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AN ACT Relating to higher education scholarships; reenacting and amending RCW 43.79A.040; adding a new chapter to Title 28B RCW; creating a new section; providing an expiration date; and declaring an emergency.

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 from low and middle-income families. 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. The higher education coordinating board shall design the Washington's promise scholarship program based on the following parameters:

(1) Scholarships shall be awarded to students who graduate from high school or its equivalent and who meet both academic and financial eligibility criteria.

(a) Before the K-12 certificate of mastery is required, academic eligibility criteria shall be as follows: (i) Students graduating from public and approved private high schools under chapter 28A.195 RCW in 2001 and 2002 must be in the top fifteen percent of their graduating class; (ii) beginning with the graduating class of 2003, students must pass all components of the Washington assessment of student learning that are required to be administered by school districts in accordance with RCW 28A.655.060 on their first attempt when they take it in the tenth grade or be in the top fifteen percent of their graduating class; and (iii) students participating in home-based instruction as provided in chapter 28A.200 RCW must pass all components of the Washington assessment of student learning on their first attempt when they take it in the tenth grade.

(b) After the K-12 certificate of mastery is required, students graduating from public and approved private high schools under chapter 28A.195 RCW, and participants in home-based instruction as provided in chapter 28A.200 RCW are academically eligible if they pass all parts of the certificate of mastery on their first attempt in the tenth grade.

(c) To meet the financial eligibility criteria, a student's family income shall not exceed one hundred thirty-five percent of the state median family income adjusted for family size as determined at the time of academic eligibility as determined in (a) or (b) of this subsection, except as otherwise determined in subsection (2) of this section.

(2) Promise scholarships are not intended to supplant any scholarship or tax program related to postsecondary education. If the board finds that promise scholarships supplant or reduce any grant, scholarship, or tax program for categories of students, then the board shall adjust the financial eligibility criteria or the amount of scholarship to the level necessary to avoid supplanting.

(3) The amount of promise scholarships shall not exceed the equivalent of two years' worth of tuition at the resident, full-time, community college tuition rate. Awards for the second year of the scholarship shall be made only to students who successfully complete their first year of postsecondary education. In determining the amount of scholarships, the board shall give the highest priority to awarding scholarships to the maximum number of potential eligible recipients.

(4) By October 15th of each year, beginning in 2001, the board shall determine the amount of the scholarships, after taking into consideration the availability of funds.

(5) The scholarships may only be used for undergraduate coursework at accredited institutions of higher education in the state of Washington.

(6) The scholarships must be used within six years of being awarded.

(7) The scholarships may be used for college-related expenses, including but not limited to, tuition, room and board, books, and materials.

(8) The scholarships may not be awarded to any student who is pursuing a degree in theology.

NEW SECTION. Sec. 3. (1) The higher education coordinating board, with the assistance of the institutions of higher education and the office of the superintendent of public instruction, shall evaluate the impact and the effectiveness of the Washington's promise scholarship program. The evaluation shall include, but not be limited to: (a) An analysis of what other financial assistance promise scholarship recipients are receiving through other federal, state, and institutional programs, including grants, work study, tuition waivers, tax credits, and loan programs; (b) an analysis of whether the implementation of the promise scholarship has had an impact on student indebtedness; and (c) an evaluation of what types of students are successfully completing high school but do not have the financial ability to attend college because they cannot obtain financial aid or the financial aid is insufficient. By November 1, 2001, the board shall report its findings and make recommendations to the governor and the legislature.

(2) This section expires December 31, 2001.

NEW SECTION. Sec. 4. The higher education coordinating board, with the assistance of the office of the superintendent of public instruction, shall implement and administer the Washington's promise scholarship program described in section 2 of this act as follows:

(1) The first scholarships shall be awarded to eligible students enrolling in postsecondary education in academic year 2001-02.

(2) The office of the superintendent of public instruction shall provide the information to the higher education coordinating board that is necessary for implementation of the program.

(a) For students graduating from high school in the top fifteen percent of their class, the office of the superintendent of public instruction shall provide the higher education coordinating board with student names, addresses, birth dates, and unique numeric identifiers as determined by each respective high school at the completion of the first term of the senior year.

(b) Beginning with the 2000-01 school year, the office of the superintendent of public instruction shall provide the names, addresses, birth dates, and unique numeric identifiers of tenth grade students who pass all components of 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 October 1st of each year following the receipt of assessment scores.

(c) All student data should be considered confidential and used solely for the purposes of providing scholarships to eligible students.

(3) The higher education coordinating board may adopt rules to implement this chapter.

NEW SECTION. Sec. 5. The Washington's promise scholarship program shall not be funded at the expense of the state need grant program as defined in RCW 28B.10.800 through 28B.10.824. In administering the state need grant and promise scholarship programs, the higher education coordinating board shall first ensure that eligibility for state need grant recipients is at least sixty-five percent of state median family income.

NEW SECTION. Sec. 6. (1) The Washington's promise scholarship account is created in the custody of the state treasurer. The account shall be a nontreasury account retaining its interest earnings in accordance with RCW 43.79A.040.

(2) 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 refunds of Washington's promise scholarships.

(3) Expenditures from the account shall be used for scholarships to eligible students.

(4) 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.

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

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

Sec. 7. RCW 43.79A.040 and 1999 c 384 s 8 and 1999 c 182 s 2 are each reenacted and 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 developmental disabilities endowment trust fund, the energy account, the fair fund, the game farm alternative account, the grain inspection revolving fund, the juvenile accountability incentive account, 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. 8. Sections 1, 2, and 4 through 6 of this act constitute a new chapter in Title 28B RCW.

NEW SECTION. Sec. 9. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.