BILL REQ. #:  S-0234.2 

Read first time 01/10/2007.   Referred to Committee on Higher Education.

     AN ACT Relating to the guaranteed opportunities scholarship; amending RCW 28B.95.020, 28B.95.030, and 28B.95.060; reenacting and amending RCW 43.79A.040; adding a new section to chapter 28B.95 RCW; 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 inspire and encourage all Washington students to dream big by creating a guaranteed one-year tuition scholarship program for students from low and middle-income families and those students that may be the first in their family to attend college. The legislature finds that too often, financial barriers prevent many of the brightest students from considering college as a future possibility. Often the cost of tuition coupled with the complexity of finding and applying for financial aid is enough to prevent a student from even applying to college. Many students become disconnected from the education system early on and may give up or drop out before graduation. It is the intent of the legislature to reward students early in their educational career so that they know they have options and opportunities available beyond high school.

NEW SECTION.  Sec. 2   The higher education coordinating board shall design the guaranteed opportunities scholarship in accordance with this section.
     (1) Eligible students shall be notified of their eligibility for the guaranteed opportunities scholarship program beginning in their seventh grade year and each year thereafter. Students shall also be notified of the requirements for award of the scholarship.
     (2) Scholarships shall be awarded to students graduating from public high schools and approved private high schools under chapter 28A.195 RCW.
     (3) "Eligible students" are those students who qualify for free- or reduced-price lunch or students whose parents have not completed a baccalaureate degree program. If a student qualifies in the seventh grade, the student remains eligible even if the student does not receive free- or reduced-price lunch or a parent receives a baccalaureate degree thereafter.
     (4) To receive the guaranteed opportunities scholarship, a student must graduate from a public high school or an approved private high school under chapter 28A.195 RCW in Washington, must have maintained a C average or better throughout high school, and must have no felony conviction record.
     (5) A student's family income will be assessed upon graduation before awarding the scholarship. If the family income exceeds one hundred percent of the state median family income adjusted for family size, as determined by the higher education coordinating board for each graduating class, the student shall receive a prorated scholarship.
     (6) The maximum scholarship amount is four hundred tuition units.
     (7) The first scholarships shall be awarded to students graduating in 2012.
     (8) The state of Washington retains legal ownership of tuition units awarded as scholarships under this chapter until the tuition units are redeemed. These tuition units shall remain separately held from any tuition units owned under chapter 28B.95 RCW by a guaranteed opportunities scholarship recipient.
     (9) The scholarship award must be used within five years of receipt. Any unused scholarship tuition units revert to the guaranteed opportunities scholarship account.
     (10) Guaranteed opportunities scholarships are not intended to supplant any grant, scholarship, or tax program related to postsecondary education. If the board finds that the scholarship supplants or reduces any grant, scholarship, or tax program for categories of students, then the board shall adjust the amount of scholarship to the level necessary to avoid supplanting.
     (11) The higher education coordinating board, with the assistance of the office of the superintendent of public instruction, shall implement and administer the guaranteed opportunities scholarship program.

NEW SECTION.  Sec. 3   (1) The guaranteed opportunities 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.
     (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 representing tuition units purchased by the state of Washington 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 of all expenditures. However, an appropriation is not required for such expenditures.
     (3) The limitations and authorities applicable to the Washington advanced college tuition payment program under RCW 28B.95.060 apply to the guaranteed opportunities scholarship account.
     (4) The assets of the account may be spent without appropriation for the purpose of making payments to institutions of higher education on behalf of recipients of guaranteed opportunities scholarships. Disbursements from the account shall be made only on the authorization of the higher education coordinating board.
     (5) Administrative expenses of the tuition unit payment portion of the guaranteed opportunities program shall be paid from the guaranteed opportunities scholarship account in an amount not to exceed three percent of total available assets in the account.
     (6) 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.

NEW SECTION.  Sec. 4   The higher education coordinating board may adopt rules to implement this chapter.

Sec. 5   RCW 28B.95.020 and 2005 c 272 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 August 1st and July 31st.
     (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 RCW 28B.95.150.
     (3) "Board" means the higher education coordinating board as defined in chapter 28B.76 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. Qualified organizations, as allowed under section 529 of the federal internal revenue code, purchasing tuition unit contracts as future scholarships need not designate a beneficiary at the time of purchase.
     (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. The state of Washington may be an eligible purchaser for purposes of purchasing tuition units to be held for granting guaranteed opportunities scholarships.
     (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. For purposes of this chapter, services and activities fees do not include fees charged for the payment of bonds heretofore or hereafter issued for, or other indebtedness incurred to pay, all or part of the cost of acquiring, constructing, or installing any lands, buildings, or facilities.
     (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 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.

Sec. 6   RCW 28B.95.030 and 2005 c 272 s 2 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 executive director of the board. The committee shall be supported by staff of the board.
     (2)(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 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 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.
     (e) While the Washington advanced college tuition payment program is designed to help all citizens of the state of Washington, the governing body may determine residency requirements for eligible purchasers and eligible beneficiaries to ensure the actuarial soundness and integrity of the program.
     (3)(a) Except for tuition units purchased by the state of Washington for the guaranteed opportunities scholarship program under chapter 28B.-- RCW (sections 1 through 4 of this act), 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 rate for state public institutions in effect at the time of redemption.
     (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.
     (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.
     (6) The governing body shall annually determine current value of a tuition unit.
     (7) The governing body shall promote, advertise, and publicize the Washington advanced college tuition payment program.
     (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 governing body in the conduct of its business under this chapter;
     (k) Contract with financial consultants, actuaries, auditors, and other consultants as necessary to carry out its responsibilities under this chapter;
     (l) Solicit and accept cash donations and grants from any person, governmental agency, private business, or organization; and
     (m) Perform all acts necessary and proper to carry out the duties and responsibilities of this program under this chapter.

NEW SECTION.  Sec. 7   A new section is added to chapter 28B.95 RCW to read as follows:
     Ownership of tuition units purchased by the state of Washington for the guaranteed opportunities scholarship program under chapter 28B.--RCW (sections 1 through 4 of this act) shall be in the name of the state of Washington and may be redeemed by the state of Washington on behalf of recipients of guaranteed opportunities scholarships for tuition and fees only and not for college-related expenses.

Sec. 8   RCW 28B.95.060 and 2000 c 14 s 5 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)(a) Except as provided in (b) of this subsection, 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 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.
     (b) All money received by the program from the state of Washington for the guaranteed opportunities scholarship program shall be deposited in the guaranteed opportunities scholarship account created in section 3 of this act.
     (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 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. 9   RCW 43.79A.040 and 2006 c 311 s 21 and 2006 c 120 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 promise scholarship account, the college savings program account, the Washington advanced college tuition payment program account, the guaranteed opportunities scholarship account, the agricultural local fund, the American Indian scholarship endowment fund, the foster care scholarship endowment fund, the foster care endowed scholarship trust fund, the students with dependents grant account, the basic health plan self-insurance reserve account, the contract harvesting revolving account, the Washington state combined fund drive account, the commemorative works account, the Washington international exchange scholarship endowment fund, the developmental disabilities endowment trust fund, the energy account, the fair fund, the fruit and vegetable inspection account, the future teachers conditional scholarship account, the game farm alternative account, the grain inspection revolving fund, the juvenile accountability incentive account, the law enforcement officers' and fire fighters' plan 2 expense fund, the local tourism promotion account, the produce railcar pool account, the regional transportation investment district account, the rural rehabilitation account, the stadium and exhibition center account, the youth athletic facility account, the self-insurance revolving fund, the sulfur dioxide abatement account, the children's trust fund, the Washington horse racing commission Washington bred owners' bonus fund account, the Washington horse racing commission class C purse fund account, the individual development account program account, the Washington horse racing commission operating account (earnings from the Washington horse racing commission operating account must be credited to the Washington horse racing commission class C purse fund account), the life sciences discovery fund, and the reading achievement account. 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 city and county advance right-of-way revolving fund, 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. 10   Sections 1 through 4 of this act constitute a new chapter in Title 28B RCW.