AN ACT Relating to higher education scholarships; amending RCW 43.79A.040; 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 intends to strengthen the link between postsecondary education and K-12 education by creating the Washington's promise scholarship program for academically successful high school graduates. The legislature finds that, increasingly, an individual's economic viability is contingent on postsecondary educational opportunities, yet the state's full financial obligation is eliminated after the twelfth grade. Students who work hard in kindergarten through twelfth grade and successfully complete high school with high academic marks may not have the financial ability to attend college because they cannot obtain financial aid or the financial aid is insufficient.

NEW SECTION. Sec. 2. (1) The higher education coordinating board shall design and implement a Washington promise scholarship program that incorporates both academic and financial requirements, and shall give the highest priority to designing and implementing the Washington's promise scholarship program in a way that awards scholarships to the maximum number of potential recipients who qualify under this section. In designing the program, the board shall evaluate student debt burden, the state's financial aid programs, and the financial aid programs of its institutions of higher education in light of federal tax policies. Gaps in college opportunity and options or addressing them should be identified. To the extent possible, tax return data after April 1999 should be used to analyze which students and families benefit from the tax credits and the amounts they claim, and changes in claims over time.

(2) Beginning with the 10th grade class taking the Washington assessment of student learning during the 2000-2001 school year, students who pass all subjects on their first attempt meet the academic requirement for the scholarship.

(3) By the 2000-2001 school year, the higher education coordinating board's plan under this section shall be complete. The plan shall outline criteria extending eligibility for the promise scholarship to graduates of approved private high schools as defined in RCW 28A.195 and participants in home-based instruction as defined in RCW 28A.200.

(4) To meet the financial requirements of the scholarship, the student's family income must not exceed one hundred thirty-five percent of the state median family income.

(5) Within available funds, for each student qualifying for a scholarship under this section, the higher education coordinating board shall purchase from the advanced college tuition payment program tuition units up to an annual amount no greater than those equivalent to the full-time annual resident tuition at community college rates, as provided for in chapter 28B.95 RCW.

NEW SECTION. Sec. 3. (1) The Washington's promise scholarship program shall be administered by the higher education coordinating board.

(2) The office of the superintendent of public instruction shall provide the names of tenth grade students who pass the Washington assessment of student learning on their first attempt to the higher education coordinating board to assist the higher education coordinating board in awarding scholarships. This shall be done by July 15th of each summer following the receipt of assessment scores to enable students to use the scholarship upon completion of twelfth grade. All student data should be considered confidential and used solely for the purposes of providing scholarships to eligible students.

(3) The scholarship may only be used at accredited institutions of higher education in the state of Washington.

(4) Scholarships may not be transferred.

(5) Scholarships may not be refunded to students. Scholarships may only be returned to the higher education coordinating board.

(6) Scholarships awarded under this section may be used for college-related expenses, including but not limited to, tuition, room and board, books, materials, and transportation.

(7) The Washington's promise scholarship program is not intended to supplant any scholarship or tax program related to postsecondary education.

(8)(a) The Washington's promise scholarship 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.

(b) The higher education coordinating board shall deposit in the account all money received for the program. The account shall be self-sustaining and consist of funds appropriated by the legislature for the Washington's promise scholarship program, private contributions to the program, and receipts from refunds of tuition and fees.

(d) With the exception of the operating costs associated with the management of the account by the treasurer's office as authorized in chapter 43.79A RCW, the account shall be credited with all investment income earned by the account.

(e) Disbursements from the account are exempt from appropriations and the allotment provisions of chapter 43.88 RCW.

(f) Disbursements from the account shall be made only on the authorization of the higher education coordinating board.

(9) The higher education coordinating board may adopt rules to implement this section.

Sec. 4. RCW 43.79A.040 and 1998 c 268 s 1 are each amended to read as follows:

(1) Money in the treasurer's trust fund may be deposited, invested, and reinvested by the state treasurer in accordance with RCW 43.84.080 in the same manner and to the same extent as if the money were in the state treasury.

(2) All income received from investment of the treasurer's trust fund shall be set aside in an account in the treasury trust fund to be known as the investment income account.

(3) The investment income account may be utilized for the payment of purchased banking services on behalf of treasurer's trust funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasurer or affected state agencies. The investment income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.

(4)(a) Monthly, the state treasurer shall distribute the earnings credited to the investment income account to the state general fund except under (b) and (c) of this subsection.

(b) The following accounts and funds shall receive their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The Washington's promise scholarship account, the Washington advanced college tuition payment program account, the agricultural local fund, the American Indian scholarship endowment fund, the Washington international exchange scholarship endowment fund, the energy account, the fair fund, the game farm alternative account, the grain inspection revolving fund, the rural rehabilitation account, the stadium and exhibition center account, the youth athletic facility grant account, the self-insurance revolving fund, the sulfur dioxide abatement account, and the children's trust fund. However, the earnings to be distributed shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.

(c) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The advanced right of way revolving fund, the advanced environmental mitigation revolving account, the federal narcotics asset forfeitures account, the high occupancy vehicle account, the local rail service assistance account, and the miscellaneous transportation programs account.

(5) In conformance with Article II, section 37 of the state Constitution, no trust accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

NEW SECTION. Sec. 5. Sections 1 through 3 of this act constitute a new chapter in Title 28B RCW.