H. B. 2159
(By Mr. Speaker, Mr. Kiss, and Delegates Michael,
Williams,
Manuel, Spencer, Anderson and Clements)
[Introduced February 19, 1997; referred to the
Committee on Education then Finance.]
A BILL to amend and reenact section twelve-a, article twenty-one,
chapter eleven of the code of West Virginia, one thousand
nine hundred thirty-one, as amended; to amend and reenact
article thirty, chapter eighteen of said code, all relating
to additional modification reducing federal adjusted gross
income; the West Virginia Higher Education Tuition Trust
Act; providing a title, legislative findings and
definitions; board of trustees composition, proceedings and
powers; creating the West Virginia higher education trust
fund; providing an income tax deduction for purchasers;
requiring reports, accounts and annual audits; liberal
construction; and expiration of article.
Be it enacted by the Legislature of West Virginia:
That section twelve-a, article twenty-one, chapter eleven of
the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; and that article thirty,
chapter eighteen of said code be amended and reenacted, all to
read as follows:
CHAPTER 11. TAXATION.
ARTICLE 21. PERSONAL INCOME TAX.
§11-21-12a. Additional modification reducing federal adjusted
gross income.
In addition to amounts authorized to be subtracted from
federal adjusted gross income pursuant to subsection (c) of
section twelve of this article, any payment made under a tuition
prepayment contract or tuition trust account contract, or both,
as provided under section fourteen seven, article thirty,
chapter eighteen of this code, shall also be an authorized
modification reducing federal adjusted gross income.
CHAPTER 18. EDUCATION.
ARTICLE 30. WEST VIRGINIA HIGHER EDUCATION TUITION TRUST ACT.
§18-30-1. Title.
This article shall be known and may be cited as the "West
Virginia Higher Education Tuition Trust Act."
§18-30-2. Legislative findings and purpose.
The Legislature hereby finds and determines that the
advancement and improvement of higher education in the state of
West Virginia is a proper governmental function and purpose of the state. The Legislature also finds that the creation of a
trust fund, as an agency and instrumentality of the state of West
Virginia to assist qualified students or their families in
financing a portion of the costs of attending state colleges and
universities in the state of West Virginia will increase the
number of qualified students who will seek to attend such state
colleges and universities, which will be of benefit to the said
state colleges and universities, and will therefore advance and
improve higher education in the state of West Virginia. It is
therefore the legislative intent of this article to establish an
educational trust fund as an agency and instrumentality of the
state of West Virginia to assist qualified students to pay in
advance the tuition costs of attending state colleges and
universities and thereby to encourage such qualified students to
attend state colleges and universities in the state of West
Virginia. In establishing the trust fund, it is further the
intent of the Legislature to encourage timely financial planning
for higher education by the creation of prepaid tuition contracts
and to encourage employer participation in such planning and to
provide assistance and incentives of the purchase of prepaid
tuition contracts, for the benefit of the children of the people
of this state.
§18-30-3. Definitions.
The following terms have the meanings ascribed to them,
unless the context clearly indicates otherwise:
(a) "Board" means the board of trustees of the prepaid
college tuition trust fund as provided in section four of this
article.
(b) "Outside tuition fee" means the amount of tuition or
fees, or both, payable to a college or university outside the
state or independent institutions upon the election by a
beneficiary to attend such institution. This fee shall generally
be the amount of the average public tuition costs or fees, or
both, of state institutions of higher learning as determined by
the board of trustees on an annual basis.
(c) "Prepaid tuition contract" means a contract entered into
by the board of trustees of the trust fund and a purchaser
pursuant to this article.
(d) "Purchaser" means a person who makes or is obligated to
make payments in accordance with a prepaid tuition contract
entered into pursuant to this chapter.
(e) "Qualified beneficiary" means a resident of this state
at the time a purchaser enters into a prepaid tuition contract on
behalf of the resident or the minor child of a noncustodial
parent who is a resident of this state.
(f) "State college or university" means any state supported public two or four year college or university.
(g) "Trust fund" means the prepaid college tuition trust
fund created as an agency and instrumentality of the state of
West Virginia pursuant to section six of this article.
(h) "Tuition" means the quarter, semester or term charges
imposed by a state college or university and all mandatory fees
required as a condition of enrollment by all students.
§18-30-4. Appointment of board of trustees; terms; compensation;
proceedings generally.
(a) The board of trustees of the prepaid college tuition
trust fund shall consist of nine members as follows:
The state superintendent of schools, the state treasurer,
who shall serve as ex officio voting members of the board, and
seven other members with knowledge, skill and experience in an
academic, business or financial field, who shall be residents of
the state appointed by the governor, by and with the advice and
consent of the Senate. One shall be a representative of the
university system of West Virginia higher education and one shall
be a representative of the college system of West Virginia higher
education. Of the appointed members, three shall be appointed
from nominations as follows: One shall be a private citizen not
employed by, or an officer of, the state or any political
subdivision thereof appointed from one or more nominees of the speaker of the House of Delegates; one shall be a private citizen
not employed by, or an officer of, the state or any political
subdivision thereof appointed from one or more nominees of the
president of the senate; and one shall represent the interest of
private institutions of higher education located in this state
who shall be appointed from one or more nominees of the West
Virginia association of private colleges. Appointed members
shall serve a term of six years and may be reappointed at the
expiration of their terms. In the event of a vacancy among
appointed members, an appointment shall be made to fill the
unexpired term. Of the initial appointments, the governor shall
appoint one member to a one-year term, one to a two-year term,
one to a three-year term, one to a four-year term, one to a
five-year term and one to a six-year term. Thereafter, all terms
shall be for six years.
(b) Members of the board of trustees serve without
compensation, but shall be reimbursed for each day's official
duties of the board for all expenses actually incurred and travel
rate as is paid the employees of the state.
(c) The state treasurer shall be the chairman and presiding
officer of the board, and the state treasurer may appoint such
other officers as the board considers advisable or necessary. A
majority of the members of the board constitute a quorum for the transaction of the business of the trust fund.
§18-30-5. Powers of the board.
In addition to the powers granted by any other provision of
this article, the board of trustees shall have, as agents of the
state of West Virginia, the powers necessary or convenient to
carry out the purposes and provisions of this article, the
purposes and objectives of the trust fund and the powers
delegated by any other law of the sate or any executive order
thereof including, but not limited to, the following express
powers:
(a) To adopt and amend bylaws;
(b) To adopt emergency rules in accordance with the
provisions of section fifteen, article three, chapter twenty- nine-a of this code. The board of trustees shall propose
legislative rules for promulgation in accordance with the
requirements of the secretary of state and the provisions of
chapter twenty-nine-a to otherwise effectuate the purposes of
this article;
(c) To invest any funds of the trust fund, at the board of
trustees discretion, with the West Virginia state board of
investments. Any investments made under this article shall be
made with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims.
Fiduciaries shall diversify plan investments so as to minimize
the risk of large losses, unless under the circumstances it is
clearly prudent not to do so. Funds of the trust fund may be
invested in any kind of property, real or personal, including,
but not limited to, mortgage or mortgage participations, common
stock, preferred stock, common trust funds, bonds, notes or other
securities;
(d) To executive contracts and other necessary instruments;
(e) To impose reasonable requirements for residency for
qualified beneficiaries at the time of purchase of the contract.
However, each state college or university shall establish its own
residency for matriculation;
(f) To impose reasonable limits on the number of contract
participants in the trust fund at any given period of time;
(g) To contract for necessary goods and services, to employ
necessary personnel, and to engage the services of private
persons for administrative and technical assistance in carrying
out the responsibilities of the trust fund;
(h) To solicit and accept gifts, including bequeathments or
other testamentary gifts made by will, trust or other
disposition, grants, loans and other aids from any personal source or to participate in any other way in any federal, state
or local governmental programs in carrying out the purposes of
this article;
(i) To define the terms and conditions under which payments
may be withdrawn from the trust fund and impose reasonable
charges for such withdrawal;
(j) To impose reasonable time limits on the use of the
tuition benefits provided by the program;
(k) To provide for the receipt of contributions to the trust
fund in lump sums or installment payments; and
(l) To establish other policies, procedures and criteria
necessary to implement and administer the provisions of this
article.
§18-30-6. West Virginia higher education tuition trust created.
(a) There is hereby created as an agency and instrumentality
of the state of West Virginia, to be administered by the board of
trustees until and unless the Legislature shall determine
otherwise, the prepaid college tuition trust fund (hereinafter
referred to as "the trust fund" or "the fund."
(b) The official location of the trust fund shall be the
state treasurer's office, and the facilities of the state
treasurer shall be used and employed in the administration of the
fund including but without limitation thereto, the keeping of records, the management of bank accounts and other investments,
the transfer of funds, and the safekeeping of securities
evidencing investments.
(c) Payments received by the board from purchasers on behalf
of qualified beneficiaries or from any other source, public or
private, shall be placed in the trust fund, and the fund may be
divided into separate accounts as may be determined by the board.
(d) Assets of the trust fund do not constitute public funds
of the state.
(e) The trust fund, through the treasurer, is hereby
specifically authorized to receive and deposit into the trust
fund any gift of any nature, real or personal property, made by
any individual by testamentary disposition, including, without
limitation, any specific gift or bequeath made by will, trust or
other disposition.
(f) The board shall obtain appropriate actuarial assistance
to establish, maintain, and certify a fund sufficient to defray
the obligation of the trust fund, and shall annually evaluate or
cause to be evaluated, the actuarial soundness of the trust fund.
If the board perceives a need for additional assets in order to
preserve actuarial soundness, it may adjust the terms of
subsequent prepaid tuition contracts to ensure such soundness.
(g) Since the trust fund constitutes an agency of the state, its property and income are exempt from all taxation by the state
and by all of its political subdivisions.
(h) In order to provide funds to enable the trust to pay all
amounts that become due under prepaid tuition contracts, there is
hereby irrevocably pledged to that purpose and hereby
appropriated from the trust fund such moneys as are necessary to
pay all amounts that become due under prepaid tuition contracts
at any time. In order to carry out the appropriation and pledge,
in each fiscal year the board shall, as provided in subsection
(f) above, determine the amount for the future obligations of the
trust fund under prepaid tuition contracts by any appropriate
actuarial method. After that determination has been made, all
moneys on deposit in the trust fund up to and including the
amount of such future obligations shall remain on deposit in the
trust fund and shall be subject to the aforesaid appropriation
and pledge.
(i) There is hereby created a separate account within the
treasurer's office to be known as the prepaid affordable college
tuition administrative account for the purposes of implementing
and maintaining prepaid college tuition accounts pursuant to this
article. There is hereby appropriated from the fees collected
and interest earned from the prepaid affordable college tuition
program, such amounts as are considered necessary by the treasurer to fund the costs of such prepaid tuition programs.
§18-30-7. Income tax deduction for purchasers.
As provided in section twelve-a, article twenty-one, chapter
eleven of this code, the purchaser may subtract for state income
tax purposes from federal adjusted gross income the amount of
payment made under a tuition prepayment contract or tuition trust
account contract or both.
§18-30-8. Report and account; annual audit.
In addition to any other requirements of this article, the
board of trustees shall:
(a) Make available summary information on the financial
condition of the trust fund to all purchasers of prepaid tuition
contracts;
(b) Prepare, or cause to be prepared, an annual accounting
of trust fund and transmit a copy of same to the Governor, the
President of the Senate and the Speaker of the House of
Delegates;
(c) Make all necessary and appropriate arrangements with
state colleges and universities in order to fulfill its
obligations under the prepaid tuition contracts which
arrangements shall include the payment by the trust fund of
current applicable tuition and fee charges on behalf of a
qualified beneficiary to the college or university; and
(d) The accounts of the board are subject to an annual
external audit, by a nationally recognized accounting form in
conjunction with the annual federal audit.
§18-30-9. Liberal construction.
This aritcle shall be construed liberally to effectuate the
legislative intent, the purposes of the article, and as complete
and independent authority for the performance of each and every
act and thing authorized in the aritcle, and all powers granted
herein shall be broadly interpreted to effectuate such intent and
purposes and not as to limitation of powers.
§18-30-10. Expiration of article.
This article become void effective the first day of January,
two thousand two, if the trust has not entered into tuition
prepayment contract or tuition trust account contract with a
purchaser before that date.
NOTE: The purpose of this bill is to provide for a Higher
Education Tuition Trust Act to allow college tuition for state
residents to be paid through prepaid tuition contracts. An
income tax deduction is available for purchasers of the
contracts.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.
§18-30 is completely rewritten; therefore, strike-throughs
and underscoring have been omitted.