunity scholarship)) board, include soliciting funds and setting annual fund-raising goals. The program administrator shall be paid an administrative fee as determined by the ((opportunity scholarship)) board.
     (2) With respect to the opportunity scholarship program, the program administrator shall:
     (a) Establish and manage two separate accounts into which to receive grants and contributions from private sources as well as state matching funds, and from which to disburse scholarship funds to participants;
     (b) Solicit and accept grants and contributions from private sources, via direct payment, pledge agreement, or escrow account, of private sources for deposit into one or both of the two accounts created in this subsection (2)(b) in accordance with this subsection (2)(b):
     (i) The "scholarship account," whose principal may be invaded, and from which scholarships must be disbursed beginning no later than December 1, 2011, if, by that date, state matching funds in the amount of five million dollars or more have been received. Thereafter, scholarships shall be disbursed on an annual basis beginning no later than May 1, 2012, and every ((May)) October 1st thereafter;
     (ii) The "endowment account," from which scholarship moneys may be disbursed from earnings only in years when:
     (A) The state match has been made into both the scholarship and the endowment account;
     (B) The state appropriations for the state need grant under RCW 28B.92.010 meet or exceed state appropriations for the state need grant made in the 2011-2013 biennium, adjusted for inflation, and eligibility for state need grant recipients is at least seventy percent of state median family income; and
     (C) The state has demonstrated progress toward the goal of total per-student funding levels, from state appropriations plus tuition and fees, of at least the sixtieth percentile of total per-student funding at similar public institutions of higher education in the global challenge states, as defined, measured, and reported in RCW 28B.15.068. In any year in which the office of financial management reports that the state has not made progress toward this goal, no new scholarships may be awarded. In any year in which the office of financial management reports that the percentile of total per-student funding is less than the sixtieth percentile and at least five percent less than the prior year, pledges of future grants and contributions may, at the request of the donor, be released and grants and contributions already received refunded to the extent that opportunity scholarship awards already made can be fulfilled from the funds remaining in the endowment account. In fulfilling the requirements of this subsection, the office of financial management shall use resources that facilitate measurement and comparisons of the most recently completed academic year. These resources may include, but are not limited to, the data provided in a uniform dashboard format under RCW 28B.77.090 as the statewide public four-year dashboard and academic year reports prepared by the state board for community and technical colleges; ((and))
     (iii) An amount equal to at least fifty percent of all grants and contributions must be deposited into the scholarship account until such time as twenty million dollars have been deposited into the account, after which time the private donors may designate whether their contributions must be deposited to the scholarship or the endowment account. The ((opportunity scholarship)) board and the program administrator must work to maximize private sector contributions to both the scholarship account and the endowment account, to maintain a robust scholarship program while simultaneously building the endowment, and to determine the division between the two accounts in the case of undesignated grants and contributions, taking into account the need for a long-term funding mechanism and the short-term needs of families and students in Washington. The first five million dollars in state match, as provided in RCW 28B.145.040, shall be deposited into the scholarship account and thereafter the state match shall be deposited into the two accounts in equal proportion to the private funds deposited in each account; and
     (iv) Once moneys in the opportunity scholarship match transfer account are subject to an agreement under RCW 28B.145.050(5) and are deposited in the scholarship account or endowment account under this section, the state acts in a fiduciary rather than ownership capacity with regard to those assets. Assets in the scholarship account and endowment account are not considered state money, common cash, or revenue to the state;
     (c) Provide proof of receipt of grants and contributions from private sources to the ((board)) council, identifying the amounts received by name of private source and date, and whether the amounts received were deposited into the scholarship or the endowment account;
     (d) In consultation with the ((higher education coordinating board)) council and the state board for community and technical colleges, make an assessment of the reasonable annual eligible expenses associated with eligible education programs identified by the ((opportunity scholarship)) board;
     (e) Determine the dollar difference between tuition fees charged by institutions of higher education in the 2008-09 academic year and the academic year for which an opportunity scholarship is being distributed;
     (f) Develop and implement an application, selection, and notification process for awarding opportunity scholarships;
     (g) Determine the annual amount of the opportunity scholarship for each selected participant. The annual amount shall be at least one thousand dollars or the amount determined under (e) of this subsection, but may be increased on an income-based, sliding scale basis up to the amount necessary to cover all reasonable annual eligible expenses as assessed pursuant to (d) of this subsection, or to encourage participation in baccalaureate degree programs identified by the ((opportunity scholarship)) board;
     (h) Distribute scholarship funds to selected participants. Once awarded, and to the extent funds are available for distribution, an opportunity scholarship shall be automatically renewed until the participant withdraws from or is no longer attending the program, completes the program, or has taken the credit or clock hour equivalent of one hundred twenty-five percent of the published length of time of the participant's program, whichever occurs first, and as long as the participant annually submits documentation of filing both a free application for federal student aid and for available federal education tax credits, including but not limited to the American opportunity tax credit; and
     (i) Notify institutions of scholarship recipients who will attend their institutions and inform them of the terms of the students' eligibility.
     (3) With respect to the opportunity expansion program, the program administrator shall:
     (a) Assist the ((opportunity scholarship)) board in developing and implementing an application, selection, and notification process for making opportunity expansion awards; and
     (b) Solicit and accept grants and contributions from private sources for opportunity expansion awards.

NEW SECTION.  Sec. 4   A new section is added to chapter 28B.145 RCW to read as follows:
     (1) The board may elect to have the state investment board invest the funds in the scholarship account and endowment account described under RCW 28B.145.030(2)(b). If the board so elects, the state investment board has the full power to invest, reinvest, manage, contract, sell, or exchange investment money in the two accounts. All investment and operating costs associated with the investment of money shall be paid under RCW 43.33A.160 and 43.84.160. With the exception of these expenses, the earnings from the investment of the money shall be retained by the accounts.
     (2) All investments made by the state investment board shall be made with the exercise of that degree of judgment and care under RCW 43.33A.140 and the investment policy established by the state investment board.
     (3) As deemed appropriate by the state investment board, money in the scholarship and endowment accounts may be commingled for investment with other funds subject to investment by the state investment board.
     (4) Members of the state investment board shall not be considered an insurer of the funds or assets and are not liable for any action or inaction.
     (5) Members of the state investment board are not liable to the state, to the fund, or to any other person as a result of their activities as members, whether ministerial or discretionary, except for willful dishonesty or intentional violations of law. The state investment board in its discretion may purchase liability insurance for members.
     (6) The authority to establish all policies relating to the scholarship account and the endowment account, other than the investment policies as provided in subsections (1) through (3) of this section, resides with the board and program administrator acting in accordance with the principles set forth in this chapter. With the exception of expenses of the state investment board in subsection (1) of this section, disbursements from the scholarship account and endowment account shall be made only on the authorization of the opportunity scholarship board or its designee, and moneys in the accounts may be spent only for the purposes specified in this chapter.
     (7) The state investment board shall routinely consult and communicate with the board on the investment policy, earnings of the accounts, and related needs of the program.

Sec. 5   RCW 28B.145.050 and 2011 1st sp.s. c 13 s 6 are each amended to read as follows:
     (1) The opportunity scholarship match transfer account is created in the custody of the state treasurer as a nonappropriated account to be used solely and exclusively for the opportunity scholarship program created in RCW 28B.145.040. The purpose of the account is to provide matching funds for the opportunity scholarship program.
     (2) Revenues to the account shall consist of appropriations by the legislature into the account and any gifts, grants, or donations received by the executive director of the ((board)) council for this purpose.
     (3) No expenditures from the account may be made except upon receipt of proof, by the executive director of the ((board)) council from the program administrator, of private contributions to the opportunity scholarship program. Expenditures, in the form of matching funds, may not exceed the total amount of private contributions.
     (4) Only the executive director of the ((board)) council or the executive director's designee may authorize expenditures from the opportunity scholarship match transfer account. Such authorization must be made as soon as practicable following receipt of proof as required under subsection (3) of this section.
     (5) The council shall enter into an appropriate agreement with the program administrator to demonstrate exchange of consideration for the matching funds.

Sec. 6   RCW 28B.145.060 and 2013 c 39 s 14 are each amended to read as follows:
     (1) The opportunity expansion program is established.
     (2) The ((opportunity scholarship)) board shall select institutions of higher education to receive opportunity expansion awards. In so doing, the ((opportunity scholarship)) board must:
     (a) Solicit, receive, and evaluate proposals from institutions of higher education that are designed to directly increase the number of baccalaureate degrees produced in high employer demand and other programs of study, and that include annual numerical targets for the number of such degrees, with a strong emphasis on serving students who received their high school diploma or high school equivalency certificate as provided in RCW 28B.50.536 in Washington or are adult Washington residents who are returning to school to gain a baccalaureate degree;
     (b) Develop criteria for evaluating proposals and awarding funds to the proposals deemed most likely to increase the number of baccalaureate degrees and degrees produced in high employer demand and other programs of study;
     (c) Give priority to proposals that include a partnership between public and private partnership entities that leverage additional private funds;
     (d) Give priority to proposals that are innovative, efficient, and cost-effective, given the nature and cost of the particular program of study;
     (e) Consult and operate in consultation with existing higher education stakeholders, including but not limited to: Faculty, labor, student organizations, and relevant higher education agencies; and
     (f) Determine which proposals to improve and accelerate the production of baccalaureate degrees in high employer demand and other programs of study will receive opportunity expansion awards for the following state fiscal year, notify the state treasurer, and announce the awards.
     (3) The state treasurer, at the direction of the ((opportunity scholarship)) board, must distribute the funds that have been awarded to the institutions of higher education from the opportunity expansion account.
     (4) Institutions of higher education receiving awards under this section may not supplant existing general fund state revenues with opportunity expansion awards.
     (5) Annually, the office of financial management shall report to the ((opportunity scholarship)) board, the governor, and the relevant committees of the legislature regarding the percentage of Washington households with incomes in the middle-income bracket or higher. For purposes of this section, "middle-income bracket" means household incomes between two hundred and five hundred percent of the 2010 federal poverty level, as determined by the United States department of health and human services for a family of four, adjusted annually for inflation.
     (6) Annually, the ((student achievement)) council must report to the ((opportunity scholarship)) board, the governor, and the relevant committees of the legislature regarding the increase in the number of degrees in high employer demand and other programs of study awarded by institutions of higher education over the average of the preceding ten academic years.
     (7) In its comprehensive plan, the workforce training and education coordinating board shall include specific strategies to reach the goal of increasing the percentage of Washington households living in the middle-income bracket or higher, as calculated by the office of financial management and developed by the agency or education institution that will lead the strategy.

Sec. 7   RCW 28B.145.070 and 2011 1st sp.s. c 13 s 8 are each amended to read as follows:
     (1) ((By December 1, 2012, and)) Annually each December 1st ((thereafter)), the ((opportunity scholarship)) board, together with the program administrator, shall report to the ((board)) council, the governor, and the appropriate committees of the legislature regarding the opportunity scholarship and opportunity expansion programs, including but not limited to:
     (a) Which education programs the ((opportunity scholarship)) board determined were eligible for purposes of the opportunity scholarship;
     (b) The number of applicants for the opportunity scholarship, disaggregated, to the extent possible, by race, ethnicity, gender, county of origin, age, and median family income;
     (c) The number of participants in the opportunity scholarship program, disaggregated, to the extent possible, by race, ethnicity, gender, county of origin, age, and median family income;
     (d) The number and amount of the scholarships actually awarded, and whether the scholarships were paid from the scholarship account or the endowment account;
     (e) The institutions and eligible education programs in which opportunity scholarship participants enrolled, together with data regarding participants' completion and graduation;
     (f) The total amount of private contributions and state match moneys received for the opportunity scholarship program, how the funds were distributed between the scholarship and endowment accounts, the interest or other earnings on the accounts, and the amount of any administrative fee paid to the program administrator; and
     (g) Identification of the programs the ((opportunity scholarship)) board selected to receive opportunity expansion awards and the amount of such awards.
     (2) In the next succeeding legislative session following receipt of a report required under subsection (1) of this section, the appropriate committees of the legislature shall review the report and consider whether any legislative action is necessary with respect to either the opportunity scholarship program or the opportunity expansion program, including but not limited to consideration of whether any legislative action is necessary with respect to the nature and level of focus on high employer demand fields and the number and amount of scholarships.