ENGROSSED
COMMITTEE SUBSTITUTE
FOR
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)
____________
[Originating in the Committee on Finance;
reported April 2, 1997.]
____________
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 prepaid college expense
trust act; providing a title, legislative findings and
definitions; board composition and proceedings; powers of
the board; creating the West Virginia prepaid college
expense trust fund; providing an income tax deduction for purchasers; requiring reports, accounts and annual audits;
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), 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 is also
be an authorized
modification reducing federal adjusted gross income but only to
the extent the amount is not allowable as a deduction when
arriving at taxpayer's federal adjusted gross income for the
taxable year in which the payment is made.
CHAPTER 18. EDUCATION.
ARTICLE 30. WEST VIRGINIA PREPAID COLLEGE EXPENSE TRUST FUND
ACT.
§18-30-1. Title.
This article shall be known and may be cited as the "West
Virginia Prepaid College Expense Trust Fund 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 and their families in
financing a portion of the costs of attending state institutions
of higher education in the state of West Virginia will increase
the number of qualified students who will seek to pursue higher
education, which will be of benefit both to the citizens of West
Virginia and to the state institutions of higher education, and
will therefore advance and improve the quality of life in the
state of West Virginia. It is, therefore, the legislative intent
of this article to establish a prepaid college expense trust fund
to assist qualified students to pay in advance the expense of
attending state institutions of higher education.
§18-30-3. Definitions.
The following terms have the meanings ascribed to them,
unless the context clearly indicates otherwise:
(a) "Beneficiary" means a person who is the recipient of
benefits under the terms of a prepaid college expense contract.
(b) "Board" means the board of the prepaid college expense
trust fund as provided in section four of this article.
(c) "Prepaid college expense contract" means a contract
entered into by the board of the trust fund and a purchaser for
the benefit of a beneficiary pursuant to this article.
(d) "Purchaser" means a person who makes or is obligated to
make payments in accordance with a prepaid college expense
contract entered into pursuant to this chapter.
(e) "State institution of higher education" as used in this
article has the same meaning as defined in section two, article
one, chapter eighteen-b of this code.
(f) "Trust fund" means the prepaid college expense trust
fund created as an agency and instrumentality of the state of
West Virginia pursuant to section eight of this article.
§18-30-4. Appointment of board; terms; compensation; proceedings
generally.
(a) The board of the prepaid college expense 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 shall serve without compensation,
but shall be reimbursed for all expenses actually incurred in the
performance of their duties and for travel at the rate paid the
employees of the state.
(d) The state treasurer shall be the chairman and presiding
officer of the board. The board shall elect a vice chairman and
any other officers it considers advisable or necessary.
(e) 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, 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 of the state
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's
discretion, with the West Virginia state board of investments;
(c) To execute contracts and other necessary instruments;
(d) To enter into prepaid college expense fund contracts;
(e) To impose reasonable requirements for residency for
qualified beneficiaries at the time of purchase of the prepaid
college expense fund contract. However, nothing in this
subdivision shall be construed to establish residency
requirements for matriculation at state institutions of higher
education;
(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 bequests 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
benefits provided by the program;
(k) To provide for the receipt of contributions to the trust fund in lump sums or installment payments;
(l) To establish other policies, procedures and criteria
necessary to implement and administer the provisions of this
article; and
(m) Subject to legislative appropriation, to use a portion
of the fees collected and interest earned from the fund for
activities of the board.
§18-30-6. Standard of care.
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.
(a) The board shall discharge its duties for the exclusive
purpose of providing benefits to purchasers and their
beneficiaries;
(b) The board shall diversify fund investments so as to
minimize the risk of large losses unless, under the
circumstances, it is clearly prudent not to do so;
(c) The board shall defray reasonable expenses of investing
and operating the fund; and
(d) The board shall discharge its duties in accordance with
the documents and instruments governing the trust fund insofar as
the documents and instruments are consistent with the provisions
of this article.
§18-30-7. Duty to propose legislative rules.
The board shall propose legislative rules for promulgation
in accordance with the requirements of the secretary of state and
the provisions of article three-a, chapter twenty-nine-a to
effectuate otherwise the purposes of this article:
Provided,
That the board may not promulgate emergency rules.
§18-30-8. West Virginia prepaid college expense trust fund
created.
(a) The prepaid college expense trust fund is hereby created
as an agency and instrumentality of the state of West Virginia.
The board shall administer the trust fund.
(b) The official location of the trust fund shall be the
office of the state treasurer, 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 deposited 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 state treasurer, may 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
bequest 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.
(g) The property and income of the trust fund are exempt
from all taxation by the state and by all of its political
subdivisions.
§18-30-9. Special revenue account for administration of trust
fund.
There is created a special revenue account within the state
treasury to be known as the "prepaid college expense
administrative account". Funds in this account are to be
appropriated by the Legislature to be used by the state treasurer
for the purposes of implementing and maintaining prepaid college
expense accounts pursuant to this article.
§18-30-10. Purchaser contributions.
Notwithstanding subsection (f), section eight 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.
§18-30-11. Income tax deduction for purchasers.
As provided in section twelve-a, article twenty-one, chapter
eleven of this code, a purchaser of a prepaid college expense
contract, under the provisions of this article, is eligible for
a tax deduction.
§18-30-12. Report and account; annual audit.
In addition to any other requirements of this article, the
board shall:
(1) Make available summary information on the financial
condition of the trust fund to all purchasers of prepaid college
expense contracts; and
(2) Prepare, or cause to be prepared, an annual accounting
of the trust fund and transmit a copy to the Governor and the
joint committee on government and finance.
§18-30-13. Expiration of article.
This article is void on the first day of January, two
thousand two, if the board has not entered into a prepaid college
expense contract with a purchaser before that date.
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