AN ACT Relating to
college payment programs; amending RCW 28B.95.020, 28B.95.110, and 43.79A.040;
adding a new section to chapter 28B.95 RCW; providing an effective date; and
declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF
WASHINGTON:
Sec. 1. RCW 28B.95.020 and 2000
c 14 s 1 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 and for the development of any authorized
college savings program pursuant to section 2 of this act.
(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: The state treasurer, the director of the office of
financial management, 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 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 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 governing
body.
(8) "Eligible
purchaser" means an individual or organization that has entered into a
tuition unit contract with the 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 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 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)) may be calculated ((for graduate
program enrollments and for attendance at nonstate institutions of higher
education and is)) as the basis for any refunds provided from the
program.
NEW SECTION. Sec.
2. A new section is added
to chapter 28B.95 RCW to read as follows:
(1) The committee may
establish a college savings program. If such a program is established, the
college savings program shall be established, in such form as may be determined
by the committee, to be a qualified state tuition program as defined by the
internal revenue service under section 529 of the internal revenue code, and
shall be administered in a manner consistent with the Washington advanced
college tuition payment program. The committee, in planning and devising the
program, shall consult with the state investment board, the state treasurer, a
qualified actuarial consulting firm with appropriate expertise to evaluate such
plans, the legislative fiscal and higher education committees, and the
institutions of higher education.
(2) Up to two hundred
thousand dollars of administrative fees collected from guaranteed education
tuition program participants may be applied as a loan to fund the development
of a college savings program. This loan must be repaid with interest before
the conclusion of the biennium in which the committee draws funds for this
purpose from the advanced college tuition payment program account.
(3) If such a college
savings program is established, the college savings program account is created
in the custody of the state treasurer for the purpose of administering the
college savings program. If created, the account shall be a discrete
nontreasury account in the custody of the state treasurer. Interest earnings shall
be retained in accordance with RCW 43.79A.040. Disbursements from the account,
except for program administration, are exempt from appropriations and the
allotment provisions of chapter 43.88 RCW. Money used for program
administration is subject to the allotment provisions, but without
appropriation.
(4) The committee,
after consultation with the state investment board, shall determine the
investment policies for the college savings program. Program contributions may
be invested by the state investment board or the committee may contract with an
investment company licensed to conduct business in this state to do the
investing. The committee shall keep or cause to be kept full and adequate
accounts and records of the assets of each individual participant in the
college savings program.
(5) Neither the state
nor any eligible educational institution may be considered or held to be an
insurer of the funds or assets of the individual participant accounts in the
college savings program created under this section nor may any such entity be
held liable for any shortage of funds in the event that balances in the
individual participant accounts are insufficient to meet the educational
expenses of the institution chosen by the student for which the individual
participant account was intended.
(6) The committee shall
adopt rules to implement this section. Such rules shall include but not be
limited to administration, investment management, promotion, and marketing;
compliance with internal revenue service standards; application procedures and
fees; start-up costs; phasing in the savings program and withdrawals therefrom;
deterrents to early withdrawals and provisions for hardship withdrawals; and
reenrollment in the savings program after withdrawal.
(7) The committee may,
at its discretion, determine to cease operation of the college savings program
if it determines the continuation is not in the best interest of the state.
The committee shall adopt rules to implement this section addressing the
orderly distribution of assets.
Sec. 3. RCW 28B.95.110 and 2000
c 14 s 8 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 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;
(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)) value, as
determined by the governing body, at the time that such certification is
submitted to the governing body, less any administrative processing fees
assessed by the governing body;
(c) If there is
certification by the student of graduation or program completion, the refund
shall be as great as one hundred percent of any remaining unused ((weighted average))
tuition units at the current value, as determined by the governing body,
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)) value of
tuition units, as determined by the governing body, in effect at the
time of the refund request, ((plus)) less 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), (e), and (f) of this section no refunds may be made
before the units have been held for two years.
Sec. 4. RCW 43.79A.040 and 2000
c 79 s 45 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 college
savings program account, the Washington advanced college tuition payment
program account, the agricultural local fund, the American Indian scholarship
endowment fund, the basic health plan self-insurance reserve account, 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. 5. Section 3 of 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 July 1, 2001.
