ENROLLED
COMMITTEE SUBSTITUTE
FOR
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 365
(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, original sponsors)
____________
[Passed March 14, 1998; in effect ninety days from passage.]
____________
AN ACT 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
two new sections, designated sections six-a and ten, all
relating to the West Virginia prepaid tuition trust fund;
clarifying name of board; legislative findings; expanding
definitions; board of trustees; board powers; authorizing
savings program for fees, room and board; permitting
obligation of state general revenue funds if authorized by the Legislature; administrative account; expanding report
and audit requirements; requiring an actuarial surplus;
confidentiality of certain information; permitting board to
promulgate emergency rules when changes in federal tax code
or regulations require; 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 two new sections, designated sections six-a and ten, all
to read as follows:
ARTICLE 30. WEST VIRGINIA PREPAID 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 the accredited higher education institutions and programs, which will be of benefit to students,
families and to 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 prepaid tuition trust fund
to assist qualified students to pay in advance the costs of
attending accredited higher education institutions and programs
and thereby to encourage 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 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 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) "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
article.
(g) "Room and board" means the charges for lodging and food
incurred by a beneficiary while attending an accredited higher
education institution or program.
(h) "Trust fund" means the prepaid tuition trust fund.
(i) "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 tuition trust fund consists 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 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 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 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;
(c) To invest any of its funds at the board's discretion, with
the West Virginia investment management board in accordance with
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 may 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 define the terms and conditions under which payments
may be withdrawn from the trust fund and impose reasonable
charges for the withdrawal:
Provided, That payments made by
employers on behalf of beneficiaries selected by their employees
are considered fully vested in the employees from time of receipt
of the payments by the board;
(k) To devise and offer to purchasers other educational
savings programs, such as the purchase of books, fees, room and
board and other educational supplies;
(l) To impose reasonable time limits on the use of the
benefits provided by the program;
(m) To provide for the receipt of contributions to the trust
fund in lump sums or installment payments; and
(n) 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 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
determines otherwise, and titled the "Prepaid Tuition Trust
Fund".
(b) The location of the trust fund is 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 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 may 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.
(h) In order to fulfill the charitable and public purposes
of this article, neither the income nor the property of the trust
fund is subject to taxation by the state or any of its political
subdivisions.
(i) The board 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.
§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, a quarterly report on
the status of the program and provide a copy of the report to the
joint committee on government and finance and the legislative
oversight commission on education accountability;
(3) Prepare, or cause to be prepared, an annual accounting
and actuarial report of the trust fund and transmit a copy of 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
(4) Make all necessary and appropriate arrangements with
accredited higher education institutions and programs in order to
fulfill its obligations under the prepaid tuition contracts. 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, are subject to an annual external audit by an
accounting firm, selected by the board, of which all members or
partners assigned to head the audit are members of the American
institute of certified public accountants. The audit shall comply with the requirements of section thirty-three, article
two, chapter five-a of this code.
§18-30-10. Confidentiality.
Any information that would tend to disclose the identity of
a beneficiary, purchaser or donor is exempt from the provisions
of chapter twenty-nine-b of this code.