ENROLLED
COMMITTEE SUBSTITUTE
FOR
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 70
(Senators Tomblin, Mr. President,
Craigo, Plymale, Jackson,
Prezioso, Snyder, Ross, Sprouse, Ball, Hunter, Schoonover,
Kimble, Dittmar, Anderson, Oliverio and Sharpe, original
sponsors)
____________
[Passed April 12, 1997; in effect ninety days from passage.]
____________
AN ACT 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; to amend and reenact
article thirty, chapter eighteen of said code; and to amend
and reenact section four, article ten, chapter thirty-eight
of said code, all relating to the creation of a prepaid
higher education tuition program; repealing provisions which
will no longer apply to the tuition trust; providing an
additional modification reducing federal adjusted gross
income; the West Virginia prepaid tuition trust act;
providing a title, legislative findings and definitions; board of trustees composition, proceedings, powers and
oversight by the Legislative oversight commission on
education accountability; creating the West Virginia prepaid
tuition trust fund; providing a state income tax deduction
for purchasers; requiring reports, accounts and annual
audits; liberal construction; expiration of article; and to
exempt from bankruptcy proceedings payments made to the
prepaid tuition trust fund.
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; that article thirty,
chapter eighteen of said code be amended and reenacted; and that
section four, article ten, chapter thirty-eight 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 prepaid tuition
contract as provided under section seven, article thirty, chapter
eighteen of this code, is also an authorized modification
reducing federal adjusted gross income, but only to the extent the amount is not allowable as a deduction when arriving at the
taxpayer's federal adjusted gross income for the taxable year in
which the payment is made.
CHAPTER 18. EDUCATION.
ARTICLE 30. WEST VIRGINIA PREPAID TUITION TRUST ACT.
§18-30-1. Title.
This article shall be known and may be cited as the "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 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 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 agent or his 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) "Trust fund" means the prepaid higher education tuition
trust fund.
(h) "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 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;
(c) To invest any funds of the trust fund, at the board's
discretion, with the West Virginia state board of investments 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 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) To devise and offer to purchasers other educational
programs, such as the purchase of books and other educational supplies;
(l) To impose reasonable time limits on the use of the
tuition 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 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 pre-existing and subsequent prepaid tuition contracts to
ensure such soundness
: Provided, That any necessary adjustment
to pre-existing 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.
(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.
§18-30-7. Income tax deduction for purchasers.
As provided in section twelve-a, article twenty-one, chapter
eleven of this code, a purchaser of a prepaid tuition contract,
under the provisions of this article, is eligible for a tax
deduction.
§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
accounts, are subject to an annual external audit, by a
nationally recognized accounting firm in conjunction with the
annual federal audit.
§18-30-9. Expiration of article.
This article shall become void upon the first day of
January, two thousand two, if the trust has not entered into a prepaid tuition contract with a purchaser before that date.
CHAPTER 38. LIENS.
ARTICLE 10. FEDERAL TAX LIENS; ORDERS AND DECREES IN
BANKRUPTCY.
§38-10-4. Exemptions of property in bankruptcy proceedings.
Pursuant to the provisions of 11 U.S.C. 522(b)(1), this
state specifically does not authorize debtors who are domiciled
in this state to exempt the property specified under the
provisions of 11 U.S.C. 522(d).
Any person who files a petition under the federal bankruptcy
law may exempt from property of the estate in a bankruptcy
proceeding the following property:
(a) The debtor's interest, not to exceed fifteen thousand
dollars in value, in real property or personal property that the
debtor or a dependent of the debtor uses as a residence, in a
cooperative that owns property that the debtor or a dependent of
the debtor uses as a residence or in a burial plot for the debtor
or a dependent of the debtor.
(b) The debtor's interest, not to exceed two thousand four
hundred dollars in value, in one motor vehicle.
(c) The debtor's interest, not to exceed four hundred
dollars in value in any particular item, in household
furnishings, household goods, wearing apparel, appliances, books,
animals, crops or musical instruments, that are held primarily
for the personal, family or household use of the debtor or a dependent of the debtor: Provided, That the total amount of
personal property exempted under this subsection shall not exceed
eight thousand dollars.
(d) The debtor's interest, not to exceed one thousand
dollars in value, in jewelry held primarily for the personal,
family or household use of the debtor or a dependent of the
debtor.
(e) The debtor's interest, not to exceed in value eight
hundred dollars plus any unused amount of the exemption provided
under subsection (a) of this section in any property.
(f) The debtor's interest, not to exceed one thousand five
hundred dollars in value, in any implements, professional books
or tools of the trade of the debtor or the trade of a dependent
of the debtor.
(g) Any unmatured life insurance contract owned by the
debtor, other than a credit life insurance contract.
(h) The debtor's interest, not to exceed in value eight
thousand dollars less any amount of property of the estate
transferred in the manner specified in 11 U.S.C. 542(d), in any
accrued dividend or interest under, or loan value of, any
unmatured life insurance contract owned by the debtor under which
the insured is the debtor or an individual of whom the debtor is
a dependent.
(i) Professionally prescribed health aids for the debtor or
a dependent of the debtor.
(j) The debtor's right to receive:
(1) A social security benefit, unemployment compensation or
a local public assistance benefit;
(2) A veterans' benefit;
(3) A disability, illness or unemployment benefit;
(4) Alimony, support or separate maintenance, to the extent
reasonably necessary for the support of the debtor and any
dependent of the debtor;
(5) A payment under a stock bonus, pension, profit sharing,
annuity or similar plan or contract on account of illness,
disability, death, age or length of service, to the extent
reasonably necessary for the support of the debtor and any
dependent of the debtor, unless:
(A) Such plan or contract was established by or under the
auspices of an insider that employed the debtor at the time the
debtor's rights under such plan or contract arose;
(B) Such payment is on account of age or length of service;
and
(C) Such plan or contract does not qualify under Section
401(a), 403(a), 403(b), 408 or 409 of the Internal Revenue Code
of 1954.
(k) The debtor's right to receive, or property that is
traceable to:
(1) An award under a crime victim's reparation law;
(2) A payment on account of the wrongful death of an individual of whom the debtor was a dependent, to the extent
reasonably necessary for the support of the debtor and any
dependent of the debtor;
(3) A payment under a life insurance contract that insured
the life of an individual of whom the debtor was a dependent on
the date of such individual's death, to the extent reasonably
necessary for the support of the debtor and any dependent of the
debtor;
(4) A payment, not to exceed fifteen thousand dollars on
account of personal bodily injury, not including pain and
suffering or compensation for actual pecuniary loss, of the
debtor or an individual of whom the debtor is a dependent;
(5) A payment in compensation of loss of future earnings of
the debtor or an individual of whom the debtor is or was a
dependent, to the extent reasonably necessary for the support of
the debtor and any dependent of the debtor;
(6) Payments made to the prepaid tuition trust fund on
behalf of any beneficiary.
This section shall not be construed to affect the
applicability of any provision of the federal bankruptcy law
other than 11 U.S.C. 552(d).
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