COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 70
(By Senators Tomblin, Mr. President,
Craigo, Plymale, Jackson,
Prezioso, Snyder, Ross, Sprouse, Ball, Hunter, Schoonover,
Kimble, Dittmar, Anderson, Oliverio and Sharpe)
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[Originating in the Committee on Education;
reported March 24, 1997.]
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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; and to amend and
reenact article thirty, chapter eighteen of said code, all
relating to additional modification reducing federal
adjusted gross income; West Virginia higher education
tuition trust act; providing a title, legislative findings
and definitions; board of trustees composition and
proceedings; powers of the board; 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 eight, 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 to encourage the 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 the 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 the 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
state university system and one shall be a representative of the
state college system as defined in section two, article one,
chapter eighteen-b of this code. 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 of the state 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 of the state 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 state or any executive order
thereof including, but not limited to, the following express
powers:
(a) To adopt and amend bylaws;
(b) 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;
(c) To execute contracts and other necessary instruments;
(d) 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 requirements for matriculation;
(e) To impose reasonable limits on the number of contract
participants in the trust fund at any given period of time;
(f) 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;
(g) 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;
(h) To define the terms and conditions under which payments
may be withdrawn from the trust fund and impose reasonable
charges for such withdrawal;
(i) To impose reasonable time limits on the use of the
tuition benefits provided by the program;
(j) To provide for the receipt of contributions to the trust
fund in lump sums or installment payments; and
(k) To establish other policies, procedures and criteria
necessary to implement and administer the provisions of this
article.
§18-30-6. Duty to propose legislative rules.
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. Notwithstanding subsection (f), section six of this article, the board shall
consider including within the rules a provision or provisions
that would allow for a lower contribution or fee than that
required for a qualified beneficiary to obtain the desired
education from any state institution of higher education at the
time the qualified beneficiary expects to attend the state
institution of higher education.
§18-30-7. West Virginia higher education tuition trust created.
(a) There is 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 not limited to, 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 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 the soundness of
the trust fund.
(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
irrevocably pledged to that purpose and appropriated from the
trust fund the moneys that 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 the future
obligations shall remain on deposit in the trust fund and shall
be subject to the aforesaid appropriation and pledge.
(i) There is 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 appropriated from the fees collected and
interest earned from the prepaid affordable college tuition
program, the amounts considered necessary by the treasurer to
fund the costs of the prepaid tuition programs.
§18-30-8. 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.
§18-30-9. 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 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 firm in
conjunction with the annual federal audit.
§18-30-10. Liberal construction.
This article 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 article, and all powers granted
in this article shall be broadly interpreted to effectuate such
intent and purposes and not as to limitation of powers.
§18-30-11. Expiration of article.
This article becomes void effective the first day of
January, two thousand two, if the trust has not entered into a
tuition prepayment contract or a tuition trust account contract
with a purchaser before that date.