SB365 SUB1
COMMITTEE SUBSTITUTE
FOR
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 365
(By Senators Jackson, Craigo, Wooten, 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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[Originating in the Committee on Finance;
reported February 26, 1998.]
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A BILL to amend and reenact sections two, three, four, five, six
and eight, article thirty, chapter eighteen of the code of
West Virginia, one thousand nine hundred thirty-one, as
amended; and to further amend said article by adding thereto
three new sections, designated sections five-a, six-a and
ten, all relating to the West Virginia tuition trust fund
act; authorizing contracts for fees, room and board;
clarifying name of board; permitting board to promulgate emergency rules when changes in federal tax code,
regulations or market conditions require; 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 sections two, three, four, five, six and eight, article
thirty, chapter eighteen of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended and
reenacted; and that said article be further amended by adding
thereto three new sections, designated sections five-a, six-a and
ten, 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 the accredited higher
education institutions and programs, which will be of benefit to
students, families and to
such the 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 the 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) "Market conditions" means the laws, rules and policies
governing the external markets in which trust fund programs must
operate. These markets include the financial markets in which
trust fund monies are invested and the financial products and
services market in which trust fund college savings programs are
offered to the public.
(d) (e) "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 those 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) (f) "Prepaid tuition contract" means a contract entered
into by the board of the trust fund and a purchaser pursuant to
this article.
(f) (g) "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 article.
(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 is 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 has 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 changes in
federal regulations contravene the current rules of the prepaid
tuition trust fund board of trustees or market conditions require
the board to take immediate action;
(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. 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 as described in
section five-a of this article;
(j) (k) To define the terms and conditions under which
payments may be withdrawn from the trust fund and impose
reasonable charges for
such the withdrawal:
Provided, That
payments made by employers on behalf of beneficiaries selected by their employees are
deemed considered fully vested in the
employees from time of receipt of
such the payments by the board;
(k) (l) To devise and offer to purchasers
contracts
guaranteeing 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.
§18-30-5a. Direct support organization.
(a) The board
shall have the authority to may establish a
direct support organization.
(b) The direct support organization shall be:
(1) A West Virginia corporation that is not for profit,
incorporated under the provisions of this code and registered
with the secretary of state;
(2) Organized and operated 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.
§18-30-6. West Virginia prepaid tuition trust created.
(a) There is
hereby created continued 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 the fund's 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. There shall be no
obligation of state general revenue funds to the trust fund for
any purpose whatsoever
unless authorized by the Legislature.
(g) The board shall build and maintain in the prepaid
tuition trust fund an actuarial surplus, at a level recommended
by the actuaries, to ensure appropriate funding for the trust
fund.
(g) (h) In order to fulfill the charitable and public
purposes of this article, neither the income nor the property of the trust fund
shall be is subject to taxation by the state or
any of its political subdivisions.
(h) (i) The board is
hereby empowered to may 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 on education
accountability. Expenditures from the fund are not authorized
from collections but may only be made upon appropriation by the
Legislature.
§18-30-6a. Prepaid tuition trust fund administrative account.
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 deposited into the prepaid tuition trust fund administrative
account. The charges shall be disclosed quarterly, beginning the
first day of January, one thousand nine hundred ninety-nine, to
the joint committee on government and finance and the legislative
oversight commission on education accountability. Expenditures
from the fund are authorized from collections subject to
appropriations made by the Legislature.
§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 the report 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 The 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
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 board. 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.
§18-30-10. Confidentiality.
Information shall be exempt from the provisions of chapter
twenty-nine-b of this code if:
(a) The information is obtained as a result of transacting
business with the trust fund, the administrative account or the
direct support organization; and
(b) The information would tend to disclose the identity of
a beneficiary, purchaser or donor.
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