H.B. No. 1214
1-1 AN ACT
1-2 relating to the establishment of a prepaid higher education tuition
1-3 program.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 54, Education Code, is amended by adding
1-6 Subchapter F to read as follows:
1-7 SUBCHAPTER F. PREPAID HIGHER EDUCATION TUITION PROGRAM
1-8 Sec. 54.6001. PUBLIC PURPOSE. An educated population being
1-9 necessary to the social development and economic health of this
1-10 state, the legislature finds and declares it to be an urgent public
1-11 necessity to assist young Texans in obtaining a higher education.
1-12 Because the state's population is rapidly growing and is diverse,
1-13 the state is required to use all of the higher education facilities
1-14 and resources within the state, both public and private, to provide
1-15 a wide variety of educational environments and instructional
1-16 options and to preserve the partnership between the state and
1-17 private or independent institutions of higher education.
1-18 Therefore, the prepaid higher education tuition program is
1-19 established to help Texas students attend the institution that best
1-20 meets their individual needs.
1-21 Sec. 54.601. DEFINITIONS. In this subchapter:
1-22 (1) "Beneficiary" means a person who is entitled to
1-23 receive benefits under a prepaid tuition contract.
1-24 (2) "Board" means the Prepaid Higher Education Tuition
2-1 Board.
2-2 (3) "Estimated average private tuition and required
2-3 fees" means an estimated average of tuition and required fees to be
2-4 charged by private or independent institutions of higher education
2-5 as determined annually by the board.
2-6 (4) "Fund" means the Texas tomorrow fund.
2-7 (5) "Institution of higher education" has the meaning
2-8 assigned by Section 61.003.
2-9 (6) "Prepaid tuition contract" means a contract
2-10 entered into under this subchapter by the board and a purchaser to
2-11 provide for the payment of higher education tuition and required
2-12 fees of a beneficiary.
2-13 (7) "Private or independent institution of higher
2-14 education" has the meaning assigned by Section 61.003.
2-15 (8) "Program" means the prepaid higher education
2-16 tuition program.
2-17 (9) "Public junior college" has the meaning assigned
2-18 by Section 61.003.
2-19 (10) "Public senior college or university" has the
2-20 meaning assigned by Section 61.003.
2-21 (11) "Purchaser" means a person who is obligated to
2-22 make payments under a prepaid tuition contract.
2-23 Sec. 54.602. ESTABLISHMENT OF BOARD; FUNCTION. (a) The
2-24 Prepaid Higher Education Tuition Board is in the office of the
2-25 comptroller.
2-26 (b) The board shall administer the program.
2-27 Sec. 54.603. SUNSET PROVISION. The Prepaid Higher Education
3-1 Tuition Board is subject to Chapter 325, Government Code (Texas
3-2 Sunset Act). Unless continued in existence as provided by that
3-3 chapter, the board is abolished and the program terminates
3-4 September 1, 2007.
3-5 Sec. 54.604. TERMINATION OR MODIFICATION OF PROGRAM. If the
3-6 comptroller determines the program is financially infeasible, the
3-7 comptroller shall notify the governor and the legislature and
3-8 recommend that the program be modified or terminated.
3-9 Sec. 54.605. EFFECT OF TERMINATION OF PROGRAM ON CONTRACT.
3-10 (a) A prepaid tuition contract remains in effect after the program
3-11 is terminated if, when the program is terminated, the beneficiary:
3-12 (1) has been accepted by or is enrolled in an
3-13 institution of higher education or a private or independent
3-14 institution of higher education; or
3-15 (2) is projected to graduate from high school not
3-16 later than the third anniversary of the date the program is
3-17 terminated.
3-18 (b) A prepaid tuition contract terminates when the program
3-19 is terminated if the contract does not remain in effect under
3-20 Subsection (a).
3-21 Sec. 54.606. MEMBERS OF BOARD; APPOINTMENT; TERMS OF OFFICE.
3-22 (a) The board consists of:
3-23 (1) the comptroller;
3-24 (2) two members appointed by the governor with the
3-25 advice and consent of the senate; and
3-26 (3) four members appointed by the lieutenant governor,
3-27 at least two of whom must be appointed from a list of persons
4-1 recommended by the speaker of the house of representatives.
4-2 (b) The appointed members must possess knowledge, skill, and
4-3 experience in higher education, business, or finance.
4-4 (c) The appointed members serve for staggered six-year
4-5 terms. The terms of one-third of the appointed members expire on
4-6 February 1 of each odd-numbered year.
4-7 Sec. 54.607. DUTY IN RECOMMENDING, MAKING, OR CONFIRMING
4-8 APPOINTMENTS. (a) In recommending, making, or confirming
4-9 appointments to the board, the governor, lieutenant governor,
4-10 speaker of the house of representatives, and senate shall ensure
4-11 that each appointee has the background and experience suitable for
4-12 performing the statutory responsibilities of a member of the board.
4-13 (b) Appointments to the board shall be made without regard
4-14 to the race, color, disability, sex, religion, age, or national
4-15 origin of the appointees.
4-16 Sec. 54.608. RESTRICTIONS ON BOARD APPOINTMENT, MEMBERSHIP,
4-17 AND EMPLOYMENT. (a) A person is not eligible for appointment as a
4-18 member of the board if the person or the person's spouse:
4-19 (1) is employed by or participates in the management
4-20 of a business entity receiving funds from the board;
4-21 (2) owns or controls, directly or indirectly, more
4-22 than a 10-percent interest in a business entity receiving funds
4-23 from the board; or
4-24 (3) uses or receives a substantial amount of tangible
4-25 goods, services, or funds from the board, other than compensation
4-26 or reimbursement authorized by law for board membership,
4-27 attendance, or expenses.
5-1 (b) An officer, employee, or paid consultant of a Texas
5-2 trade association in the field of higher education may not be a
5-3 member or employee of the board who is exempt from the state's
5-4 position classification plan or is compensated at or above the
5-5 amount prescribed by the General Appropriations Act for step 1,
5-6 salary group 17, of the position classification salary schedule.
5-7 (c) A person who is the spouse of an officer, manager, or
5-8 paid consultant of a Texas trade association in the field of higher
5-9 education may not be a board member and may not be a board employee
5-10 who is exempt from the state's position classification plan or is
5-11 compensated at or above the amount prescribed by the General
5-12 Appropriations Act for step 1, salary group 17, of the position
5-13 classification salary schedule.
5-14 (d) A person may not serve as a member of the board or act
5-15 as the general counsel to the board if the person is required to
5-16 register as a lobbyist under Chapter 305, Government Code, because
5-17 of the person's activities for compensation on behalf of a
5-18 profession related to the operation of the board.
5-19 (e) A person may not serve as an appointed member of the
5-20 board if the person is related in the second degree by affinity or
5-21 consanguinity, as determined under Subchapter B, Chapter 573,
5-22 Government Code, to a person who is an officer, employee, or paid
5-23 consultant of a Texas trade association in the banking, securities,
5-24 or investment industry.
5-25 (f) For the purposes of this section, a Texas trade
5-26 association is a nonprofit, cooperative, and voluntarily joined
5-27 association of business or professional competitors in this state
6-1 designed to assist its members and its industry or profession in
6-2 dealing with mutual business or professional problems and in
6-3 promoting their common interest.
6-4 Sec. 54.609. REMOVAL OF BOARD MEMBER. (a) It is a ground
6-5 for removal from the board if a member:
6-6 (1) violates a prohibition established by Section
6-7 54.608;
6-8 (2) cannot because of illness or disability discharge
6-9 the member's duties for a substantial part of the term for which
6-10 the member is appointed; or
6-11 (3) is absent from more than half of the regularly
6-12 scheduled board meetings that the member is eligible to attend
6-13 during a calendar year unless the absence is excused by majority
6-14 vote of the board.
6-15 (b) The validity of an action of the board is not affected
6-16 by the fact that the action was taken when a ground for removal of
6-17 a board member existed.
6-18 Sec. 54.610. TRAINING OF BOARD MEMBERS. (a) Before a
6-19 member of the board may assume the member's duties and before an
6-20 appointed member may be confirmed by the senate, the member must
6-21 complete at least one course of the training program established
6-22 under this section.
6-23 (b) A training program established under this section shall
6-24 provide information to the member regarding:
6-25 (1) the enabling legislation that created the board;
6-26 (2) the programs operated by the board;
6-27 (3) the role and functions of the board;
7-1 (4) the rules of the board, with an emphasis on the
7-2 rules that relate to disciplinary and investigatory authority;
7-3 (5) the current budget for the board;
7-4 (6) the results of the most recent formal audit of the
7-5 board;
7-6 (7) the requirements of the:
7-7 (A) open meetings law, Chapter 551, Government
7-8 Code;
7-9 (B) open records law, Chapter 552, Government
7-10 Code; and
7-11 (C) administrative procedure law, Chapter 2001,
7-12 Government Code;
7-13 (8) the requirements of the conflict of interest laws
7-14 and other laws relating to public officials; and
7-15 (9) any applicable ethics policies adopted by the
7-16 board or the Texas Ethics Commission.
7-17 Sec. 54.611. BOARD OFFICERS. (a) The comptroller serves as
7-18 the presiding officer of the board.
7-19 (b) The board shall appoint a secretary of the board whose
7-20 duties may be prescribed by law and by the board.
7-21 Sec. 54.612. COMPENSATION AND EXPENSES OF APPOINTED BOARD
7-22 MEMBERS. Appointed members of the board shall serve without pay
7-23 but shall be reimbursed for their actual expenses incurred in
7-24 attending meetings of the board or in performing other work of the
7-25 board when that work is approved by the presiding officer of the
7-26 board.
7-27 Sec. 54.613. MEETINGS. (a) The board shall hold regular
8-1 quarterly meetings in the city of Austin and other meetings at
8-2 places and times scheduled by the board in formal sessions and
8-3 called by the presiding officer.
8-4 (b) The board shall develop and implement policies that
8-5 provide the public with a reasonable opportunity to appear before
8-6 the board and to speak on any issue under the jurisdiction of the
8-7 board.
8-8 (c) Minutes of all meetings shall be available in the
8-9 board's office for public inspection.
8-10 Sec. 54.614. APPLICABILITY OF OPEN MEETINGS LAW AND
8-11 ADMINISTRATIVE PROCEDURE LAW. The board is subject to the open
8-12 meetings law, Chapter 551, Government Code, and the administrative
8-13 procedure law, Chapter 2001, Government Code.
8-14 Sec. 54.615. EXECUTIVE DIRECTOR; STAFF. (a) The
8-15 comptroller serves as the executive director of the board.
8-16 (b) The employees of the comptroller selected by the
8-17 comptroller for that purpose serve as the staff of the board.
8-18 (c) The comptroller shall select and supervise the staff of
8-19 the board and perform other duties delegated to the comptroller by
8-20 the board.
8-21 (d) The comptroller shall provide to members of the board
8-22 and to board staff, as often as necessary, information regarding
8-23 their qualifications for office or employment under this subchapter
8-24 and their responsibilities under applicable laws relating to
8-25 standards of conduct for state officers or employees.
8-26 (e) The board shall develop and implement policies that
8-27 clearly separate the policy-making responsibilities of the board
9-1 and the management responsibilities of the comptroller and the
9-2 staff of the board.
9-3 Sec. 54.616. PROGRAM AND FACILITY ACCESSIBILITY. (a) The
9-4 board shall comply with federal and state laws related to program
9-5 and facility accessibility.
9-6 (b) The board shall prepare and maintain a written plan that
9-7 describes how a person who does not speak English can be provided
9-8 reasonable access to the board's programs and services.
9-9 Sec. 54.617. PUBLIC INTEREST INFORMATION AND COMPLAINTS.
9-10 (a) The board shall prepare information of public interest
9-11 describing the functions of the board and the board's procedures by
9-12 which complaints are filed with and resolved by the board. The
9-13 board shall make the information available to the public and
9-14 appropriate state agencies.
9-15 (b) The board by rule shall establish methods by which
9-16 consumers and service recipients are notified of the name, mailing
9-17 address, and telephone number of the board for the purpose of
9-18 directing complaints to the board.
9-19 (c) The board shall keep information about each complaint
9-20 filed with the board. The information shall include:
9-21 (1) the date the complaint is received;
9-22 (2) the name of the complainant;
9-23 (3) the subject matter of the complaint;
9-24 (4) a record of all persons contacted in relation to
9-25 the complaint;
9-26 (5) a summary of the results of the review or
9-27 investigation of the complaint; and
10-1 (6) for complaints for which the board took no action,
10-2 an explanation of the reason the complaint was closed without
10-3 action.
10-4 (d) The board shall keep a file for each written complaint
10-5 filed with the board that the board has authority to resolve. The
10-6 board shall provide to the person filing the complaint and the
10-7 persons or entities complained about the board's policies and
10-8 procedures pertaining to complaint investigation and resolution.
10-9 The board, at least quarterly and until final disposition of the
10-10 complaint, shall notify the person filing the complaint and the
10-11 persons or entities complained about of the status of the complaint
10-12 unless the notice would jeopardize an undercover investigation.
10-13 Sec. 54.618. POWERS OF BOARD. (a) The board has the powers
10-14 necessary or proper to carry out this subchapter.
10-15 (b) The board may:
10-16 (1) adopt an official seal;
10-17 (2) adopt rules to implement this subchapter;
10-18 (3) sue and be sued;
10-19 (4) enter into contracts and other necessary
10-20 instruments;
10-21 (5) enter into agreements or other transactions with
10-22 the United States, state agencies, including institutions of higher
10-23 education, private or independent institutions of higher education,
10-24 and local governments;
10-25 (6) appear in its own behalf before governmental
10-26 agencies;
10-27 (7) contract for necessary goods and services and
11-1 engage the services of private consultants, actuaries, trustees,
11-2 records administrators, managers, legal counsel, and auditors for
11-3 administrative or technical assistance;
11-4 (8) solicit and accept gifts, grants, loans, and other
11-5 aid from any source or participate in any other way in any
11-6 government program to carry out this subchapter;
11-7 (9) impose administrative fees;
11-8 (10) contract with a person to market the program;
11-9 (11) purchase liability insurance covering the board
11-10 and employees and agents of the board; and
11-11 (12) establish other policies, procedures, and
11-12 eligibility criteria to implement this subchapter.
11-13 Sec. 54.619. PREPAID HIGHER EDUCATION TUITION PROGRAM. (a)
11-14 Under the program, a purchaser may enter into a prepaid tuition
11-15 contract with the board under which the purchaser agrees to prepay
11-16 the tuition and required fees for a beneficiary to attend an
11-17 institution of higher education or private or independent
11-18 institution of higher education.
11-19 (b) The board shall deposit the money paid under a prepaid
11-20 tuition contract in the fund, invest the money and credit the
11-21 income earned to the fund, and apply money in the fund to the
11-22 tuition and required fees of the institution of higher education or
11-23 private or independent institution of higher education in which the
11-24 beneficiary enrolls as provided by the prepaid tuition contract.
11-25 (c) If the beneficiary of a plan described by Section
11-26 54.623, 54.624, or 54.625 enrolls in a private or independent
11-27 institution of higher education, the board shall pay the
12-1 institution the tuition and required fees the board would have paid
12-2 had the beneficiary enrolled in an institution of higher education
12-3 covered by the plan selected in the prepaid tuition contract. The
12-4 beneficiary is responsible for paying the private or independent
12-5 institution of higher education the amount by which the tuition and
12-6 required fees of the institution exceed the tuition and required
12-7 fees paid by the board.
12-8 (d) If the beneficiary of a plan described by Section
12-9 54.6251 enrolls in an institution of higher education, the board
12-10 shall pay:
12-11 (1) to the institution the tuition and required fees
12-12 of the institution; and
12-13 (2) to the beneficiary the amount by which the
12-14 estimated average private tuition and required fees exceeds the
12-15 tuition and required fees of the institution.
12-16 (e) If the beneficiary of a plan described by Section
12-17 54.6251 enrolls in a private or independent institution of higher
12-18 education, the board shall pay:
12-19 (1) to the institution the lesser of:
12-20 (A) the tuition and required fees of the
12-21 institution; or
12-22 (B) the estimated average private tuition and
12-23 required fees; and
12-24 (2) to the beneficiary the amount by which the
12-25 estimated average private tuition and required fees exceeds the
12-26 tuition and required fees of the institution.
12-27 (f) If the beneficiary of a plan described by Section
13-1 54.6251 enrolls in a private or independent institution of higher
13-2 education, the beneficiary is responsible for paying the
13-3 institution the amount by which the tuition and required fees of
13-4 the institution exceeds the estimated average private tuition and
13-5 required fees.
13-6 (g) If there is not enough money in the fund to pay the
13-7 tuition and required fees of the institution of higher education in
13-8 which a beneficiary enrolls or the appropriate portion of the
13-9 tuition and required fees of the private or independent institution
13-10 of higher education in which the beneficiary enrolls as provided by
13-11 the prepaid tuition contract, the legislature may appropriate to
13-12 the fund the amount necessary for the board to pay the applicable
13-13 amount of tuition and required fees of the institution.
13-14 Sec. 54.620. PREPAID TUITION CONTRACT. (a) The board may
13-15 contract with a purchaser for the purchaser to prepay the tuition
13-16 and required fees for a beneficiary to attend an institution of
13-17 higher education or private or independent institution of higher
13-18 education to which the beneficiary is admitted as a student.
13-19 (b) The terms of a prepaid tuition contract shall be based
13-20 on an actuarial analysis of:
13-21 (1) the rates of increase of:
13-22 (A) tuition and required fees at institutions of
13-23 higher education; or
13-24 (B) estimated average private tuition and
13-25 required fees;
13-26 (2) expected investment returns;
13-27 (3) estimated administrative costs; and
14-1 (4) the period between the date the contract is
14-2 entered into and the date the beneficiary is projected to graduate
14-3 from high school.
14-4 (c) The board shall adopt a form for a prepaid tuition
14-5 contract to be used by the board and purchasers.
14-6 (d) A prepaid tuition contract must:
14-7 (1) specify the amount and number of payments required
14-8 from the purchaser on behalf of the beneficiary;
14-9 (2) specify the terms under which the purchaser shall
14-10 make payments, including the date on which each payment is due;
14-11 (3) specify the consequences of default;
14-12 (4) specify the name and date of birth of the
14-13 beneficiary of the contract and the terms under which another
14-14 person may be substituted as the beneficiary;
14-15 (5) specify the number of credit hours contracted by
14-16 the purchaser;
14-17 (6) specify the type of plan toward which the
14-18 contracted credit hours shall be applied;
14-19 (7) contain an assumption of a contractual obligation
14-20 by the board to the beneficiary to provide for a specified number
14-21 of credit hours of undergraduate instruction at an institution of
14-22 higher education or private or independent institution of higher
14-23 education, not to exceed the typical number of credit hours
14-24 required for the degree that corresponds to the plan purchased on
14-25 behalf of the beneficiary;
14-26 (8) specify the date the beneficiary is projected to
14-27 graduate from high school; and
15-1 (9) contain any other provisions the board considers
15-2 necessary or appropriate.
15-3 (e) A prepaid tuition contract does not cover the cost of
15-4 laboratory fees charged for specific courses.
15-5 Sec. 54.621. BENEFICIARY. (a) The beneficiary of a prepaid
15-6 tuition contract must be younger than 18 years of age at the time
15-7 the purchaser enters into the contract and must be:
15-8 (1) a resident of this state at the time the purchaser
15-9 enters into the contract; or
15-10 (2) a nonresident who is the child of a parent who is
15-11 a resident of this state at the time that parent enters into the
15-12 contract.
15-13 (b) The board may require a reasonable period of residence
15-14 in this state for a beneficiary or the parent of a beneficiary.
15-15 (c) A beneficiary is considered a resident for purposes of
15-16 tuition regardless of the beneficiary's residence on the date of
15-17 enrollment.
15-18 Sec. 54.622. TYPES OF PLANS. The board shall make prepaid
15-19 tuition contracts available for the:
15-20 (1) junior college plan;
15-21 (2) senior college plan;
15-22 (3) junior-senior college plan; and
15-23 (4) private college plan.
15-24 Sec. 54.623. JUNIOR COLLEGE PLAN. Through the junior
15-25 college plan, a prepaid tuition contract shall provide prepaid
15-26 tuition and required fees for the beneficiary to attend a public
15-27 junior college for a specified number of undergraduate credit hours
16-1 not to exceed the typical number of hours required for a
16-2 certificate or an associate degree awarded by a public junior
16-3 college.
16-4 Sec. 54.624. SENIOR COLLEGE PLAN. Through the senior
16-5 college plan, a prepaid tuition contract shall provide prepaid
16-6 tuition and required fees for the beneficiary to attend a public
16-7 senior college or university for a specified number of
16-8 undergraduate credit hours not to exceed the typical number of
16-9 hours required for a baccalaureate degree awarded by a public
16-10 senior college or university.
16-11 Sec. 54.625. JUNIOR-SENIOR COLLEGE PLAN. Through the
16-12 junior-senior college plan, a prepaid tuition contract shall
16-13 provide prepaid tuition and required fees for the beneficiary to
16-14 attend:
16-15 (1) a public junior college for a specified number of
16-16 undergraduate credit hours not to exceed the typical number of
16-17 hours required for a person to receive a certificate or associate
16-18 degree awarded by a public junior college; and
16-19 (2) a public senior college or university for a
16-20 specified number of credit hours not to exceed the typical number
16-21 of additional hours required for the person to receive a
16-22 baccalaureate degree awarded by a public senior college or
16-23 university.
16-24 Sec. 54.6251. PRIVATE COLLEGE PLAN. Through the private
16-25 college plan, a prepaid tuition contract shall provide prepaid
16-26 estimated average private tuition and required fees for the
16-27 beneficiary to attend a private or independent institution of
17-1 higher education for a specified number of undergraduate credit
17-2 hours not to exceed the typical number of hours required for a
17-3 baccalaureate degree awarded by a private or independent
17-4 institution of higher education.
17-5 Sec. 54.626. CONTRACT PAYMENT. (a) The board may provide
17-6 for the receipt of payments under prepaid tuition contracts in lump
17-7 sums or installment payments.
17-8 (b) A purchaser may make payments under a prepaid tuition
17-9 contract by electronic funds transfer.
17-10 (c) An employee of the state or a political subdivision of
17-11 the state may make payments under a prepaid tuition contract by
17-12 payroll deductions made by the appropriate officer of the state or
17-13 political subdivision.
17-14 (d) The board may impose a fee for a late payment under a
17-15 prepaid tuition contract.
17-16 Sec. 54.627. CHANGE OF BENEFICIARY. (a) The purchaser of a
17-17 prepaid tuition contract may designate a new beneficiary instead of
17-18 the original beneficiary if the new beneficiary meets the
17-19 requirements of a beneficiary on the date the designation is
17-20 changed. If the purchaser is an individual, the new beneficiary
17-21 must be a sibling, step-sibling, or half-sibling of the original
17-22 beneficiary.
17-23 (b) The board may adjust the terms of the contract so that
17-24 the purchaser is required to pay the amount the purchaser would
17-25 have been required to pay had the purchaser originally designated
17-26 the new beneficiary as the beneficiary, taking into account any
17-27 payments made before the date the designation is changed.
18-1 (c) The purchaser of a prepaid tuition contract may not sell
18-2 the contract.
18-3 Sec. 54.628. CONVERSION TO ANOTHER PLAN. (a) A purchaser
18-4 may convert a prepaid tuition contract from one plan to another
18-5 plan.
18-6 (b) The board may adjust the terms of the contract so that
18-7 the purchaser is required to pay the amount required under the plan
18-8 to which the contract is converted, taking into account any
18-9 payments made before the date the contract is converted.
18-10 Sec. 54.629. VERIFICATION UNDER OATH. The board may require
18-11 a purchaser to verify under oath a request to:
18-12 (1) change a beneficiary;
18-13 (2) convert a contract to another plan; or
18-14 (3) terminate a contract.
18-15 Sec. 54.630. PROMISE OR GUARANTEE OF ADMISSION. This
18-16 subchapter is not a promise or guarantee that a beneficiary will
18-17 be:
18-18 (1) admitted to any institution of higher education or
18-19 private or independent institution of higher education;
18-20 (2) admitted to a particular institution of higher
18-21 education or private or independent institution of higher
18-22 education;
18-23 (3) allowed to continue enrollment at an institution
18-24 of higher education or private or independent institution of higher
18-25 education after admission; or
18-26 (4) graduated from an institution of higher education
18-27 or private or independent institution of higher education.
19-1 Sec. 54.631. CONTRACT TERMINATION. (a) A prepaid tuition
19-2 contract shall specify:
19-3 (1) the name of any person who may terminate the
19-4 contract; and
19-5 (2) the terms under which the contract may be
19-6 terminated.
19-7 (b) A prepaid tuition contract terminates on the 10th
19-8 anniversary of the date the beneficiary is projected to graduate
19-9 from high school, not counting time spent by the beneficiary as an
19-10 active duty member of the United States armed services.
19-11 Sec. 54.632. REFUND. (a) A prepaid tuition contract shall
19-12 specify:
19-13 (1) the name of the person entitled to any refund if
19-14 the contract is terminated;
19-15 (2) the terms under which a person is entitled to a
19-16 refund; and
19-17 (3) the method by which the amount of the refund is
19-18 calculated.
19-19 (b) The person named in the contract is entitled to a refund
19-20 following termination of a prepaid tuition contract.
19-21 (c) The board shall determine the method by which the amount
19-22 of the refund is calculated.
19-23 Sec. 54.633. PREPAID HIGHER EDUCATION TUITION SCHOLARSHIPS
19-24 FOR NEEDY STUDENTS. (a) To the extent money is available, the
19-25 board may award a prepaid higher education tuition scholarship to a
19-26 student who meets economic and academic requirements adopted by the
19-27 board by rule.
20-1 (b) A scholarship awarded under this section terminates if
20-2 the student to whom the scholarship is awarded is:
20-3 (1) convicted of, or adjudicated as having engaged in
20-4 delinquent conduct constituting, an offense under Chapter 481,
20-5 Health and Safety Code; or
20-6 (2) convicted of, or adjudicated as having engaged in
20-7 delinquent conduct constituting, a felony or Class A misdemeanor.
20-8 (c) The board shall ensure that each region of the state is
20-9 equitably represented in the awarding of scholarships under this
20-10 section.
20-11 (d) Scholarships under this section are funded by the
20-12 private sector.
20-13 (e) The board may establish a direct-support organization
20-14 under the Texas Non-Profit Corporation Act (Article 1396-1.01 et
20-15 seq., Vernon's Texas Civil Statutes) to:
20-16 (1) receive, hold, invest, and administer money,
20-17 gifts, grants, loans, or other property for or on behalf of the
20-18 program; and
20-19 (2) purchase scholarships under this section.
20-20 (f) The board of directors of the direct-support
20-21 organization consists of:
20-22 (1) the comptroller;
20-23 (2) a member appointed by the governor with the advice
20-24 and consent of the senate; and
20-25 (3) three members appointed jointly by the comptroller
20-26 and the member appointed by the governor.
20-27 (g) The board must certify that the direct-support
21-1 organization operates in a manner consistent with the goals of this
21-2 state and in the best interests of this state.
21-3 (h) The board may contract with an independent certified
21-4 public accountant to annually audit the direct-support organization
21-5 under rules adopted by the board. The board shall submit the audit
21-6 to the comptroller, governor, lieutenant governor, speaker of the
21-7 house of representatives, Legislative Budget Board, Legislative
21-8 Audit Committee, state auditor, and Texas Higher Education
21-9 Coordinating Board. The comptroller or state auditor may require
21-10 the direct-support organization or independent certified public
21-11 accountant to provide additional information relating to the
21-12 operation of the organization.
21-13 (i) The identity of a donor under this section who desires
21-14 to remain anonymous and the records of the direct-support
21-15 organization, other than the records disclosed under Subsection
21-16 (h), are confidential.
21-17 Sec. 54.634. ESTABLISHMENT OF FUND. (a) The Texas tomorrow
21-18 fund is outside the state treasury. The fund consists of:
21-19 (1) state appropriations for purposes of the fund;
21-20 (2) money acquired from other governmental or private
21-21 sources;
21-22 (3) money paid under prepaid tuition contracts; and
21-23 (4) the income from money deposited in the fund.
21-24 (b) The board shall administer the assets of the fund. The
21-25 board is the trustee of the fund's assets.
21-26 (c) The board may:
21-27 (1) segregate contributions and payments to the fund
22-1 into various accounts; and
22-2 (2) acquire, hold, manage, purchase, sell, assign,
22-3 trade, transfer, and dispose of any security, evidence of
22-4 indebtedness, or other investment in which the fund's assets may be
22-5 invested.
22-6 Sec. 54.635. STATE TREASURER. (a) Except as provided by
22-7 Subsections (d) and (e), the state treasurer is the custodian of
22-8 the assets of the fund.
22-9 (b) The state treasurer shall pay money from the fund on a
22-10 warrant drawn by the comptroller supported only on a voucher signed
22-11 by the comptroller or the comptroller's authorized representative.
22-12 (c) The state treasurer annually shall furnish to the board
22-13 a sworn statement of the amount of the fund's assets in the
22-14 treasurer's custody.
22-15 (d) The board may select one or more commercial banks,
22-16 depository trust companies, or other entities to serve as custodian
22-17 of all or part of the fund's assets.
22-18 (e) If the office of the state treasurer is abolished, the
22-19 comptroller is the custodian of the assets of the fund.
22-20 Sec. 54.636. INVESTMENT OF FUND ASSETS. (a) The board
22-21 shall invest the assets of the fund.
22-22 (b) The board may contract with private professional
22-23 investment managers to assist the board in investing the assets of
22-24 the fund.
22-25 (c) The board shall develop written investment objectives
22-26 concerning the investment of the assets of the fund. The
22-27 objectives may address desired rates of return, risks involved,
23-1 investment time frames, and any other relevant considerations.
23-2 (d) The comptroller shall develop a comprehensive plan for
23-3 the investment of the assets of the fund consistent with the
23-4 objectives developed by the board under Subsection (c). The plan
23-5 shall specify the policies under which the board shall invest the
23-6 assets of the fund. The board must approve the plan.
23-7 (e) The board shall invest the assets of the fund in
23-8 accordance with the Public Funds Investment Act (Subchapter A,
23-9 Chapter 2256, Government Code).
23-10 Sec. 54.637. USE OF FUND ASSETS. The assets of the fund may
23-11 be used only to:
23-12 (1) pay the costs of program administration and
23-13 operations;
23-14 (2) make payments to institutions of higher education
23-15 or private or independent institutions of higher education on
23-16 behalf of beneficiaries; and
23-17 (3) make refunds under prepaid tuition contracts.
23-18 Sec. 54.638. REQUEST OF RULINGS FROM INTERNAL REVENUE
23-19 SERVICE AND SECURITIES AND EXCHANGE COMMISSION. (a) The board
23-20 shall request rulings from:
23-21 (1) the Internal Revenue Service regarding the tax
23-22 consequences to purchasers and beneficiaries of participating in
23-23 the program; and
23-24 (2) the Securities and Exchange Commission regarding
23-25 the application of federal securities laws to the fund.
23-26 (b) The board shall inform a purchaser of the status of the
23-27 requests under Subsection (a) before the purchaser enters into a
24-1 prepaid tuition contract.
24-2 Sec. 54.6385. EXEMPTION FROM SECURITIES LAWS. The
24-3 registration requirements of The Securities Act (Article 581-1 et
24-4 seq., Vernon's Texas Civil Statutes) do not apply to the sale of a
24-5 prepaid tuition contract by the board or by a registered securities
24-6 dealer.
24-7 Sec. 54.639. EXEMPTION FROM CREDITORS' CLAIMS. Money in the
24-8 fund is exempt from claims of creditors of a purchaser or
24-9 beneficiary.
24-10 Sec. 54.640. ACTUARIAL SOUNDNESS OF FUND. (a) The board
24-11 shall administer the fund in a manner that is sufficiently
24-12 actuarially sound to pay the costs of program administration and
24-13 operations and meet the obligations of the program.
24-14 (b) The board shall annually evaluate the actuarial
24-15 soundness of the fund.
24-16 (c) The board may adjust the terms of subsequent prepaid
24-17 tuition contracts as necessary to ensure the actuarial soundness of
24-18 the fund.
24-19 Sec. 54.641. STATEMENT REGARDING STATUS OF PREPAID TUITION
24-20 CONTRACT. (a) Not later than December 1 of each year, the board
24-21 shall furnish without charge to each purchaser a statement of:
24-22 (1) the amount paid by the purchaser under the prepaid
24-23 tuition contract;
24-24 (2) the number of credit hours originally covered by
24-25 the contract;
24-26 (3) the number of credit hours remaining under the
24-27 contract; and
25-1 (4) any other information the board determines by rule
25-2 is necessary or appropriate.
25-3 (b) The board shall furnish a statement complying with
25-4 Subsection (a) to a purchaser or beneficiary on written request.
25-5 The board may charge a reasonable fee for each statement furnished
25-6 under this subsection.
25-7 Sec. 54.642. REPORTS. (a) Not later than December 1 of
25-8 each year, the board shall submit to the governor, lieutenant
25-9 governor, speaker of the house of representatives, Legislative
25-10 Budget Board, Legislative Audit Committee, state auditor, and Texas
25-11 Higher Education Coordinating Board a report including:
25-12 (1) the board's fiscal transactions during the
25-13 preceding fiscal year;
25-14 (2) the market and book value of the fund as of the
25-15 end of the preceding fiscal year;
25-16 (3) the asset allocations of the fund expressed in
25-17 percentages of stocks, fixed income, cash, or other financial
25-18 investments;
25-19 (4) the rate of return on the investment of the fund's
25-20 assets during the preceding fiscal year; and
25-21 (5) an actuarial valuation of the assets and
25-22 liabilities of the program, including the extent to which the
25-23 program's liabilities are unfunded.
25-24 (b) The board shall make the report described by Subsection
25-25 (a) available to purchasers of prepaid tuition contracts.
25-26 (c) Not later than December 1 of each year, the board shall
25-27 provide to the Texas Higher Education Coordinating Board complete
26-1 prepaid tuition contract sales information, including projected
26-2 enrollments of beneficiaries at institutions of higher education.
26-3 Sec. 54.643. CONFIDENTIALITY. (a) Records in the custody
26-4 of the board relating to the participation of specific purchasers
26-5 and beneficiaries in the program are confidential.
26-6 (b) Notwithstanding Subsection (a), the board may release
26-7 information described by that subsection to an institution of
26-8 higher education in which a beneficiary may enroll or is enrolled.
26-9 The institution of higher education shall keep the information
26-10 confidential.
26-11 SECTION 2. (a) As soon as possible on or after the
26-12 effective date of this Act, the governor and lieutenant governor
26-13 shall appoint the members of the Prepaid Higher Education Tuition
26-14 Board appointed by those officers. In making the appointments, the
26-15 governor shall designate one member for a term expiring February 1,
26-16 1997, and one member for a term expiring February 1, 1999. In
26-17 making the appointments, the lieutenant governor shall designate
26-18 one member for a term expiring February 1, 1997, one member
26-19 appointed from a list of persons recommended by the speaker of the
26-20 house of representatives for a term expiring February 1, 1999, and
26-21 two members for terms expiring February 1, 2001, one of whom must
26-22 be appointed from a list of persons recommended by the speaker of
26-23 the house of representatives.
26-24 (b) The legislature may appropriate to the board an amount
26-25 sufficient to cover the board's administrative costs for the state
26-26 fiscal biennium ending August 31, 1997.
26-27 (c) The board shall be prepared to enter into a prepaid
27-1 tuition contract not later than the 90th day after the date all the
27-2 members are appointed or January 1, 1996, whichever occurs later.
27-3 SECTION 3. This Act takes effect September 1, 1995.
27-4 SECTION 4. The importance of this legislation and the
27-5 crowded condition of the calendars in both houses create an
27-6 emergency and an imperative public necessity that the
27-7 constitutional rule requiring bills to be read on three several
27-8 days in each house be suspended, and this rule is hereby suspended.