AN ACT Relating to college savings bonds; amending RCW 28B.106.005, 28B.106.010, and 28B.106.900; adding a new section to chapter 39.42 RCW; adding new sections to chapter 28B.106 RCW; creating a new section; repealing RCW 28B.106.901; and making an appropriation.

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

NEW SECTION. Sec. 1. A new section is added to chapter 39.42 RCW to read as follows:

For any future bond authorization which includes funds for the acquisition, construction, remodeling, furnishing, and equipping of state buildings and facilities for the state institutions of higher education, including facilities for the state community college system, the state finance committee, if it determines it is economically feasible and in the best interest of the state, may issue college savings bonds of the state of Washington.

The state finance committee shall determine by resolution whether interest on all or any part of the bonds is to be payable periodically during the term of such bonds or only at the maturity thereof. For purposes of the limitations on the amount of bonds authorized to be issued contained in the acts authorizing their issuance, the amount of bonds which pay interest only at maturity shall be equal to the price, exclusive of accrued interest, at which the bonds are initially offered to the public.

Sec. 2. Section 8, chapter 125, Laws of 1988 and RCW 28B.106.005 are each amended to read as follows:

The legislature finds it essential that this and future generations of children be allowed the fullest opportunity to learn and to develop their intellectual and mental capacities and skills at the postsecondary level. The legislature is greatly concerned about the ever-increasing costs of obtaining higher education. The purpose of this chapter and section 1 of this act is to assist Washington residents in their quest for higher education and to encourage financial planning to meet higher education costs by creating a college savings bond program.

Sec. 3. Section 9, chapter 125, Laws of 1988 and RCW 28B.106.010 are each amended to read as follows:

The following definitions shall apply throughout this chapter, unless the context clearly indicates otherwise:

(1) "College savings bonds" or "bonds" are Washington state general obligation bonds, issued under the authority of and in accordance with ((~~this chapter~~)) RCW 28B.106.020 through 28B.106.060, except that as used in sections 6 through 10 of this act, "bonds" means Washington state general obligation bonds issued under the authority of and in accordance with section 1 of this act.

(2) "Board" means the higher education coordinating board, or any successor thereto.

(3) "College savings bond program" means the issuance of college savings bonds under this chapter or section 1 of this act.

(4) "Year" means the period from July 1 of one year through June 30 of the following year.

(5) "Eligible student" means a person who:

(a) Applies to the board for an award under this section;

(b) At the time of application, is enrolled at an institution of higher education;

(c) Has been designated by a holder of college savings bonds issued under section 1 of this act that have matured within two years prior to the date of the application to receive an award under section 7 of this act. The holder making the designation shall have continuously owned the bonds for at least five years prior to maturity or shall have acquired ownership of the bonds under the laws of descent and distribution;

(d) Demonstrates to the board that all of the amounts paid at maturity of the bonds were used, directly or indirectly, for the payment of educational expenses in connection with attendance at an institution of higher education and that the award will be used for the payment of educational expenses in connection with attendance at an institution of higher education; and

(e) Meets any other eligibility requirements established by the board for purposes of the college savings bond program.

(6) "Institution of higher education" means a university, college, community college, vocational-technical school, or other school in the state of Washington offering instruction beyond the high school level that is a member institution of an accrediting association recognized by rule of the board for purposes of the college savings bond program.

(7) "Educational expenses" means tuition, fees, books and supplies, room, board, and other educational expenses as determined by the board.

(8) "Accreted value at maturity" means the accreted value of any bond on the date all of the principal and interest thereof and thereon is scheduled to be paid.

Sec. 4. Section 15, chapter 125, Laws of 1988 and RCW 28B.106.900 are each amended to read as follows:

The board and the state finance committee shall evaluate the effectiveness of the college savings bond program ((~~created by this chapter,~~)) and shall submit a report about the program, and recommended changes, to the governor and the appropriate standing committees of the senate and house of representatives on or before December 1, 1990. ((~~In the report, the board shall consider the advisability of offering incentives to purchase college savings bonds.~~))

NEW SECTION. Sec. 5. To encourage financial planning to meet higher education costs and the enrollment of students in Washington institutions of higher education, the board shall make college savings bond program awards to eligible students under section 6 of this act. The making of awards shall be subject to the availability of funds.

NEW SECTION. Sec. 6. The board shall award to an eligible student two hundred dollars for each five thousand dollars of accreted value at maturity of bonds that have been designated for the student. No student shall receive an award for any year of more than six hundred dollars. No award shall be made which would, together with the accreted value at maturity of bonds designated for the student for the year, exceed the educational expenses of the student. No awards shall be made to assist in the financing of the education of any student who is pursuing a degree in theology.

NEW SECTION. Sec. 7. The board may solicit and receive such gifts, grants, and endowments from public or private sources as may be made from time to time, in trust or otherwise, for the use and benefit of the purposes of the college savings bond program and may expend the same or any income therefrom according to the terms of the gifts, grants, or endowments.

NEW SECTION. Sec. 8. The board shall adopt rules to implement sections 5 through 7 of this act.

NEW SECTION. Sec. 9. The state finance committee shall provide necessary information to the board for the purpose of making the awards.

NEW SECTION. Sec. 10. The college savings bond account is established in the custody of the state treasurer. All moneys appropriated for college savings bond awards and all moneys received under section 8 of this act shall be deposited in the account. Moneys in the account may be spent only for awards under section 6 of this act. Disbursements from the account shall be on authorization of the board. The account is subject to the allotment procedure provided under chapter 43.88 RCW, but no appropriation is required for disbursements. RCW 43.84.090 does not apply to the college savings bond account.

NEW SECTION. Sec. 11. Section 18, chapter 125, Laws of 1988 and RCW 28B.106.901 are each repealed.

NEW SECTION. Sec. 12. The sum of .......... dollars, or as much thereof as may be necessary, is appropriated from the general fund for the biennium ending June 30, 1991, to the higher education coordinating board to be deposited in the college savings bond account to carry out the purposes of this act.

NEW SECTION. Sec. 13. Sections 5 through 10 of this act are each added to chapter 28B.106 RCW.