� |
� |
� |
� |
AN ACT
|
� |
relating to the Texas tomorrow fund II prepaid tuition unit |
� |
undergraduate education program. |
� |
�������BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
� |
�������SECTION�1.��Chapter 54, Education Code, is amended by adding |
� |
Subchapter H to read as follows: |
� |
SUBCHAPTER H. PREPAID TUITION UNIT UNDERGRADUATE EDUCATION |
� |
PROGRAM: �TEXAS TOMORROW FUND II |
� |
�������Sec.�54.751.��DEFINITIONS. In this subchapter: |
� |
�������������(1)��"Accredited out-of-state institution of higher |
� |
education"�means a public or private institution of higher |
� |
education that: |
� |
�������������������(A)��is located outside this state; and |
� |
�������������������(B)��is accredited by a recognized accrediting |
� |
agency. |
� |
�������������(2)��"Beneficiary" means the person designated under a |
� |
prepaid tuition contract as the person entitled to apply one or more |
� |
tuition units purchased under the contract to the payment of the |
� |
person's undergraduate tuition and required fees at a general |
� |
academic teaching institution, two-year institution of higher |
� |
education, private or independent institution of higher education, |
� |
or accredited out-of-state institution of higher education. |
� |
�������������(3)��"Board" means the Prepaid Higher Education Tuition |
� |
Board. |
� |
�������������(4)��"Fund" means the Texas tomorrow fund II. |
� |
�������������(5)��"General academic teaching institution" has the |
� |
meaning assigned by Section 61.003, except that the term does not |
� |
include a public state college. |
� |
�������������(6)��"Prepaid tuition contract" means a contract under |
� |
which a person purchases from the board on behalf of a beneficiary |
� |
one or more tuition units that the beneficiary is entitled to apply |
� |
to the payment of the beneficiary's undergraduate tuition and |
� |
required fees at a general academic teaching institution, two-year |
� |
institution of higher education, private or independent |
� |
institution of higher education, or accredited out-of-state |
� |
institution of higher education. |
� |
�������������(7)��"Private or independent institution of higher |
� |
education,"�"public junior college," "public state college," |
� |
"public technical institute," and "recognized accrediting agency"� |
� |
have the meanings assigned by Section 61.003. |
� |
�������������(8)��"Program" means the prepaid tuition unit |
� |
undergraduate education program. |
� |
�������������(9)��"Purchaser" means a person who enters into a |
� |
prepaid tuition contract with the board on behalf of a beneficiary |
� |
for the purchase of one or more tuition units. |
� |
�������������(10)��"Required fee" means a fee, other than a |
� |
laboratory fee for a specific course, that is charged by a public or |
� |
private institution of higher education to all students at the |
� |
institution who are not exempt from the fee. For purposes of this |
� |
subdivision, a fee is a required fee only to the extent that the fee |
� |
is considered a qualified higher education expense under Internal |
� |
Revenue Code provisions applicable to the program. |
� |
�������������(11)��"Two-year institution of higher education" means |
� |
a public junior college, a public state college, and a public |
� |
technical institute. |
� |
�������Sec.�54.752.��POWERS AND DUTIES OF BOARD CONCERNING PROGRAM. |
� |
(a) In addition to carrying out duties assigned under Subchapters F |
� |
and G, the Prepaid Higher Education Tuition Board shall administer |
� |
the prepaid tuition unit undergraduate education program |
� |
established under this subchapter. The board shall comply with |
� |
federal and state law related to the program. |
� |
�������(b)��In addition to the board's powers assigned under |
� |
Subchapters F and G, the board has the powers necessary or proper to |
� |
carry out this subchapter, including the power to: |
� |
�������������(1)��adopt rules to implement this subchapter; |
� |
�������������(2)��sue and be sued; |
� |
�������������(3)��enter into contracts and other necessary |
� |
instruments; |
� |
�������������(4)��enter into agreements or other transactions with |
� |
the United States, state agencies, general academic teaching |
� |
institutions, two-year institutions of higher education, and local |
� |
governments; |
� |
�������������(5)��appear on its own behalf before governmental |
� |
agencies; |
� |
�������������(6)��contract for necessary goods and services, |
� |
including specifying in the contract duties to be performed by the |
� |
provider of a good or service that are a part of or are in addition |
� |
to the person's primary duties under the contract; |
� |
�������������(7)��engage the services of private consultants, |
� |
actuaries, trustees, records administrators, managers, legal |
� |
counsel, and auditors for administrative or technical assistance; |
� |
�������������(8)��solicit and accept gifts, grants, loans, and other |
� |
aid from any source or participate in any other way in any |
� |
government program to carry out this subchapter; |
� |
�������������(9)��impose administrative fees; |
� |
�������������(10)��contract with a person to market the program; |
� |
�������������(11)��purchase liability insurance covering the board |
� |
and employees and agents of the board; and |
� |
�������������(12)��establish other policies, procedures, and |
� |
eligibility criteria to implement this subchapter. |
� |
�������(c)��In marketing the program, regardless of whether the |
� |
board markets the program directly or under contract as authorized |
� |
by Subsection (b)(10), the board, in coordination with the Health |
� |
and Human Services Commission, the Texas Workforce Commission, and |
� |
the Texas Higher Education Coordinating Board, shall ensure that: |
� |
�������������(1)��the program is marketed across the state in a |
� |
manner that promotes the participation goals and targets of the |
� |
most recent revision of "Closing the Gaps," the state's master plan |
� |
for higher education; and |
� |
�������������(2)��any marketing plan for the program includes a |
� |
specific strategy to promote enrollment in the program by persons |
� |
likely to qualify for federal earned income tax credits. |
� |
�������Sec.�54.7521.��TEXAS SAVE AND MATCH PROGRAM. The board by |
� |
rule shall develop and shall implement the Texas Save and Match |
� |
program under which money paid by a purchaser under a prepaid |
� |
tuition contract may be matched with: |
� |
�������������(1)��contributions made by any person to the Texas Save |
� |
and Match program and used to purchase additional tuition units on |
� |
behalf of beneficiaries selected as provided by board rule; and |
� |
�������������(2)��money appropriated by the legislature for the |
� |
Texas Save and Match program and used to purchase additional |
� |
tuition units on behalf of beneficiaries: |
� |
�������������������(A)��whose annual household income is below the |
� |
state median family income, adjusted for household size; |
� |
�������������������(B)��whose enrollment in the program would, as |
� |
determined by the board, promote the participation goals and |
� |
targets of the most recent revision of "Closing the Gaps," the |
� |
state's master plan for higher education; or |
� |
�������������������(C)��who meet other criteria established by board |
� |
rule. |
� |
�������Sec.�54.753.��PREPAID TUITION UNITS: PURCHASE; ASSIGNED |
� |
VALUE; TYPES; PRICE. (a) Under the program, a purchaser may prepay |
� |
the costs of all or a portion of a beneficiary's undergraduate |
� |
tuition and required fees at a general academic teaching |
� |
institution, two-year institution of higher education, private or |
� |
independent institution of higher education, or accredited |
� |
out-of-state institution of higher education by entering into a |
� |
prepaid tuition contract with the board to purchase one or more |
� |
tuition units of a type described by this section at the applicable |
� |
price established by the board for that type of unit for the year in |
� |
which the unit is purchased. The portion of the beneficiary's |
� |
undergraduate tuition and required fees for which a tuition unit |
� |
may be redeemed at a particular general academic teaching |
� |
institution or two-year institution of higher education is assigned |
� |
to the tuition unit at the time of purchase, and the tuition unit |
� |
may be redeemed to pay that portion of the tuition and fees at the |
� |
general academic teaching institution or two-year institution of |
� |
higher education in any academic year in which the unit is redeemed |
� |
in accordance with this subchapter. �The purchaser may purchase one |
� |
type of unit or a combination of two or three types of units. |
� |
�������(b)��The assigned value of a tuition unit, purchased as |
� |
provided by this section, when used to pay the cost of tuition and |
� |
required fees at a general academic teaching institution or |
� |
two-year institution of higher education, is equal to one percent |
� |
of the amount necessary for the academic year in which the unit is |
� |
redeemed to cover the applicable cost of undergraduate resident |
� |
tuition and required fees for one academic year consisting of 30 |
� |
semester credit hours as follows: |
� |
�������������(1)��for a Type I tuition unit, the cost of |
� |
undergraduate resident tuition and required fees charged by the |
� |
general academic teaching institution with the highest such tuition |
� |
and fee costs, determined as provided by Subsection (d); |
� |
�������������(2)��for a Type II tuition unit, the weighted average |
� |
undergraduate resident tuition and required fees charged by general |
� |
academic teaching institutions, determined as provided by |
� |
Subsection (e); and |
� |
�������������(3)��for a Type III tuition unit, the weighted average |
� |
undergraduate resident tuition and required fees of two-year |
� |
institutions of higher education, determined as provided by |
� |
Subsection (f). |
� |
�������(c)��Each year, the board shall establish the price at which |
� |
each type of tuition unit may be purchased during the next sales |
� |
period and the percentage of the total cost of undergraduate |
� |
resident tuition and required fees for one academic year consisting |
� |
of 30 semester credit hours for which each type of tuition unit may |
� |
be redeemed at each general academic teaching institution and |
� |
two-year institution. �The percentage shall be based on the total |
� |
cost of required tuition and fees at a particular general academic |
� |
teaching institution or two-year institution of higher education in |
� |
relation to the amount determined for the institution with the |
� |
highest cost or weighted average cost, as applicable. The purchase |
� |
price established for each type of unit must be equal to the |
� |
applicable cost of tuition and required fees as determined under |
� |
this section for the most recent academic year that began before the |
� |
beginning of the sales period. The sales period to which those |
� |
prices apply expires on the first anniversary of the date the units |
� |
become available for purchase at the prices established for that |
� |
year. |
� |
�������(d)��The board shall base the purchase price of a Type I |
� |
tuition unit on one percent of the cost of the undergraduate |
� |
resident tuition and required fees for the applicable academic year |
� |
at the general academic teaching institution with the highest such |
� |
tuition and fee cost for that academic year. |
� |
�������(e)��The board shall base the purchase price of a Type II |
� |
tuition unit on one percent of the cost of the weighted average |
� |
general academic teaching institution undergraduate resident |
� |
tuition and required fees for the applicable academic year. That |
� |
cost is determined by: |
� |
�������������(1)��for each general academic teaching institution, |
� |
multiplying the average amount of the institution's undergraduate |
� |
resident tuition and required fees for an academic year consisting |
� |
of 30 semester credit hours by the number of full-time equivalent |
� |
undergraduate resident students at that institution; |
� |
�������������(2)��adding together the products computed under |
� |
Subdivision (1) for each institution; and |
� |
�������������(3)��dividing the sum determined under Subdivision (2) |
� |
by the total number of full-time equivalent undergraduate resident |
� |
students at all general academic teaching institutions. |
� |
�������(f)��The board shall base the purchase price of a Type III |
� |
tuition unit on one percent of the cost of the weighted average |
� |
two-year institution of higher education undergraduate resident |
� |
tuition and required fees for the applicable academic year, |
� |
disregarding any portion of the tuition charged by a public junior |
� |
college to a resident of this state who does not reside within the |
� |
taxing jurisdiction of the junior college. That cost is determined |
� |
by: |
� |
�������������(1)��for each two-year institution of higher education, |
� |
multiplying the average amount of the institution's undergraduate |
� |
resident tuition and required fees for an academic year consisting |
� |
of 30 semester credit hours by the number of full-time equivalent |
� |
undergraduate resident students at that institution; |
� |
�������������(2)��adding together the products computed under |
� |
Subdivision (1) for each institution; and |
� |
�������������(3)��dividing the sum determined under Subdivision (2) |
� |
by the total number of full-time equivalent undergraduate resident |
� |
students at all two-year institutions of higher education. |
� |
�������(g)��The total amount paid under a prepaid tuition contract |
� |
on behalf of a single beneficiary may not exceed any limit |
� |
established on the amount by Section 529, Internal Revenue Code of |
� |
1986. The board shall establish, in compliance with Section 529, |
� |
Internal Revenue Code of 1986, the minimum amount that the |
� |
purchaser is required to pay under the contract on behalf of a |
� |
single beneficiary. |
� |
�������(h)��At the time of the establishment of the account to which |
� |
a purchaser's prepaid tuition contract money is assigned, the board |
� |
may impose an administrative fee not to exceed $25. �Money from that |
� |
fee must be used directly in maintaining the actuarial soundness of |
� |
the fund as required by Section 54.770. �The board may not impose |
� |
any other fee or charge in connection with the sale of a tuition |
� |
unit. |
� |
�������Sec.�54.754.��REDEMPTION OF TUITION UNITS. (a) In |
� |
accordance with this subchapter, when a beneficiary under a prepaid |
� |
tuition contract redeems one or more tuition units to pay costs of |
� |
tuition and required fees, the board shall apply money in the fund, |
� |
in the amount provided by Section 54.765 to pay all or the |
� |
applicable portion of the costs of the beneficiary's tuition and |
� |
required fees at the general academic teaching institution, |
� |
two-year institution of higher education, private or independent |
� |
institution of higher education, or accredited out-of-state |
� |
institution of higher education in which the beneficiary enrolls. |
� |
Subject to Subsection (b)(2) and the other provisions of this |
� |
section, a beneficiary may redeem any type of tuition unit for |
� |
attendance at an institution described by this section. �A general |
� |
academic teaching institution or two-year institution of higher |
� |
education shall accept the amount transferred to the institution |
� |
under Section 54.765(c) when the unit or units are redeemed as |
� |
payment for all or the applicable portion of the beneficiary's |
� |
tuition and required fees. |
� |
�������(b)��To pay for the entire cost of undergraduate resident |
� |
tuition and required fees for an academic year consisting of 30 |
� |
semester credit hours, redemption of 100 Type I tuition units is |
� |
required at the general academic teaching institution with the |
� |
highest tuition and fee cost as described by Section 54.753(d), |
� |
redemption of 100 Type II tuition units is required at a general |
� |
academic teaching institution with the applicable tuition and fee |
� |
cost at the weighted average as described by Subsection (e) of that |
� |
section, and redemption of 100 Type III units is required at a |
� |
two-year institution of higher education with the applicable |
� |
tuition and fee cost at the weighted average as described by |
� |
Subsection (f) of that section. The number of tuition units that |
� |
must be redeemed to pay for the entire cost of tuition and required |
� |
fees for an academic year at another general academic teaching |
� |
institution or two-year institution of higher education may be |
� |
higher or lower: |
� |
�������������(1)��in proportion to the amount that the cost of |
� |
tuition and required fees at that institution is higher or lower |
� |
than the amount determined for the institution with the highest |
� |
cost or weighted average cost, as applicable; or |
� |
�������������(2)��if a more or less valuable type of tuition unit is |
� |
redeemed. |
� |
�������(c)��To assist purchasers in determining the number of |
� |
tuition units a beneficiary must redeem to cover the costs of |
� |
tuition and required fees at general academic teaching institutions |
� |
and two-year institutions of higher education, each year the board |
� |
shall prepare a tuition unit redemption chart and shall post the |
� |
chart on an Internet website. The chart must show for each general |
� |
academic teaching institution and for each two-year institution of |
� |
higher education the number of each type of units purchased that |
� |
year that would be required to cover the cost of tuition and |
� |
required fees, based on an academic year consisting of 30 semester |
� |
credit hours. |
� |
�������(d)��If a beneficiary redeems fewer tuition units of the type |
� |
or combination of types necessary to pay the total cost of the |
� |
beneficiary's tuition and required fees at the general academic |
� |
teaching institution, two-year institution of higher education, |
� |
private or independent institution of higher education, or |
� |
accredited out-of-state institution of higher education at which |
� |
the beneficiary enrolls, the beneficiary is responsible for paying |
� |
the amount of the difference between the amount of tuition and |
� |
required fees for which the beneficiary pays through the redemption |
� |
of one or more tuition units and the total cost of the beneficiary's |
� |
tuition and required fees at the institution. |
� |
�������(d-1)��A beneficiary who redeems one or more Type III tuition |
� |
units to attend a public junior college and who does not reside |
� |
within the taxing jurisdiction of the junior college is responsible |
� |
for paying any portion of the tuition charged by the junior college |
� |
to persons who do not reside within that taxing jurisdiction. |
� |
�������(e)��If the beneficiary redeems fewer tuition units to pay |
� |
the cost of tuition and required fees than the number of units |
� |
purchased on behalf of the beneficiary under a prepaid tuition |
� |
contract, other than to defer redemption as permitted in accordance |
� |
with Section 54.758, the purchaser may: |
� |
�������������(1)��redeem for cash the amount of the purchase price of |
� |
the excess units, plus annual interest earned on that money, |
� |
accrued at a rate set by the board not to exceed five percent |
� |
annually; or |
� |
�������������(2)��transfer the remaining units to another |
� |
beneficiary in accordance with this subchapter. |
� |
�������(f)��A beneficiary or purchaser may not redeem a tuition unit |
� |
earlier than the third anniversary of the date the unit was |
� |
purchased. |
� |
�������Sec.�54.755.��PREPAID TUITION CONTRACT. �(a) �The board shall |
� |
adopt a form for a prepaid tuition contract to be used by the board |
� |
and purchasers. |
� |
�������(b)��A prepaid tuition contract must: |
� |
�������������(1)��specify the terms under which the purchaser must |
� |
pay any amounts owed under the contract; |
� |
�������������(2)��specify the consequences of default; |
� |
�������������(3)��specify the name and date of birth of the |
� |
beneficiary under the contract and the terms under which another |
� |
person may be substituted as the beneficiary; |
� |
�������������(4)��specify the date the beneficiary is projected to |
� |
graduate from high school; and |
� |
�������������(5)��contain any other provisions the board considers |
� |
necessary or appropriate. |
� |
�������(c)��A prepaid tuition contract may provide for the purchase |
� |
of additional tuition units in subsequent years at the then-current |
� |
price of the additional units. |
� |
�������Sec.�54.756.��PURCHASER; BENEFICIARY. �(a) �A purchaser may |
� |
be any person who is permitted to be a purchaser under Section 529, |
� |
Internal Revenue Code of 1986. �The purchaser is not required to be |
� |
a resident of this state, except as provided by Subsection (c)(2). |
� |
�������(b)��In accordance with applicable provisions of Section |
� |
529, Internal Revenue Code of 1986, a purchaser is the owner of the |
� |
account to which the purchaser's prepaid tuition contract money is |
� |
assigned. |
� |
�������(c)��At the time the purchaser enters into a prepaid tuition |
� |
contract, the beneficiary of the contract must be: |
� |
�������������(1)��a resident of this state at the time the purchaser |
� |
enters into the contract; or |
� |
�������������(2)��a nonresident who is the child of a parent who is a |
� |
resident of this state at the time that parent enters into the |
� |
contract. |
� |
�������(d)��For purposes of Subsection (c), the board may require a |
� |
reasonable period of residence in this state for a beneficiary or |
� |
the parent of a beneficiary. |
� |
�������(e)��Notwithstanding any provision of Subchapter B, the |
� |
tuition and required fees charged by a general academic teaching |
� |
institution or two-year institution of higher education that are |
� |
paid for with tuition units shall be determined as if the |
� |
beneficiary of that contract were a resident student. |
� |
�������Sec.�54.757.��CONTRACT PAYMENT. (a) The board may provide |
� |
for the receipt of payment under prepaid tuition contracts in lump |
� |
sums or installment payments. If the board allows payments under a |
� |
contract to be made in installments over a period longer than one |
� |
year, the board must provide for a plan that permits those payments |
� |
to be made in single annual installments in addition to any other |
� |
permitted installment plans. |
� |
�������(b)��A purchaser may make payments under a prepaid tuition |
� |
contract by an electronic funds transfer. |
� |
�������(c)��An employee of this state or a political subdivision of |
� |
this state may make payments under a prepaid tuition contract by |
� |
payroll deductions made by the appropriate officer of the state or |
� |
political subdivision. �The board shall implement procedures to |
� |
facilitate payments under this subsection. |
� |
�������(d)��The board may impose a fee for a late payment under a |
� |
prepaid tuition contract. |
� |
�������Sec.�54.758.��DEFERRED USE OF PREPAID CREDIT HOURS. (a) �A |
� |
prepaid tuition contract must permit the beneficiary to elect to |
� |
pay from a source other than tuition units purchased under the |
� |
contract the beneficiary's tuition and required fees for some or |
� |
all of the tuition and required fees to which the beneficiary is |
� |
entitled to payment under the contract, and to defer to a subsequent |
� |
semester or other academic term the right to payment of the |
� |
beneficiary's tuition and required fees by using tuition units |
� |
remaining under the contract. |
� |
�������(b)��This section does not affect the date on which a prepaid |
� |
tuition contract terminates under this subchapter and does not give |
� |
the beneficiary the right to a payment under the contract after |
� |
termination of the contract. |
� |
�������Sec.�54.759.��CHANGE OF BENEFICIARY. (a) �The purchaser of a |
� |
prepaid tuition contract may designate a different beneficiary in |
� |
place of the original beneficiary if the new beneficiary meets the |
� |
requirements of a beneficiary on the date the designation is |
� |
changed. The new beneficiary must meet the requirements of Section |
� |
529, Internal Revenue Code of 1986, to prevent the change of |
� |
beneficiary from being treated as a distribution under that law. |
� |
�������(b)��The board may adjust the terms of the contract so that |
� |
the purchaser is required to pay the amount the purchaser would have |
� |
been required to pay had the purchaser originally designated the |
� |
new beneficiary as the beneficiary, taking into account any |
� |
payments made before the date the designation is changed. |
� |
�������(c)��The board may not impose a fee in connection with the |
� |
designation of a new beneficiary. |
� |
�������(d)��The purchaser of a prepaid tuition contract may not sell |
� |
the contract. |
� |
�������Sec.�54.760.��VERIFICATION UNDER OATH. The board may |
� |
require a purchaser to verify under oath a request to: |
� |
�������������(1)��change a beneficiary; or |
� |
�������������(2)��terminate a contract. |
� |
�������Sec.�54.761.��PROMISE OR GUARANTEE OF ADMISSION. This |
� |
subchapter is not a promise or guarantee that a beneficiary will be: |
� |
�������������(1)��admitted to any public or private institution of |
� |
higher education; |
� |
�������������(2)��admitted to a particular public or private |
� |
institution of higher education; |
� |
�������������(3)��allowed to continue enrollment at a public or |
� |
private institution of higher education; or |
� |
�������������(4)��graduated from a public or private institution of |
� |
higher education. |
� |
�������Sec.�54.762.��CONTRACT TERMINATION. (a) �A prepaid tuition |
� |
contract shall specify: |
� |
�������������(1)��the name of any person who may terminate the |
� |
contract; and |
� |
�������������(2)��the terms under which the contract may be |
� |
terminated. |
� |
�������(b)��A prepaid tuition contract terminates on the 10th |
� |
anniversary of the date the beneficiary is projected to graduate |
� |
from high school, not counting time spent by the beneficiary as an |
� |
active duty member of the United States armed services. |
� |
�������Sec.�54.763.��REFUND. (a) �A prepaid tuition contract shall |
� |
specify: |
� |
�������������(1)��the name of the person entitled to any refund if |
� |
the contract is terminated; |
� |
�������������(2)��the terms under which a person is entitled to a |
� |
refund; and |
� |
�������������(3)��the method by which the amount of the refund is |
� |
computed. |
� |
�������(b)��The person named in the contract is entitled to a refund |
� |
following termination of a prepaid tuition contract. |
� |
�������(c)��The board shall determine the method by which the amount |
� |
of the refund is computed. |
� |
�������Sec.�54.764.��FUND. (a) �The Texas tomorrow fund II prepaid |
� |
tuition unit undergraduate education program fund is established as |
� |
a trust fund outside of the state treasury. |
� |
�������(b)��The board shall: |
� |
�������������(1)��deposit in the fund money paid under prepaid |
� |
tuition contracts; and |
� |
�������������(2)��credit to the fund income earned on that money. |
� |
�������(c)��The board shall provide for administering the assets of |
� |
the fund and establishing and administering the accounts of |
� |
purchasers under prepaid tuition contracts. |
� |
�������(d)��The board shall provide for assigning payments to the |
� |
fund to separate accounts for purchasers and may provide for |
� |
assigning payments to other general accounts as otherwise |
� |
considered appropriate by the board. |
� |
�������(e)��The board may provide for acquiring, holding, managing, |
� |
purchasing, selling, assigning, trading, transferring, or |
� |
disposing of any security, evidence of indebtedness, or other |
� |
investment in which the fund's assets may be invested. |
� |
�������Sec.�54.765.��COMPTROLLER'S DUTIES; TRANSFERS TO |
� |
INSTITUTIONS ON REDEMPTION OF TUITION UNITS. (a) �Except as |
� |
provided by Subsection (e), the comptroller is the custodian of the |
� |
assets of the fund. |
� |
�������(b)��The comptroller shall pay money from the fund on a |
� |
warrant drawn by the comptroller supported only on a voucher signed |
� |
by the comptroller or the comptroller's authorized representative. |
� |
�������(c)��When a beneficiary enrolls at a general academic |
� |
teaching institution or two-year institution of higher education, |
� |
on written authorization from the purchaser of the tuition unit or |
� |
units for that beneficiary, the comptroller shall transfer to the |
� |
institution an amount equal to the lesser of: |
� |
�������������(1)��the sum of: |
� |
�������������������(A)��the total purchase price of the tuition unit |
� |
or units the beneficiary redeems for the semester or other academic |
� |
term; �and |
� |
�������������������(B)��the amount determined under Subsection (d); |
� |
or |
� |
�������������(2)��an amount equal to 101 percent of the amount of |
� |
tuition and required fees covered by the tuition units being |
� |
redeemed. |
� |
�������(d)��The amount required to be transferred under Subsection |
� |
(c)(1)(B) is the greater of: |
� |
�������������(1)��an amount equal to the portion of the actual total |
� |
return on all investment assets of the fund attributable to the |
� |
amount transferred under Subsection (c)(1)(A); or |
� |
�������������(2)��an amount equal to the portion of the total return |
� |
on all investment assets of the fund attributable to the amount |
� |
transferred under Subsection (c)(1)(A) that would result assuming |
� |
an annual return on all investment assets of the fund of five |
� |
percent, subject to the availability of money in the fund for that |
� |
purpose. |
� |
�������(e)��If the amount that would otherwise be transferred under |
� |
Subsections (c)(1)(A) and (B) exceeds the amount that may be |
� |
transferred under Subsection (c)(2), the excess amount shall be |
� |
retained in the fund and used as necessary to provide sufficient |
� |
money to meet the minimum transfer requirements under Subsection |
� |
(c)(1)(B) as specified by Subsection (d). |
� |
�������(f)��When a beneficiary enrolls at a private or independent |
� |
institution of higher education or accredited out-of-state |
� |
institution of higher education, on written authorization from the |
� |
purchaser of the tuition unit or units for that beneficiary, the |
� |
comptroller shall transfer to the institution the lesser of: |
� |
�������������(1)��an amount equal to the current cost of the tuition |
� |
and required fees that would be covered by redemption of the number |
� |
and type of tuition units the beneficiary is redeeming if the |
� |
beneficiary were redeeming the unit or units at a general academic |
� |
teaching institution or two-year institution of higher education as |
� |
follows: |
� |
�������������������(A)��for a Type I unit, at the general academic |
� |
teaching institution that, in the sales year in which the unit was |
� |
purchased, had the highest tuition and required fee cost; |
� |
�������������������(B)��for a Type II unit, at a general academic |
� |
teaching institution that, in the sales year in which the unit was |
� |
purchased, had tuition and required fee cost at the weighted |
� |
average; and |
� |
�������������������(C)��for a Type III unit, at a two-year |
� |
institution of higher education that, in the sales year in which the |
� |
unit was purchased, had tuition and required fee cost at the |
� |
weighted average; or |
� |
�������������(2)��an amount equal to the total purchase price of the |
� |
tuition unit or units the beneficiary redeems for the semester or |
� |
other academic term plus the portion of the total return on assets |
� |
of the fund attributable to that amount. |
� |
�������(g)��The comptroller annually shall provide to the board a |
� |
sworn statement of the amount of the fund's assets in the |
� |
comptroller's custody. |
� |
�������(h)��The board may select one or more commercial banks, |
� |
depository trust companies, or other entities to serve as custodian |
� |
of all or part of the fund's assets. |
� |
�������Sec.�54.766.��INVESTMENT OF FUND ASSETS. (a) �The board |
� |
shall provide for investing the assets of the fund. In investing the |
� |
fund, the board has the same investment authority as that provided |
� |
by Section 11b, Article VII, Texas Constitution, or other law, to |
� |
the board of regents of The University of Texas System with respect |
� |
to the investment of the Permanent University Fund. �The board and |
� |
the board of regents of The University of Texas System may contract |
� |
for the board of regents to manage and invest the assets of the |
� |
fund, and for that purpose the board may delegate its duties under |
� |
this section to the board of regents. |
� |
�������(b)��If the board does not contract with the board of regents |
� |
of The University of Texas System under Subsection (a) to manage and |
� |
invest the assets of the fund, the board shall contract with one or |
� |
more private professional investment managers to serve as plan |
� |
manager and to invest the assets of the fund on behalf of the board. |
� |
In selecting a manager, the board must: |
� |
�������������(1)��select a person who has served as a professional |
� |
investment manager for at least 10 years; |
� |
�������������(2)��evaluate each person considered for the position |
� |
based on the historical net returns of the person's professional |
� |
investments and the consistency of the person's professional |
� |
investment returns over a period of at least five years; and |
� |
�������������(3)��comply with Section 54.704. |
� |
�������(c)��In monitoring the manager's investments, the board |
� |
shall ensure that investments are made according to the standard of |
� |
investment provided by this section. The plan manager has the same |
� |
duties imposed on a plan manager by Section 54.705. |
� |
�������(d)��The board shall develop written objectives concerning |
� |
the investment of the assets of the fund. The objectives may |
� |
address desired rates of return, risks involved, investment time |
� |
frames, and any other relevant considerations. |
� |
�������(e)��The board may specify in a contract under this section |
� |
that the plan manager is required to establish and maintain an |
� |
Internet website through which a purchaser may monitor the account |
� |
to which the purchaser's prepaid tuition contract money is |
� |
assigned. |
� |
�������Sec.�54.767.��USE OF FUND ASSETS. The assets of the fund may |
� |
be used only to: |
� |
�������������(1)��pay the costs of program administration and |
� |
operations; |
� |
�������������(2)��make payments to general academic teaching |
� |
institutions, two-year institutions of higher education, private |
� |
or independent institutions of higher education, and accredited |
� |
out-of-state institutions of higher education on behalf of |
� |
beneficiaries; and |
� |
�������������(3)��make refunds under prepaid tuition contracts. |
� |
�������Sec.�54.7671.��TRANSFERS AMONG 529 PLANS. �(a) �The board by |
� |
rule shall provide for a purchaser to transfer money between an |
� |
account under this subchapter and an account under another plan |
� |
established by this state or by another state or other authorized |
� |
entity in accordance with Section 529, Internal Revenue Code of |
� |
1986, to the extent and in the manner authorized by that section. |
� |
�������(b)��For purposes of a transfer of money from an account |
� |
under this subchapter, the value of the account at the time of |
� |
transfer is the lesser of: |
� |
�������������(1)��an amount equal to the cost, at the time of the |
� |
transfer, of the tuition and required fees that would be covered by |
� |
redemption of the number and type of tuition units to be transferred |
� |
from the account if the beneficiary were redeeming the units at a |
� |
general academic teaching institution or two-year institution of |
� |
higher education as follows: |
� |
�������������������(A)��for a Type I unit, at the general academic |
� |
teaching institution that, in the sales year in which the unit was |
� |
purchased, had the highest tuition and required fee cost; |
� |
�������������������(B)��for a Type II unit, at a general academic |
� |
teaching institution that, in the sales year in which the unit was |
� |
purchased, had tuition and required fee cost at the weighted |
� |
average; and |
� |
�������������������(C)��for a Type III unit, at a two-year |
� |
institution of higher education that, in the sales year in which the |
� |
unit was purchased, had tuition and required fee cost at the |
� |
weighted average; or |
� |
�������������(2)��an amount equal to the total purchase price of the |
� |
tuition units to be transferred from the account, plus the portion |
� |
of the total return on assets of the fund attributable to that |
� |
amount. |
� |
�������Sec.�54.768.��EXEMPTION FROM SECURITIES LAWS. The |
� |
registration requirements of The Securities Act (Article 581-1 et |
� |
seq., Vernon's Texas Civil Statutes) do not apply to the sale of a |
� |
prepaid tuition contract by the board or by a registered securities |
� |
dealer or registered investment adviser. |
� |
�������Sec.�54.769.��EXEMPTION FROM CREDITORS' CLAIMS. (a) �Money |
� |
in the fund is exempt from claims of creditors, including claims of |
� |
creditors of a purchaser, a beneficiary, or a successor in interest |
� |
of a purchaser or beneficiary. |
� |
�������(b)��The rights of a purchaser, beneficiary, or successor in |
� |
interest of a purchaser or beneficiary in and under a prepaid |
� |
tuition contract and the payment of tuition and required fees for a |
� |
beneficiary under a prepaid tuition contract to a general academic |
� |
teaching institution, two-year institution of higher education, |
� |
private or independent institution of higher education, or |
� |
accredited out-of-state institution of higher education under this |
� |
chapter are exempt from attachment, levy, garnishment, execution, |
� |
and seizure for the satisfaction of any debt, judgment, or claim |
� |
against a purchaser, beneficiary, or successor in interest of a |
� |
purchaser or beneficiary. |
� |
�������(c)��A claim or judgment against a purchaser, beneficiary, or |
� |
successor in interest of a purchaser or beneficiary does not impair |
� |
or entitle the claim or judgment holder to assert or enforce a lien |
� |
against: |
� |
�������������(1)��the rights of a purchaser, beneficiary, or |
� |
successor in interest of a purchaser or beneficiary in and under a |
� |
prepaid tuition contract; or |
� |
�������������(2)��the right of a beneficiary to the payment of |
� |
tuition and required fees to a general academic teaching |
� |
institution, two-year institution of higher education, private or |
� |
independent institution of higher education, or accredited |
� |
out-of-state institution of higher education under a prepaid |
� |
tuition contract. |
� |
�������Sec.�54.770.��ACTUARIAL SOUNDNESS OF FUND. (a) �The board |
� |
shall administer the fund in a manner that is sufficiently |
� |
actuarially sound to pay the costs of program administration and |
� |
operations and to meet the obligations of the program. |
� |
�������(b)��The board shall annually evaluate the actuarial |
� |
soundness of the fund. |
� |
�������(c)��The board may adjust the terms of subsequent prepaid |
� |
tuition contracts as necessary to ensure the actuarial soundness of |
� |
the fund. |
� |
�������Sec.�54.771.��COMPLIANCE WITH LIMITS ON CONTRIBUTIONS AND |
� |
WITHDRAWALS. The board shall monitor contributions to and |
� |
withdrawals from the fund and any account within the fund to ensure |
� |
that any applicable limits on contributions or withdrawals are not |
� |
exceeded. |
� |
�������Sec.�54.772.��TAX EXEMPT STATUS REQUIREMENTS. (a) �This |
� |
section is intended to meet the requirements of Section 529, |
� |
Internal Revenue Code of 1986. |
� |
�������(b)��A payment of an amount due to the fund for a prepaid |
� |
tuition contract must be made in cash or cash equivalent. A person |
� |
may not make a payment to the fund in excess of the amounts required |
� |
to be paid under a prepaid tuition contract. |
� |
�������(c)��The board shall maintain a separate accounting for each |
� |
beneficiary. |
� |
�������(d)��The purchaser under a prepaid tuition contract and the |
� |
beneficiary under the contract may not: |
� |
�������������(1)��control or direct the investment of payments under |
� |
the contract or any earnings of the fund; or |
� |
�������������(2)��use any interest in the contract as security for a |
� |
loan or other obligation. |
� |
�������(e)��The board shall make reports required by the secretary |
� |
of the United States Treasury. |
� |
�������Sec.�54.773.��SUSPENSION OF NEW ENROLLMENT; PROGRAM |
� |
MODIFICATION OR TERMINATION. (a) On the request of the comptroller |
� |
as the comptroller considers necessary to ensure the actuarial |
� |
soundness of the fund, the board may temporarily suspend new |
� |
enrollment in the program. |
� |
�������(b)��If the comptroller determines that the program is |
� |
financially infeasible, the comptroller shall notify the governor |
� |
and the legislature and recommend that the program be modified or |
� |
terminated. |
� |
�������Sec.�54.774.��EFFECT OF PROGRAM TERMINATION ON CONTRACT. |
� |
(a) �A prepaid tuition contract remains in effect after the program |
� |
is terminated if, when the program is terminated, the beneficiary: |
� |
�������������(1)��has been accepted by or is enrolled at a general |
� |
academic teaching institution, two-year institution of higher |
� |
education, private or independent institution of higher education, |
� |
or accredited out-of-state institution of higher education; or |
� |
�������������(2)��is projected to graduate from high school not |
� |
later than the third anniversary of the date the program is |
� |
terminated. |
� |
�������(b)��A prepaid tuition contract terminates when the program |
� |
is terminated if the contract does not remain in effect under |
� |
Subsection (a). |
� |
�������Sec.�54.775.��CONFIDENTIALITY. (a) �Records in the custody |
� |
of the board relating to the participation of specific purchasers |
� |
and beneficiaries in the program are confidential. |
� |
�������(b)��Notwithstanding Subsection (a), the board may release |
� |
information described by that subsection to a general academic |
� |
teaching institution, two-year institution of higher education, |
� |
private or independent institution of higher education, or |
� |
accredited out-of-state institution of higher education at which a |
� |
beneficiary may enroll or is enrolled. The institution shall keep |
� |
the information confidential. |
� |
�������(c)��Notwithstanding any other provision of this subchapter, |
� |
the board may release information to the Internal Revenue Service |
� |
and to any state tax agencies as required by applicable tax law. |
� |
�������Sec.�54.776.��STATEMENT REGARDING STATUS OF PREPAID TUITION |
� |
CONTRACT. Not later than January 1 of each year, the board shall |
� |
provide without charge to each purchaser a statement of: |
� |
�������������(1)��the amount paid by the purchaser under the prepaid |
� |
tuition contract; |
� |
�������������(2)��the total number of each type of tuition unit |
� |
covered by the contract at any one time; |
� |
�������������(3)��the number of each type of tuition unit remaining |
� |
under the contract; |
� |
�������������(4)��the value of the purchasers'�tuition units if |
� |
redeemed at any general academic teaching institution or two-year |
� |
institution of higher education designated for that year by the |
� |
purchaser in the time and manner required by the board, not to |
� |
exceed five institutions; and |
� |
�������������(5)��any other information the board determines by rule |
� |
is necessary or appropriate. |
� |
�������Sec.�54.777.��REPORTS. (a) �Not later than December 1 of |
� |
each year, the board shall submit to the governor, lieutenant |
� |
governor, speaker of the house of representatives, Legislative |
� |
Budget Board, Legislative Audit Committee, state auditor, and Texas |
� |
Higher Education Coordinating Board a report including: |
� |
�������������(1)��the fiscal transactions of the board and the plan |
� |
manager under this subchapter during the preceding fiscal year; |
� |
�������������(2)��the market and book value of the fund as of the end |
� |
of the preceding fiscal year; |
� |
�������������(3)��the asset allocations of the fund expressed in |
� |
percentages of stocks, fixed income, cash, or other financial |
� |
investments; |
� |
�������������(4)��the rate of return on the investment of the fund's |
� |
assets during the preceding fiscal year; and |
� |
�������������(5)��an actuarial valuation of the assets and |
� |
liabilities of the program, including the extent to which the |
� |
program's liabilities are unfunded. |
� |
�������(b)��The board shall make the report described by Subsection |
� |
(a) available to purchasers of prepaid tuition contracts. |
� |
�������(c)��Not later than December 1 of each year, the board shall |
� |
provide to the coordinating board complete prepaid tuition contract |
� |
sales information, including projected enrollments of |
� |
beneficiaries at general academic teaching institutions and |
� |
two-year institutions of higher education. |
� |
�������Sec.�54.778.��AUDIT. The fund and the operations of the |
� |
board are subject to audit by the state auditor in accordance with |
� |
Chapter 321, Government Code. |
� |
�������SECTION�2.��Beginning September 1, 2008, the Prepaid Higher |
� |
Education Tuition Board may enter into prepaid tuition contracts |
� |
with purchasers and begin selling tuition units under those |
� |
contracts in accordance with Subchapter H, Chapter 54, Education |
� |
Code, as added by this Act. |
� |
�������SECTION�3.��This Act takes effect immediately if it receives |
� |
a vote of two-thirds of all the members elected to each house, as |
� |
provided by Section 39, Article III, Texas Constitution.��If this |
� |
Act does not receive the vote necessary for immediate effect, this |
� |
Act takes effect September 1, 2007. |
� |
� |
� |
______________________________ |
______________________________ |
� |
���President of the Senate |
Speaker of the House����� |
� |
� |
� |
�������I certify that H.B. No. 3900 was passed by the House on May 1, |
� |
2007, by the following vote:��Yeas 145, Nays 0, 1 present, not |
� |
voting; and that the House concurred in Senate amendments to H.B. |
� |
No. 3900 on May 21, 2007, by the following vote:��Yeas 141, Nays 0, |
� |
2 present, not voting. |
� |
|
� |
______________________________ |
� |
Chief Clerk of the House��� |
� |
� |
�������I certify that H.B. No. 3900 was passed by the Senate, with |
� |
amendments, on May 17, 2007, by the following vote:��Yeas 31, Nays |
� |
0. |
� |
|
� |
______________________________ |
� |
Secretary of the Senate��� |
� |
APPROVED: __________________ |
� |
����������������Date������� |
� |
� |
� |
�������� __________________ |
� |
��������������Governor������� |