SENATE BILL REPORT

SB 6591

BYSenators Saling, Smitherman, Johnson, Rinehart, von Reichbauer, McMullen, Anderson, Gaspard, Patterson, Stratton, Cantu, Garrett and Smith.

Establishing a college savings bond program.

Senate Committee on Higher Education

Senate Hearing Date(s):February 1, 1988

Majority Report:  That Substitute Senate Bill No. 6591 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Saling, Chairman; Patterson, Vice Chairman; Anderson, McMullen, Smitherman, von Reichbauer.

Senate Staff:Jo-Ellen Thomas (786-7784)

                  February 2, 1988

AS REPORTED BY COMMITTEE ON HIGHER EDUCATION, FEBRUARY 1, 1988

BACKGROUND:

The cost of a college education is continually increasing.  Many Washington citizens are unable to meet rising college costs.  The Legislature feels it is of the utmost importance that those who wish to obtain a college education can afford to do so.  In order to assist Washington citizens in financing their college costs, and to encourage enrollment in Washington colleges and universities, the Legislature establishes a college savings bond program.

SUMMARY:

In order to provide funds for higher education capital projects, the State Finance Committee is authorized to issue $ 50 million in college savings bonds.  The bonds can be used by Washington residents at nationally accredited Washington colleges and universities.  The bond sale is regulated by the State Finance Committee.  The Committee is authorized also to develop bond marketing methods, and if deemed feasible, may create additional financial incentives to make the bonds an attractive investment.  The bonds may be sold at a deep discount, and bond proceeds are deposited into the state building construction account.  The state higher education bond retirement fund of 1988 is created in the state treasury.

As an incentive to purchase the bonds, up to $25,000 in bonds, or their accumulated principal and interest, may be excluded when calculating student assets in financial aid determinations.  The Higher Education Coordinating Board creates and implements bond marketing and publicity strategies.  The State Finance Committee and the Higher Education Coordinating Board must report on the bond program's effectiveness by December 1, 1990.

EFFECT OF PROPOSED SUBSTITUTE:

The State Finance Committee is authorized to issue $50 million in college savings bonds.  The bonds can be used by Washington residents at Washington public universities, colleges, community colleges, and at private universities and colleges which are members of accrediting associations recognized by the Higher Education Coordinating Board.  The bonds may not be used to attend private colleges or universities which require religious worship, exercise, or instruction.  The authority of the State Finance Committee to create additional financial incentives to buy the bonds is revoked.  Other revisions are technical in nature.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested January 27, 1988

Senate Committee - Testified: Tim Kerr, State Treasurer