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.
