AN ACT Relating to undergraduate fellowships for needy and meritorious students; 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 recognizes that quality in the state's institutions of higher education would be strengthened by additional partnerships between citizens and the institutions. The legislature intends to foster these partnerships by creating a matching grant program to assist institutions of higher education and their foundations in creating endowments for funding fellowships or scholarships for needy or meritorious undergraduate students.

NEW SECTION. Sec. 2. The Washington undergraduate fellowship and scholarship trust fund program is established. The purposes of the program are to assist Washington's accredited public and independent institutions of higher education and private career schools and colleges to raise private funds and create endowments for needy or meritorious resident undergraduate students attending in-state institutions of higher education.

NEW SECTION. Sec. 3. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

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

(2) "Endowment fund" or "local endowment fund" means a fund established to receive the private donations and state matching funds under this chapter by a public institution of higher education or the institution of higher education's foundation or by the foundation of an independent institution of higher education or a private career school or college.

(3) "Foundation" means a private, nonprofit corporation that:

(a) Is registered under Title 24 RCW and qualifies as a tax-exempt entity under section 501(c)(3) of the federal internal revenue code;

(b) Exists solely for the benefit of one or more institutions of higher education located in the state of Washington; and

(4) "Institution of higher education" means an entity that is:

(a)(i) An institution of higher education as defined in RCW 28B.10.016;

(ii) An independent institution of higher education that meets the definition of higher education institution in RCW 28B.07.020(4); and

(iii) A private career school or college authorized to operate in the state under chapter 28C.10 RCW;

(b) Located in the state of Washington;

(d) In compliance with conditions adopted by the board for the program; and

(e) Accepted by the board for participation in the program in this chapter.

(5) "Meritorious student" means a student who:

(a) Would meet the residency requirements of RCW 28B.15.012(2), as demonstrated in RCW 28B.15.013, if the student were enrolled in a state institution of higher education;

(b) Is meritorious, as defined by the institution of higher education that the student attends or by the foundation that is administering the fellowship or scholarship, and includes but is not limited to needy students with 3.00 or above grade point average or involvement in community or campus activities; and

(6) "Needy student" means a student who:

(a) Would meet the residency requirements of RCW 28B.15.012(2), as demonstrated in RCW 28B.15.013, if the student were enrolled in a state institution of higher education;

(b) Is needy, as defined in RCW 28B.10.802(3); and

(7) "Trust fund" means the undergraduate fellowship and scholarship trust fund established under section 5 of this act.

NEW SECTION. Sec. 4. The undergraduate fellowship and scholarship trust fund program shall be administered by the board. In consultation with eligible institutions of higher education, the board shall establish guidelines for the program. In its administration of the program, the board's duties may include, but need not be limited to:

(1) The adoption of rules, deadlines, and procedures;

(2) When the conditions of section 6(4) of this act are met, the release of state matching funds to (a) eligible institutions of higher education as defined in RCW 28B.10.016 or their foundations and to (b) the foundations of eligible independent institutions of higher education and eligible private career schools and colleges;

(3) The adoption of an annual allocation system based on factors that may include, but need not be limited to: The amount of money available in the trust fund; the characteristics of potential participating institutions including the numbers of eligible students enrolled in each such institution of higher education, adjusted by each eligible student's rate of enrollment; the amount of private cash donations that each potential participating institution of higher education commits to raise annually for the program; and the amount of money previously received by each participating institution of higher education or institutional foundation. Any allocation system shall be superseded by conditions in any legislative act appropriating funds for the program;

(4) The adoption of contracts with participating institutions of higher education and foundations. The contracts may include any conditions required of participants by the board, including but not limited to: (a) Provisions for the protection of state matching moneys administered by foundations; (b) requirements to provide the board with the results of an annual audit of participating foundations; and (c) requirements to maintain records on the disposition of state and private matching funds and to provide an accounting of the number and characteristics of students assisted through the program;

(5) The adoption of policies that maximize the distribution of trust fund and matching moneys to eligible institutions of higher education or foundations;

(6) The adoption of a mechanism to reallocate unused funds to institutions of higher education or foundations if the institutions of higher education or foundations have used their annual allotment of state matching moneys and have raised additional private donations for which the state matching funds were not available; and

(7) The preparation and distribution of an annual report on the results of the program. The report shall include an accounting of the students who have benefited through the program.

NEW SECTION. Sec. 5. Funds appropriated by the legislature for the undergraduate fellowship and scholarship program shall be deposited in the undergraduate fellowship and scholarship trust fund. The trust fund shall be administered by the state treasurer. At the request of the board, the treasurer shall release the state matching funds to the designated institution of higher education's or foundation's local endowment fund. No appropriation is required for expenditures from the trust fund.

NEW SECTION. Sec. 6. Subject to rules adopted by the board:

(1) All institutions of higher education as defined in RCW 28B.10.016 are eligible for state matching funds from the trust fund.

(2) All foundations of institutions of higher education as defined in RCW 28B.10.016 shall be eligible for matching funds if the foundations meet the requirements adopted by the board.

(3) The foundations of independent higher education institutions and private career schools and colleges shall be eligible for matching funds if the foundations meet the requirements adopted by the board.

(4) Independent higher education institutions and private career schools and colleges are not eligible to receive state matching funds under the program.

(5) Eligible institutions of higher education and foundations may apply to the board for twenty-five thousand dollars from the fund when they can match the state funds with an equal amount of cash donations from private sources. These donations shall be made specifically to the undergraduate fellowship and scholarship program, and shall be donated after July 1, 1997.

(6) Upon an application by an institution of higher education or a foundation, the board may designate twenty-five thousand dollars from the trust fund for the local endowment fund of the institution of higher education or foundation.

(7) Once the private donation is received by the institution of higher education, the board shall ask the state treasurer to release the state matching funds to a local endowment fund established by the institution of higher education or the foundation for the undergraduate fellowships or scholarships.

NEW SECTION. Sec. 7. The foundation of an institution of higher education as defined in RCW 28B.10.016 is eligible to receive moneys from the trust fund only if the foundation and the governing board of the institution of higher education for whose benefit the foundation exists have entered into a contract, approved by the attorney general that:

(1) Specifies the services to be provided by the foundation;

(2) Provides for the protection of any state matching funds under the foundation's control that were provided under the program;

(3) Provides for the institution of higher education's assumption of the ownership, management, and control of program funds if the foundation ceases to exist, fails to function properly, or fails to provide the specified services in accordance with the contract; and

(4) Includes other conditions specified by the board.

NEW SECTION. Sec. 8. The foundation of one or more independent colleges or universities or private career schools or colleges is eligible to receive moneys from the trust fund only if the foundation and the board have entered into a contract, approved by the attorney general that:

(1) Specifies the services to be provided by the foundation;

(2) Provides for the protection of any state matching funds under the foundation's control that were provided under the program;

(3) Provides for the board's assumption of the ownership, management, and control of program funds if the foundation ceases to exist, fails to function properly, or fails to provide the specified services in accordance with the contract;

(4) Guarantees that program funds shall not be used for any student who is not eligible to receive a state grant under the religious provisions of RCW 28B.101.040; and

(5) Includes other conditions specified by the board.

NEW SECTION. Sec. 9. (1) The undergraduate fellowship or scholarship provided under this chapter is the property of the institution of higher education or foundation and may be named in honor of a donor, benefactor, or honoree of the institution of higher education or foundation, at the option of the institution of higher education or the foundation.

(2) The institution of higher education or the foundation is responsible for soliciting private donations, investing and maintaining all endowment funds, administering the fellowship or scholarship, and reporting on the program to the board upon request. The institution of higher education or foundation may augment the endowment fund with additional private donations. The principal of the invested endowment fund shall not be invaded.

(3) The institution of higher education or the foundation shall include a representative of the undergraduate student body when selecting undergraduate fellowship and scholarship recipients.

(4) The proceeds from the endowment fund may be used to provide fellowship or scholarship stipends to be used by the recipient for such things as tuition and fees, books and supplies, subsistence, research expenses, and other educationally related costs.

(5) Institutions, in the awarding of undergraduate fellowships or scholarships, shall require that recipients demonstrate satisfactory academic progress toward program completion. Further, institutions shall provide a probationary opportunity for recipients who do not demonstrate satisfactory academic progress.

NEW SECTION. Sec. 10. Any private or public money, including all investment income, deposited in the Washington undergraduate fellowship and scholarship trust fund or any local endowment for fellowship or scholarship programs shall not be subject to collective bargaining.

NEW SECTION. Sec. 11. Sections 1 through 10 of this act constitute a new chapter in Title 28B RCW.