AN ACT Relating to college savings bonds; 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 declares that for the benefit of the people of the state of Washington, the conduct and increase of their commerce, the protection and enhancement of their welfare, the development of continued prosperity and the improvement of their health and living conditions, it is essential that this and future generations of youth be given the fullest opportunity to learn and to develop their intellectual and mental capacities and skills. The legislature further finds that to achieve these ends it is of the utmost importance that Washington residents be provided with investment alternatives to enhance their financial access to institutions of higher education. The purpose of this chapter is to encourage parents and other persons to save so that future generations may attend higher education institutions, to provide an alternative low-cost method of borrowing to benefit higher education institutions, and to encourage enrollment in institutions of higher education in the state.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Bonds" means general obligation bonds of the state of Washington issued under the authority of this chapter.

(2) "Institution of higher education" means: (a) Any public university, college, community college, or vocational- technical institution operated by the state of Washington, or any political subdivision thereof; or (b) any other university, college, school, or institution in the state of Washington offering instruction beyond the high school level which is a member institution of an accrediting association recognized by rule of the board for the purposes of this chapter, and which grants entry without regard to race, creed, color, religion, sex, or ancestry.

(3) "Board" means the higher education coordinating board.

NEW SECTION. Sec. 3. For the purpose of providing needed capital improvements consisting of the acquisition, construction, remodeling, furnishing and equipping of state buildings and facilities for the state institutions of higher education, including facilities for the community college system, the state finance committee is authorized to issue general obligation bonds of the state of Washington in the sum of ____________________ dollars, or so much thereof as may be required, to finance these projects, and all costs incidental thereto.

No bonds may be offered for sale without prior legislative appropriation.

The bonds shall pledge the full faith and credit of the state of Washington and shall contain an unconditional promise to pay the principal thereof and interest thereon when due.

NEW SECTION. Sec. 4. The state finance committee is authorized to prescribe the form, terms, conditions, and covenants of the bonds, the time or times of sale of all or any portion of them, and the manner of their sale and issuance. However, if and to the extent that the state finance committee determines it is economically feasible and in the best interest of the state to do so, the bonds shall be sold at a "deep discount" from their par value.

NEW SECTION. Sec. 5. The proceeds from the sale of the bonds, together with all grants, donations, transferred funds, and all other moneys which the state finance committee may direct the state treasurer to deposit therein, shall be deposited in the state building construction account of the general fund in the state treasury. All such proceeds shall be used exclusively for the purposes specified in section 3 of this act and for incidental costs and costs relating to the payment of the expenses incurred in connection with the sale and issuance of the bonds.

NEW SECTION. Sec. 6. The state higher education bond retirement fund of 1988 is hereby created in the state treasury and shall be used for the purpose of the payment of principal of and interest on the bonds.

The state finance committee, on or before June 30th of each year, shall certify to the state treasurer the amount required in the next succeeding twelve months for the payment of the principal of and the interest coming due on the bonds and any amounts required to be set aside in the state higher education bond retirement fund of 1988 pursuant to the bond resolution. Not less than thirty days prior to the date on which any interest or principal and interest payment is due, or any date on which any funds are required by the bond resolution to be transferred to the state higher education bond retirement fund of 1988, the state treasurer shall withdraw from any general state revenues received in the state treasury and deposit in the state higher education bond retirement fund of 1988 an amount equal to the amount certified by the state finance committee to be due on the payment date or required to be set aside in the state higher education bond retirement fund of 1988.

The owner and holder of each of the bonds or the trustee for the owner and holder of any of the bonds may by mandamus or other appropriate proceeding require the transfer and payment of funds as directed in this section.

NEW SECTION. Sec. 7. The bonds shall constitute a legal investment for all state funds or for funds under state control and all funds of municipal corporations.

NEW SECTION. Sec. 8. (1) In marketing the bonds and consistent with other provisions of law, the state finance committee shall consider methods for encouraging purchase of the bonds as a means of college savings.

(2) The state finance committee may provide additional financial incentives to holders of the bonds to encourage the enrollment and attendance of students at institutions of higher education. Such financial incentives shall be in such forms as determined by the state finance committee and may include supplemental payments to a holder of such bonds at maturity who can demonstrate his or her or a dependent's enrollment and attendance at an institution of higher education in accordance with rules of the board. Such financial incentives shall be provided only if, in the sole judgment of the state finance committee, the cost of such incentives shall not cause the cost to the state of the bonds being sold to be increased by more than one-half of one percent.

(3) The incentive shall not be paid to assist in the financing of the education of any student who is pursuing a degree in theology.

NEW SECTION. Sec. 9. To encourage purchase of the bonds for college savings, the board may, in determining eligibility of a student for financial aid, exclude up to the first twenty-five thousand dollars of bonds or accumulated bonds and interest of the student, parents, or individual legally responsible for the care and maintenance of the student. The board shall adopt rules for determining such exclusions, including the aid programs to which the exclusion applies.

NEW SECTION. Sec. 10. The state finance committee and the board shall evaluate the effectiveness of the college savings bond program created by this chapter, and report to the governor and the appropriate committees of the house and the senate about the program and any changes recommended by December 1, 1991.

NEW SECTION. Sec. 11. The board shall develop and implement an educational program and marketing strategies designed to inform parents about the options available for financing a college education, including college savings bonds, and the need to accumulate the financial resources necessary to pay for a college education.

NEW SECTION. Sec. 12. This act may be known and cited as the college savings bond act.

NEW SECTION. Sec. 13. Sections 1 through 12 of this act shall constitute a new chapter in Title 28B RCW.

NEW SECTION. Sec. 14. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.