Senate Bill No. 365
(By Senators Jackson, Craigo, Wooton, Kessler, Anderson,
Snyder, White, Prezioso, Dittmar, Schoonover, Ball, Hunter,
Sprouse, Sharpe, McKenzie, Ross, Bailey, Chafin, Fanning,
Helmick, Love, Walker and Tomblin, Mr. President)
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[Introduced February 2, 1989; referred to the Committee
on Education; and then to the Committee on Finance.]
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A BILL to repeal section ten, article thirty, chapter eighteen
of the code of West Virginia, one thousand nine hundred
thirty-one, as amended; to amend and reenact sections two,
three, four, five, six and eight of said article; and to
further amend said article by adding thereto a new section,
designated section six-a, all relating to the West Virginia
higher education tuition trust act; permitting use of
general revenue funds for the program as authorized by the
Legislature; creating a reserve fund; authorizing contracts
for room and board; clarifying name of board; permitting
board to promulgate emergency rules when changes in federal tax code or regulations or market conditions require;
authorizing investment of reserve funds; authorizing use of
investment managers; authorizing establishment of a direct
support organization that is a not-for-profit West Virginia
corporation; clarifying how expenditures may be made from
collections; adding the reserve fund and accounts of the
direct-supporting organization to accounts requiring audit;
and ensuring audit compliance with the state audit.
Be it enacted by the Legislature of West Virginia:
That section ten, article thirty, chapter eighteen of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be repealed; that sections two, three, four, five, six
and eight of said article be amended and reenacted; and that said
article be further amended by adding thereto a new section,
designated section six-a, all to read as follows:
ARTICLE 30. 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
prepaid tuition trust fund, to assist qualified students and
their families in financing a portion of the costs of attending an accredited higher education institution or program in the
state of West Virginia will increase the number of qualified
students who will seek to attend such accredited higher education
institutions and programs, which will be of benefit to students,
families and to such accredited higher education institutions and
programs, 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 a higher education prepaid
tuition trust fund to assist qualified students to pay
in advance
the tuition the costs of attending accredited higher education
institutions and programs and thereby to encourage such qualified
students to attend accredited higher education institutions and
programs in the state of West Virginia.
The Legislature finds
and declares that prepaid tuition trust fund contracts neither
contain nor obligate any general revenue funds.
§18-30-3. Definitions.
For the purpose of this article, the following terms have the
meanings ascribed to them, unless the context clearly indicates
otherwise:
(a) "Accredited higher education institution or program" means
any accredited higher education institution or accredited higher
education program offered through an accredited provider.
(b) "Beneficiary" means any intended or unintended beneficiary of the prepaid tuition contract between the purchaser and the
board, including any beneficiary designated by the purchaser, his
or her agent or his
or her estate in the event that the intended
beneficiary is unable or unwilling to benefit under the terms of
the trust fund.
(c) "Board" means the board of trustees of the prepaid
higher
education tuition trust fund as provided in section four of this
article.
(d) "Outside tuition fee" means the amount of tuition or fees,
or both, payable to an accredited higher education institution or
program outside the state or independent state institutions or
programs upon the election by a beneficiary to attend such
institutions or programs. 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.
(e) "Prepaid tuition contract" means a contract entered into
by the board of the trust fund and a purchaser pursuant to this
article.
(f) "Purchaser" means an individual, corporation or other
entity who makes or is obligated to make payments in accordance
with a prepaid tuition contract entered into pursuant to this
chapter.
(g) "Reserve fund" means the prepaid tuition reserve fund.
(h) "Room and board" means the charges for lodging and food
incurred by a beneficiary while attending an accredited higher
education institution or program.
(g) (i) "Trust fund" means the prepaid
higher education
tuition trust fund.
(h) (j) "Tuition" means the quarter, semester or term charges
imposed by an accredited higher education institution or program
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 the prepaid
college expense tuition trust
fund shall consist of nine members and shall include the
secretary of education and the arts and 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. The seven appointed
members shall be residents of the state. One member shall be a
representative of the university of West Virginia board of
trustees selected by the board of trustees from its members as
defined in section one, article two, chapter eighteen-b of this
code and one member shall be a representative of the board of directors of the state college system selected by the board of
directors from its members as defined in section one, article
three, chapter eighteen-b of this code. The governor shall
appoint three members from nominations as follows: One member
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 member 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 member shall represent the interests 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. The governor also shall appoint
two members who are representatives of the public. The public
members and the member representing the interests of private
institutions of higher education shall be appointed by the
governor with the advice and consent of the Senate.
(b) Appointed members shall serve a term of five years and may
be reappointed at the expiration of their terms. In the event of
a vacancy among appointed members, the governor shall appoint a
person representing the same interests to fill the unexpired
term. Of the initial appointments, the governor shall appoint one member to a one-year term, one member to a two-year term, one
member to a three-year term, one member to a four-year term and
one member to a five-year term. Thereafter, all terms shall be
for five years.
(c) Members of the board of trustees shall serve without
compensation, but for the first twelve months after the effective
date of this section members shall be reimbursed by the state
treasurer's office for expenses, including travel expenses,
actually incurred by a member in the official conduct of the
business of the board at the same rate as is paid the employees
of the state. Thereafter, the state treasurer may charge back to
the trust fund as administrative expenses all expenses, including
travel expenses, actually incurred and paid to board members for
the conduct of their official duties.
(d) The state treasurer shall be the trustee chairman and
presiding officer of the board, and may appoint such other
employees 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 shall have the powers necessary or
convenient to carry out the purposes and provisions of this article, the purposes and objectives of the trust and the powers
delegated by any other law of the state or any executive order of
the state including, but not limited to, the following express
powers:
(a) To adopt and amend bylaws;
(b) To propose legislative rules for promulgation in
accordance with the provisions of article three-a, chapter
twenty-nine-a of this code to effectuate the purposes of this
article:
Provided, That the board may
not promulgate emergency
rules
only when changes in the federal tax code or regulations or
market conditions require the board to take immediate action that
contravenes current rules;
(c) To invest any
of its funds
of the trust fund, at the
board's discretion, with the West Virginia
state board of
investments investment management board in accordance with
applying the provisions of article six, chapter twelve of this
code
or with one or more entities selected by the treasurer to
serve as investment managers or as custodians or as both
investment managers and custodians of the funds. 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 to the extent permitted by law so as to minimize the
risk of large losses, unless under the circumstances it is
clearly prudent not to do so;
(d) To execute contracts and other necessary instruments;
(e) To enter into prepaid tuition contracts;
(f) To impose reasonable limits on the number of prepaid
tuition contract purchasers participating in the trust fund at
any given period of time;
(g) To impose reasonable requirements for residency for
qualified beneficiaries at the time of purchase of the prepaid
tuition contract. However, nothing in this subdivision shall be
construed to establish residency requirements for matriculation
at state institutions of higher education;
(h) 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;
(i) To solicit and accept gifts, including bequests or other
testamentary gifts made by will, trust or other disposition,
grants, loans and other aids from any source or to participate in
any other way in any federal, state or local governmental
programs in carrying out the purposes of this article;
(j) To establish a direct support organization which is:
(1) A West Virginia corporation, not for profit, incorporated
under the provisions of this code and registered with the
secretary of state;
(2) Organized and operated exclusively to receive, hold,
invest, and administer property and funds and to make
expenditures to or for the benefit of the trust fund and the
prepaid tuition program; and
(3) Authorized to solicit and accept gifts, including, but not
limited to, bequests or other testamentary gifts made by will,
trust or other disposition, grants, loans, and funds from any
source and to participate in any federal, state or local
government programs. The identity of donors desiring to remain
anonymous shall be confidential and exempt from the provisions of
chapter twenty-nine-b of this code. Audit reports shall maintain
the confidentiality. Personal information regarding
beneficiaries and their identities, information or documents
received by the corporation labeled confidential, or information
or documents determined by the treasurer to be confidential,
shall be confidential and exempt from chapter twenty-nine-b of
this code.
(j) (k) To define the terms and conditions under which
payments may be withdrawn from the trust fund and impose reasonable charges for such withdrawal:
Provided, That payments
made by employers on behalf of beneficiaries selected by their
employees are deemed fully vested in the employees from time of
receipt of such payments by the board;
(k) (l) To devise and offer to purchasers other educational
programs, such as the purchase of books,
fees, room and board and
other educational supplies;
(l) (m) To impose reasonable time limits on the use of the
tuition benefits provided by the program;
(m) (n) To provide for the receipt of contributions to the
trust fund in lump sums or installment payments; and
(n) (o) To establish other policies, procedures and criteria
necessary to implement and administer the provisions of this
article.
§18-30-6. West Virginia prepaid tuition trust created.
(a) There is hereby created within the accounts held by the
state treasurer the prepaid tuition trust fund account to be
administered by the board until and unless the Legislature shall
determine otherwise, and titled the "Prepaid Tuition Trust Fund".
(b) The 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 trust
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 beneficiaries or from any other source, public or private,
shall be placed in the trust fund.
(d) The corpus, assets and income of the trust fund do not
constitute public funds of the state.
(e) The trust fund, through the trustee chairman, is
authorized to receive any gift or transfer of property, real or
personal of any nature, from any source as may be approved by the
board, or any terms and conditions as may be imposed by the
board:
Provided, That all property received by the trust shall
be converted into cash within ninety days of receipt.
(f) The board shall cause an actuarial study to be
periodically performed to ensure that sufficient funds are being
deposited to the fund to meet the obligations of the trust fund.
Specifically, the board shall annually evaluate or cause to be
evaluated, the actuarial soundness of the trust fund. If the
board finds that additional contributions are needed in order to
preserve the actuarial soundness of the fund, it may adjust the
terms of preexisting and subsequent prepaid tuition contracts to
ensure such soundness
: Provided, That any necessary adjustment to preexisting contracts may only be assessed on future payments
and not retroactively upon previous payments made by the
purchaser or donors to the trust fund.
The board shall also
build and maintain an actuarial surplus, at a level recommended
by the actuaries, to ensure appropriate funding for the trust
fund. There shall be no obligation of state general revenue
funds to the trust fund for any purpose whatsoever
unless
authorized by the Legislature.
(g) In order to fulfill the charitable and public purposes
of this article, neither the income nor the property of the trust
fund shall be subject to taxation by the state or any of its
political subdivisions.
(h) The board is hereby empowered to propose rules to
provide for the withdrawal and disbursement of contract funds on
an actuarially sound basis. The board may propose rules to
provide a tuition guarantee for beneficiaries attending state
institutions of higher education:
Provided, That this rule may
not be promulgated as an emergency rule subject to oversight by
the legislative oversight commission on education accountability
as provided by section eleven, article three-a, chapter
twenty-nine-a of this code.
(i) There is hereby created a separate account within the
state treasurer's office to be known as the "Prepaid Tuition Trust Fund Administrative Account" for the purposes of
implementing and maintaining the trust fund accounts pursuant to
this article. The board may charge against the fees collected
and interest earned from the trust fund accounts, amounts as are
reasonable and customary for the state treasurer to fund the
administrative costs of maintaining the trust fund accounts. The
charges shall be subject to review by the legislative oversight
commission on education accountability. Expenditures from the
fund are
not authorized from collections
but may only be made
upon appropriation by the Legislature in accordance with
appropriations by the Legislature.
(j) For purposes of the trust fund, the provisions of
chapter twenty-nine-b of this code shall not apply.
§18-30-6a. Creation of prepaid tuition reserve fund account;
purpose; trust created; income distribution; accounting.
(a) There is hereby created within the accounts held by the
state treasurer the prepaid tuition reserve fund account to be
administered by the board until and unless the Legislature shall
determine otherwise, and titled "Prepaid Tuition Reserve Fund".
The purpose of the reserve fund is to provide a guarantee for the
lawful prepaid tuition contract obligations of the prepaid
tuition trust fund in an amount not to exceed the funds of the reserve fund.
(b) The facilities of the state treasurer shall be used and
employed in the administration of the reserve 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 investment.
The state treasurer may contract for necessary goods and services
for the administration and technical assistance needed in
carrying out the purposes of this section.
(c) The reserve fund shall consist of appropriations made by
the Legislature, income from the investment of moneys held in the
account and all other sums available for deposit to the account
from any source, public or private.
(d) Any time the trust fund has insufficient funds available
to meet its obligations for tuition benefit payments, the board
may borrow amounts necessary to meet the shortfall from the
reserve fund and transfer the funds borrowed to the trust fund.
(e) Interest and other income earned on the reserve fund is
reserved for the benefit of the reserve fund.
(f) Beginning the first day of July, one thousand nine
hundred and ninety-eight and ending the thirtieth day of June,
two thousand eight, appropriations shall be made to the reserve
fund in amounts necessary to meet any trust fund shortfalls for tuition benefit payments, but not to exceed five million dollars
over the ten-year funding period. If the reserve fund reaches a
sum in excess of five million dollars prior to the thirtieth day
of June, two thousand eight, the appropriation requirements of
this subsection shall expire.
(g) Any general revenue funds deposited in the reserve fund
in accordance with this section shall be repaid to the general
revenue fund from the trust fund when an actuarial report
determines that the repayment will not impair the trust fund.
The repayment may be, in whole or in part, as funds are
available, as determined by the board.
(h) The state treasurer may charge against the earnings of
the reserve fund amounts as are reasonable and customary to fund
the administrative costs of maintaining the reserve fund.
§18-30-8. Report and account; annual audit.
(a) In addition to any other requirements of this article,
the board shall:
(1) Provide annually summary information on the financial
condition of the trust fund to all purchasers of prepaid tuition
contracts;
(2) Prepare, or cause to be prepared, an annual accounting
and actuarial report of the trust fund and transmit a copy of
same to the governor, the president of the Senate, the speaker of the House of Delegates and the legislative oversight commission
on education accountability; and
(3) Make all necessary and appropriate arrangements with
accredited higher education institutions and programs in order to
fulfill its obligations under the prepaid tuition contracts which
arrangements shall include the satisfaction by the trust fund of
current applicable tuition and fee charges on behalf of a
beneficiary to the accredited higher education institution or
program.
(b) All accounts of the board, including the trust fund
and
reserve fund accounts
and the accounts of the direct support
organization, are subject to an annual external audit, by a
nationally recognized accounting firm
selected by the treasurer.
in conjunction with the annual federal audit. The audit shall
comply with the requirements of section thirty-three, article
two, chapter five-a of this code.
NOTE: The purpose of this bill is to clarify certain
provisions of the West Virginia Higher Education Tuition Trust
Act; update provisions of the Act to comply with changes in the
federal laws; create a reserve fund with a pledge of up to $5
million from the general revenue fund over a period of ten years;
authorize investments by the investment management board or
investment managers; authorize establishment of a direct support
organization that is a not for profit West Virginia corporation;
and ensure audit compliance.
§18-30-10 is being repealed; therefore, it is not included
in the text of the bill.
§18-30-6a is new; therefore, strike-throughs and
underscoring have been omitted.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added
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