AN
ACT Relating to the advanced college tuition payment program; and amending RCW
28B.95.020, 28B.95.025, 28B.95.030, 28B.95.050, 28B.95.060, 28B.95.070,
28B.95.100, and 28B.95.110.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
28B.95.020 and 1997 c 289 s 2 are each amended to read as follows:
The
definitions in this section apply throughout this chapter, unless the context
clearly requires otherwise.
(1)
"Academic year" means the regular nine-month, three-quarter, or
two-semester period annually occurring between July 1st and June 30th.
(2)
"Account" means the Washington advanced college tuition payment
program account established for the deposit of all money received by the board
from eligible purchasers and interest earnings on investments of funds in the
account, as well as for all expenditures on behalf of eligible beneficiaries
for the redemption of tuition units.
(3)
"Board" means the higher education coordinating board as defined in
chapter 28B.80 RCW.
(4)
"Committee on advanced tuition payment" or "committee"
means a committee of the following members ((or their designees)): The
state treasurer, the director of the office of financial management, ((and
the chair)) the executive director of the higher education
coordinating board, or their designees, and two members to be appointed by
the governor, one representing program participants and one private business
representative with marketing, public relations, or financial expertise.
(5)
"Governing body" means the ((entity)) committee
empowered by the legislature to administer the Washington advanced college
tuition payment program.
(6)
"Contractual obligation" means a legally binding contract of the
state with the purchaser and the beneficiary establishing that purchases of
tuition units will be worth the same number of tuition units at the time of
redemption as they were worth at the time of the purchase.
(7)
"Eligible beneficiary" means the person for whom the tuition unit
will be redeemed for attendance at an institution of higher education. The
beneficiary is that person named by the purchaser at the time that a tuition
unit contract is accepted by the ((board)) governing body. With
the exception of tuition unit contracts purchased by qualified organizations as
future scholarships, the beneficiary must reside in the state of Washington or
otherwise be a resident of the state of Washington at the time the tuition unit
contract is accepted by the ((board)) governing body.
(8)
"Eligible purchaser" means an individual or organization that has
entered into a tuition unit contract with the ((board)) governing
body for the purchase of tuition units for an eligible beneficiary.
(9)
"Full-time tuition charges" means resident tuition charges at a state
institution of higher education for enrollments between ten credits and
eighteen credit hours per academic term.
(10)
"Institution of higher education" means an institution that offers
education beyond the secondary level and is ((accredited by a nationally
recognized accrediting association or is licensed to do business in the state
in which it is located)) recognized by the internal revenue service
under chapter 529 of the internal revenue code.
(11)
"Investment board" means the state investment board as defined in
chapter 43.33A RCW.
(12)
"State institution of higher education" means institutions of higher
education as defined in RCW 28B.10.016.
(13)
"Tuition and fees" means undergraduate tuition and services
and activities fees as defined in RCW 28B.15.020 and 28B.15.041 rounded to the
nearest whole dollar. The maximum tuition and fees charges recognized for
beneficiaries enrolled in a state technical college shall be equal to the
tuition and fees for the community college system.
(14)
"Tuition unit contract" means a contract between an eligible
purchaser and the ((board)) governing body, or a successor agency
appointed for administration of this chapter, for the purchase of tuition units
for a specified beneficiary that may be redeemed at a later date for an equal
number of tuition units.
(15)
"Unit purchase price" means the minimum cost to purchase one tuition
unit for an eligible beneficiary. Generally, the minimum purchase price is one
percent of the undergraduate weighted average tuition and fees for the
current year, rounded to the nearest whole dollar, adjusted for the costs of
administration and adjusted to ensure the actuarial soundness of the account. The
analysis for price setting shall also include, but not be limited to consideration
of past and projected patterns of tuition increases, program liability, past
and projected investment returns, and the need for a prudent stabilization
reserve.
(16)
"Weighted average tuition" shall be calculated as the sum of the
undergraduate tuition and services and activities fees for each four-year state
institution of higher education, multiplied by the respective full-time
equivalent student enrollment at each institution divided by the sum total of
undergraduate full-time equivalent student enrollments of all four-year state
institutions of higher education, rounded to the nearest whole dollar.
(17)
"Weighted average tuition unit" is the value of the weighted average
tuition and fees divided by one hundred. The weighted average is the basis
upon which tuition benefits are calculated for graduate program enrollments and
for attendance at nonstate institutions of higher education and is the basis
for any refunds provided from the program.
Sec.
2. RCW
28B.95.025 and 1998 c 69 s 2 are each amended to read as follows:
The
((committee)) board shall maintain appropriate offices and employ
and fix compensation of such personnel as may be necessary to perform ((its))
the advanced college tuition payment program duties ((including, but
not be limited to a director, an accountant, and a confidential secretary)).
The board shall consult with the governing body on the selection,
compensation, and other issues relating to the employment of the program
director. The positions are exempt from classified service under chapter
41.06 RCW. The employees shall be employees of the higher education
coordinating board.
Sec.
3. RCW
28B.95.030 and 1997 c 289 s 3 are each amended to read as follows:
(1)
The Washington advanced college tuition payment program shall be administered
by the committee on advanced tuition payment which shall be chaired by the ((representative
from the higher education coordinating)) executive director of the
board. The committee shall be supported by staff of the board.
(2)
((The committee shall assess the administration and projected financial
solvency of the program and make a recommendation to the legislature by the end
of the second year after July 27, 1997, as to disposition of the further
administration of the program.
(3)))(a)
The Washington advanced college tuition payment program shall consist of the
sale of tuition units, which may be redeemed by the beneficiary at a future
date for an equal number of tuition units regardless of any increase in the
price of tuition, that may have occurred in the interval.
(b)
Each purchase shall be worth a specific number of or fraction of tuition units
at each state institution of higher education as determined by the ((board))
governing body.
(c)
The number of tuition units necessary to pay for a full year's, full-time undergraduate
tuition and fee charges at a state institution of higher education shall be set
by the ((board)) governing body at the time a purchaser enters
into a tuition unit contract.
(d)
The governing body may limit the number of tuition units purchased by any one
purchaser or on behalf of any one beneficiary, however, no limit may be imposed
that is less than that necessary to achieve four years of full-time,
undergraduate tuition charges at a state institution of higher education. The
governing body also may, at its discretion, limit the number of participants,
if needed, to ensure the actuarial soundness and integrity of the program.
(((4)))
(3)(a) No tuition unit may be redeemed until two years after the
purchase of the unit. Units may be redeemed for enrollment at any institution
of higher education that is recognized by the internal revenue service under
chapter 529 of the internal revenue code.
(b)
Units redeemed at a nonstate institution of higher education or for graduate
enrollment shall be redeemed at the ((current weighted average tuition unit))
rate for state public institutions in effect at the time of redemption.
(((5)))
(4) The governing body shall determine the conditions under which the
tuition benefit may be transferred to another family member. In permitting
such transfers, the governing body may not allow the tuition benefit to be
bought, sold, bartered, or otherwise exchanged for goods and services by either
the beneficiary or the purchaser.
(((6)))
(5) The governing body shall administer the Washington advanced college
tuition payment program in a manner reasonably designed to be actuarially
sound, such that the assets of the trust will be sufficient to defray the
obligations of the trust including the costs of administration. The governing
body may, at its discretion, discount the minimum purchase price for certain
kinds of purchases such as those from families with young children, as long as
the actuarial soundness of the account is not jeopardized.
(((7)))
(6) The governing body shall annually determine current value of a
tuition unit and the value of the weighted average tuition unit.
(((8)))
(7) The governing body shall promote, advertise, and publicize the
Washington advanced college tuition payment program.
(((9)))
(8) In addition to any other powers conferred by this chapter, the
governing body may:
(a)
Impose reasonable limits on the number of tuition units or units that may be
used in any one year;
(b)
Determine and set any time limits, if necessary, for the use of benefits under
this chapter;
(c)
Impose and collect administrative fees and charges in connection with any
transaction under this chapter;
(d)
Appoint and use advisory committees as needed to provide program direction and
guidance;
(e)
Formulate and adopt all other policies and rules necessary for the efficient
administration of the program;
(f)
Consider the addition of an advanced payment program for room and board
contracts and also consider a college savings program;
(g)
Purchase insurance from insurers licensed to do business in the state, to
provide for coverage against any loss in connection with the account's
property, assets, or activities or to further insure the value of the tuition
units;
(h)
Make, execute, and deliver contracts, conveyances, and other instruments
necessary to the exercise and discharge of its powers and duties under this
chapter;
(i)
Contract for the provision for all or part of the services necessary for the
management and operation of the program with other state or nonstate entities
authorized to do business in the state;
(j)
Contract for other services or for goods needed by the ((board)) governing
body in the conduct of its business under this chapter;
(k)
((Employ all personnel as necessary to carry out its responsibilities under
this chapter and to fix the compensation of these persons;
(l)))
Contract with financial consultants, actuaries, auditors, and other consultants
as necessary to carry out its responsibilities under this chapter;
(((m)))
(l) Solicit and accept cash donations and grants from any person,
governmental agency, private business, or organization; and
(((n)))
(m) Perform all acts necessary and proper to carry out the duties and
responsibilities of this program under this chapter.
Sec.
4. RCW
28B.95.050 and 1997 c 289 s 5 are each amended to read as follows:
The
Washington advanced college tuition payment program is an essential state
governmental function. Contracts with eligible participants shall be
contractual obligations legally binding on the state as set forth in this
chapter. If, and only if, the moneys in the account are projected to be
insufficient to cover the state's contracted expenses for a given biennium,
then the legislature shall appropriate to the account the amount necessary to
cover such expenses.
The
tuition and fees charged by ((a state)) an eligible institution
of higher education to an eligible beneficiary for a current enrollment shall
be paid by the account to the extent the beneficiary has remaining unused
tuition units for the appropriate school. ((The tuition and fees charged to
a beneficiary for graduate level enrollments or by a nonstate institution of
higher education shall be paid by the account to the extent that the
beneficiary has remaining weighted average tuition units.))
Sec.
5. RCW
28B.95.060 and 1998 c 69 s 4 are each amended to read as follows:
(1)
The Washington advanced college tuition payment program account is created in
the custody of the state treasurer. The account shall be a discrete
nontreasury account retaining its interest earnings in accordance with RCW
43.79A.040.
(2)
The governing body shall deposit in the account all money received for the
program. The account shall be self-sustaining and consist of payments received
from purchasers of tuition units and funds received from other sources, public
or private. With the exception of investment and operating costs associated
with the investment of money by the investment board paid under RCW 43.33A.160
and 43.84.160, the account shall be credited with all investment income earned
by the account. Disbursements from the account are exempt from appropriations
and the allotment provisions of chapter 43.88 RCW. Money used for program
administration is subject to the allotment ((and budgetary controls of
chapter 43.88 RCW, and)) of all expenditures. However, an
appropriation is not required for such expenditures. Program
administration shall include, but not be limited to: The salaries and expenses
of the program personnel including lease payments, travel, and goods and
services necessary for program operation; contracts for program promotion and
advertisement, audits, and account management; and other general costs of
conducting the business of the program.
(3)
The assets of the account may be spent without appropriation for the purpose of
making payments to institutions of higher education on behalf of the qualified
beneficiaries, making refunds, transfers, or direct payments upon the
termination of the Washington advanced college tuition payment program.
Disbursements from the account shall be made only on the authorization of the
((board)) governing body.
(4) With regard to the assets of the account, the state acts in
a fiduciary, not ownership, capacity. Therefore the assets of the program are
not considered state money, common cash, or revenue to the state.
Sec.
6. RCW
28B.95.070 and 1997 c 289 s 7 are each amended to read as follows:
(1)
The investment board has the full power to invest, reinvest, manage, contract,
sell, or exchange investment money in the account. All investment and
operating costs associated with the investment of money shall be paid pursuant
to 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 account.
(2)
All investments made by the investment board shall be made with the exercise of
that degree of judgment and care pursuant to RCW 43.33A.140 and the investment
policy established by the state investment board.
(3)
As deemed appropriate by the investment board, money in the account may be
commingled for investment with other funds subject to investment by the board.
(4)
The authority to establish all policies relating to the account, other than the
investment policies as set forth in subsections (1) through (3) of this
section, resides with the ((board)) governing body. With the
exception of expenses of the investment board set forth in subsection (1) of
this section, disbursements from the account shall be made only on the
authorization of the governing body, and money in the account may be spent only
for the purposes of the program as specified in this chapter.
(5)
The investment board shall routinely consult and communicate with the governing
body on the investment policy, earnings of the trust, and related needs of the
program.
Sec.
7. RCW
28B.95.100 and 1997 c 289 s 10 are each amended to read as follows:
(1)
The ((committee)) governing body, in planning and devising the
program, shall consult with the investment board, the state treasurer, ((the
state actuary,)) the office of financial management, and the institutions
of higher education.
(2)
The governing body may seek the assistance of the state agencies named in
subsection (1) of this section, private financial institutions, and any other
qualified party with experience in the areas of accounting, actuary, risk
management, or investment management to assist with preparing an accounting of
the program and ensuring the fiscal soundness of the account.
(3)
State agencies and public institutions of higher education shall fully
cooperate with the governing body in matters relating to the program in order
to ensure the solvency of the account and ability of the governing body to meet
outstanding commitments.
Sec.
8. RCW
28B.95.110 and 1997 c 289 s 12 are each amended to read as follows:
(1)
The intent of the Washington advanced college tuition payment program is to
redeem tuition units for attendance at an institution of higher education.
Refunds shall be issued under specific conditions that may include the
following:
(a)
Certification that the beneficiary, who is eighteen years of age or older, will
not attend an institution of higher education, will result in a refund not to
exceed ((ninety-five percent of)) the current weighted average tuition
and fees in effect at the time of such certification minus a penalty at the
rate established by the internal revenue service under chapter 529 of the
internal revenue code. No more than one hundred tuition units may be
refunded per year to any individual making this certification. The refund
shall be made no sooner than ninety days after such certification, less any
administrative processing fees assessed by the governing body((. The
governing body may, at its discretion, impose a greater penalty));
(b)
If there is certification of the death or disability of the beneficiary, the
refund shall be equal to one hundred percent of any remaining unused tuition units
valued at the current weighted average tuition units at the time that such
certification is submitted to the ((board)) governing body, less
any administrative processing fees assessed by the ((board)) governing
body;
(c)
If there is certification by the student of graduation or program completion,
the refund ((may)) shall be as great as one hundred percent of
any remaining unused weighted average tuition units at the time that such
certification is submitted to the governing body, less any administrative
processing fees assessed by the governing body. The governing body may, at its
discretion, impose a penalty if needed to comply with federal tax rules;
(d)
If there is certification of other tuition and fee scholarships, which
will cover the cost of tuition for the eligible beneficiary. The refund shall
be equal to one hundred percent of the current weighted average tuition units
in effect at the time of the refund request, plus any administrative processing
fees assessed by the governing body. The refund under this subsection may not
exceed the value of the scholarship;
(e)
Incorrect or misleading information provided by the purchaser or beneficiaries
may result in a refund of the purchaser's investment, less any administrative
processing fees assessed by the governing body. The value of the refund will
not exceed the actual dollar value of the purchaser's contributions; and
(f)
The governing body may determine other circumstances qualifying for refunds of
remaining unused tuition units and may determine the value of that refund.
(2) With the exception of subsection (1)(b) ((and)),
(e), and (f) of this section no refunds may be made before the ((beneficiary
is at least eighteen years of age)) units have been held for two years.
