74R7494 SMH-D
By Kamel, Raymond H.B. No. 1214
Substitute the following for H.B. No. 1214:
By Rangel C.S.H.B. No. 1214
A BILL TO BE ENTITLED
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. 54.601. DEFINITIONS. In this subchapter:
1-9 (1) "Beneficiary" means a person who is entitled to
1-10 receive benefits under a prepaid tuition contract.
1-11 (2) "Board" means the Prepaid Higher Education Tuition
1-12 Board.
1-13 (3) "Fund" means the Texas tomorrow fund.
1-14 (4) "Institution of higher education" has the meaning
1-15 assigned by Section 61.003.
1-16 (5) "Prepaid tuition contract" means a contract
1-17 entered into under this subchapter by the board and a purchaser to
1-18 provide for the payment of higher education tuition and required
1-19 fees of a beneficiary.
1-20 (6) "Private or independent institution of higher
1-21 education" has the meaning assigned by Section 61.003.
1-22 (7) "Program" means the prepaid higher education
1-23 tuition program.
1-24 (8) "Public junior college" has the meaning assigned
2-1 by Section 61.003.
2-2 (9) "Public senior college or university" has the
2-3 meaning assigned by Section 61.003.
2-4 (10) "Purchaser" means a person who is obligated to
2-5 make payments under a prepaid tuition contract.
2-6 Sec. 54.602. ESTABLISHMENT OF BOARD; FUNCTION. (a) The
2-7 Prepaid Higher Education Tuition Board is in the office of the
2-8 comptroller.
2-9 (b) The board shall administer the program.
2-10 Sec. 54.603. SUNSET PROVISION. The Prepaid Higher Education
2-11 Tuition Board is subject to Chapter 325, Government Code (Texas
2-12 Sunset Act). Unless continued in existence as provided by that
2-13 chapter, the board is abolished and the program terminates
2-14 September 1, 2007.
2-15 Sec. 54.604. TERMINATION OR MODIFICATION OF PROGRAM. If the
2-16 comptroller determines the program is financially infeasible, the
2-17 comptroller shall notify the governor and the legislature and
2-18 recommend that the program be modified or terminated.
2-19 Sec. 54.605. EFFECT OF TERMINATION OF PROGRAM ON CONTRACT.
2-20 (a) A prepaid tuition contract remains in effect after the program
2-21 is terminated if, when the program is terminated, the beneficiary:
2-22 (1) has been accepted by or is enrolled in an
2-23 institution of higher education or a private or independent
2-24 institution of higher education; or
2-25 (2) is projected to graduate from high school not
2-26 later than the third anniversary of the date the program is
2-27 terminated.
3-1 (b) A prepaid tuition contract terminates when the program
3-2 is terminated if the contract does not remain in effect under
3-3 Subsection (a).
3-4 Sec. 54.606. MEMBERS OF BOARD; APPOINTMENT; TERMS OF OFFICE.
3-5 (a) The board consists of:
3-6 (1) the comptroller;
3-7 (2) two members appointed by the governor with the
3-8 advice and consent of the senate; and
3-9 (3) four members appointed by the lieutenant governor,
3-10 at least two of whom must be appointed from a list of persons
3-11 recommended by the speaker of the house of representatives.
3-12 (b) The appointed members must possess knowledge, skill, and
3-13 experience in higher education, business, or finance.
3-14 (c) The appointed members serve for staggered six-year
3-15 terms. The terms of one-third of the appointed members expire on
3-16 February 1 of each odd-numbered year.
3-17 Sec. 54.607. DUTY IN RECOMMENDING, MAKING, OR CONFIRMING
3-18 APPOINTMENTS. (a) In recommending, making, or confirming
3-19 appointments to the board, the governor, lieutenant governor,
3-20 speaker of the house of representatives, and senate shall ensure
3-21 that each appointee has the background and experience suitable for
3-22 performing the statutory responsibilities of a member of the board.
3-23 (b) Appointments to the board shall be made without regard
3-24 to the race, color, disability, sex, religion, age, or national
3-25 origin of the appointees.
3-26 Sec. 54.608. RESTRICTIONS ON BOARD APPOINTMENT, MEMBERSHIP,
3-27 AND EMPLOYMENT. (a) A person is not eligible for appointment as a
4-1 member of the board if the person or the person's spouse:
4-2 (1) is employed by or participates in the management
4-3 of a business entity receiving funds from the board;
4-4 (2) owns or controls, directly or indirectly, more
4-5 than a 10-percent interest in a business entity receiving funds
4-6 from the board; or
4-7 (3) uses or receives a substantial amount of tangible
4-8 goods, services, or funds from the board, other than compensation
4-9 or reimbursement authorized by law for board membership,
4-10 attendance, or expenses.
4-11 (b) An officer, employee, or paid consultant of a Texas
4-12 trade association in the field of higher education may not be a
4-13 member or employee of the board who is exempt from the state's
4-14 position classification plan or is compensated at or above the
4-15 amount prescribed by the General Appropriations Act for step 1,
4-16 salary group 17, of the position classification salary schedule.
4-17 (c) A person who is the spouse of an officer, manager, or
4-18 paid consultant of a Texas trade association in the field of higher
4-19 education may not be a board member and may not be a board employee
4-20 who is exempt from the state's position classification plan or is
4-21 compensated at or above the amount prescribed by the General
4-22 Appropriations Act for step 1, salary group 17, of the position
4-23 classification salary schedule.
4-24 (d) A person may not serve as a member of the board or act
4-25 as the general counsel to the board if the person is required to
4-26 register as a lobbyist under Chapter 305, Government Code, because
4-27 of the person's activities for compensation on behalf of a
5-1 profession related to the operation of the board.
5-2 (e) A person may not serve as an appointed member of the
5-3 board if the person is related in the second degree by affinity or
5-4 consanguinity, as determined under Subchapter B, Chapter 573,
5-5 Government Code, to a person who is an officer, employee, or paid
5-6 consultant of a Texas trade association in the banking, securities,
5-7 or investment industry.
5-8 (f) For the purposes of this section, a Texas trade
5-9 association is a nonprofit, cooperative, and voluntarily joined
5-10 association of business or professional competitors in this state
5-11 designed to assist its members and its industry or profession in
5-12 dealing with mutual business or professional problems and in
5-13 promoting their common interest.
5-14 Sec. 54.609. REMOVAL OF BOARD MEMBER. (a) It is a ground
5-15 for removal from the board if a member:
5-16 (1) violates a prohibition established by Section
5-17 54.608;
5-18 (2) cannot because of illness or disability discharge
5-19 the member's duties for a substantial part of the term for which
5-20 the member is appointed; or
5-21 (3) is absent from more than half of the regularly
5-22 scheduled board meetings that the member is eligible to attend
5-23 during a calendar year unless the absence is excused by majority
5-24 vote of the board.
5-25 (b) The validity of an action of the board is not affected
5-26 by the fact that the action was taken when a ground for removal of
5-27 a board member existed.
6-1 Sec. 54.610. TRAINING OF BOARD MEMBERS. (a) Before a
6-2 member of the board may assume the member's duties and before an
6-3 appointed member may be confirmed by the senate, the member must
6-4 complete at least one course of the training program established
6-5 under this section.
6-6 (b) A training program established under this section shall
6-7 provide information to the member regarding:
6-8 (1) the enabling legislation that created the board;
6-9 (2) the programs operated by the board;
6-10 (3) the role and functions of the board;
6-11 (4) the rules of the board, with an emphasis on the
6-12 rules that relate to disciplinary and investigatory authority;
6-13 (5) the current budget for the board;
6-14 (6) the results of the most recent formal audit of the
6-15 board;
6-16 (7) the requirements of the:
6-17 (A) open meetings law, Chapter 551, Government
6-18 Code;
6-19 (B) open records law, Chapter 552, Government
6-20 Code; and
6-21 (C) administrative procedure law, Chapter 2001,
6-22 Government Code;
6-23 (8) the requirements of the conflict of interest laws
6-24 and other laws relating to public officials; and
6-25 (9) any applicable ethics policies adopted by the
6-26 board or the Texas Ethics Commission.
6-27 Sec. 54.611. BOARD OFFICERS. (a) The comptroller serves as
7-1 the presiding officer of the board.
7-2 (b) The board shall appoint a secretary of the board whose
7-3 duties may be prescribed by law and by the board.
7-4 Sec. 54.612. COMPENSATION AND EXPENSES OF APPOINTED BOARD
7-5 MEMBERS. Appointed members of the board shall serve without pay
7-6 but shall be reimbursed for their actual expenses incurred in
7-7 attending meetings of the board or in performing other work of the
7-8 board when that work is approved by the presiding officer of the
7-9 board.
7-10 Sec. 54.613. MEETINGS. (a) The board shall hold regular
7-11 quarterly meetings in the city of Austin and other meetings at
7-12 places and times scheduled by the board in formal sessions and
7-13 called by the presiding officer.
7-14 (b) The board shall develop and implement policies that
7-15 provide the public with a reasonable opportunity to appear before
7-16 the board and to speak on any issue under the jurisdiction of the
7-17 board.
7-18 (c) Minutes of all meetings shall be available in the
7-19 board's office for public inspection.
7-20 Sec. 54.614. APPLICABILITY OF OPEN MEETINGS LAW AND
7-21 ADMINISTRATIVE PROCEDURE LAW. The board is subject to the open
7-22 meetings law, Chapter 551, Government Code, and the administrative
7-23 procedure law, Chapter 2001, Government Code.
7-24 Sec. 54.615. EXECUTIVE DIRECTOR; STAFF. (a) The
7-25 comptroller serves as the executive director of the board.
7-26 (b) The employees of the comptroller selected by the
7-27 comptroller for that purpose serve as the staff of the board.
8-1 (c) The comptroller shall select and supervise the staff of
8-2 the board and perform other duties delegated to the comptroller by
8-3 the board.
8-4 (d) The comptroller shall provide to members of the board
8-5 and to board staff, as often as necessary, information regarding
8-6 their qualifications for office or employment under this subchapter
8-7 and their responsibilities under applicable laws relating to
8-8 standards of conduct for state officers or employees.
8-9 (e) The board shall develop and implement policies that
8-10 clearly separate the policy-making responsibilities of the board
8-11 and the management responsibilities of the comptroller and the
8-12 staff of the board.
8-13 Sec. 54.616. PROGRAM AND FACILITY ACCESSIBILITY. (a) The
8-14 board shall comply with federal and state laws related to program
8-15 and facility accessibility.
8-16 (b) The board shall prepare and maintain a written plan that
8-17 describes how a person who does not speak English can be provided
8-18 reasonable access to the board's programs and services.
8-19 Sec. 54.617. PUBLIC INTEREST INFORMATION AND COMPLAINTS.
8-20 (a) The board shall prepare information of public interest
8-21 describing the functions of the board and the board's procedures by
8-22 which complaints are filed with and resolved by the board. The
8-23 board shall make the information available to the public and
8-24 appropriate state agencies.
8-25 (b) The board by rule shall establish methods by which
8-26 consumers and service recipients are notified of the name, mailing
8-27 address, and telephone number of the board for the purpose of
9-1 directing complaints to the board.
9-2 (c) The board shall keep information about each complaint
9-3 filed with the board. The information shall include:
9-4 (1) the date the complaint is received;
9-5 (2) the name of the complainant;
9-6 (3) the subject matter of the complaint;
9-7 (4) a record of all persons contacted in relation to
9-8 the complaint;
9-9 (5) a summary of the results of the review or
9-10 investigation of the complaint; and
9-11 (6) for complaints for which the board took no action,
9-12 an explanation of the reason the complaint was closed without
9-13 action.
9-14 (d) The board shall keep a file for each written complaint
9-15 filed with the board that the board has authority to resolve. The
9-16 board shall provide to the person filing the complaint and the
9-17 persons or entities complained about the board's policies and
9-18 procedures pertaining to complaint investigation and resolution.
9-19 The board, at least quarterly and until final disposition of the
9-20 complaint, shall notify the person filing the complaint and the
9-21 persons or entities complained about of the status of the complaint
9-22 unless the notice would jeopardize an undercover investigation.
9-23 Sec. 54.618. POWERS OF BOARD. (a) The board has the powers
9-24 necessary or proper to carry out this subchapter.
9-25 (b) The board may:
9-26 (1) adopt an official seal;
9-27 (2) adopt rules to implement this subchapter;
10-1 (3) sue and be sued;
10-2 (4) enter into contracts and other necessary
10-3 instruments;
10-4 (5) enter into agreements or other transactions with
10-5 the United States, state agencies, including institutions of higher
10-6 education, and local governments;
10-7 (6) appear in its own behalf before governmental
10-8 agencies;
10-9 (7) contract for necessary goods and services and
10-10 engage the services of private consultants, actuaries, trustees,
10-11 records administrators, managers, legal counsel, and auditors for
10-12 administrative or technical assistance;
10-13 (8) solicit and accept gifts, grants, loans, and other
10-14 aid from any source or participate in any other way in any
10-15 government program to carry out this subchapter;
10-16 (9) impose administrative fees;
10-17 (10) contract with a person to market the program;
10-18 (11) purchase liability insurance covering the board
10-19 and employees and agents of the board; and
10-20 (12) establish other policies, procedures, and
10-21 eligibility criteria to implement this subchapter.
10-22 Sec. 54.619. PREPAID HIGHER EDUCATION TUITION PROGRAM. (a)
10-23 Under the program, a purchaser may enter into a prepaid tuition
10-24 contract with the board under which the purchaser agrees to prepay
10-25 the tuition and required fees for a beneficiary to attend an
10-26 institution of higher education.
10-27 (b) The board shall deposit the money paid under a prepaid
11-1 tuition contract in the fund, invest the money and credit the
11-2 income earned to the fund, and apply money in the fund to the
11-3 tuition and required fees of the institution of higher education in
11-4 which the beneficiary enrolls as provided by the prepaid tuition
11-5 contract.
11-6 (c) If there is not enough money in the fund to pay the
11-7 tuition and required fees of the institution of higher education in
11-8 which a beneficiary enrolls as provided by the prepaid tuition
11-9 contract, the legislature shall appropriate to the fund the amount
11-10 necessary for the board to pay the tuition and required fees of the
11-11 institution.
11-12 (d) If the beneficiary enrolls in a private or independent
11-13 institution of higher education, the board shall pay the
11-14 institution the tuition and required fees the board would have paid
11-15 had the student enrolled in an institution of higher education
11-16 covered by the plan selected in the prepaid tuition contract. The
11-17 beneficiary is responsible for paying the private or independent
11-18 institution of higher education the amount by which the tuition and
11-19 required fees of the institution exceed the tuition and required
11-20 fees paid by the board.
11-21 Sec. 54.620. PREPAID TUITION CONTRACT. (a) The board may
11-22 contract with a purchaser for the purchaser to prepay the tuition
11-23 and required fees for a beneficiary to attend an institution of
11-24 higher education to which the beneficiary is admitted as a student.
11-25 (b) The terms of a prepaid tuition contract shall be based
11-26 on an actuarial analysis of:
11-27 (1) tuition growth rates;
12-1 (2) expected investment returns; and
12-2 (3) estimated administrative costs.
12-3 (c) The board shall adopt a form for a prepaid tuition
12-4 contract to be used by the board and purchasers.
12-5 (d) A prepaid tuition contract must:
12-6 (1) specify the amount and number of payments required
12-7 from the purchaser on behalf of the beneficiary;
12-8 (2) specify the terms under which the purchaser shall
12-9 make payments, including the date on which each payment is due;
12-10 (3) specify the consequences of default;
12-11 (4) specify the name and date of birth of the
12-12 beneficiary of the contract and the terms under which another
12-13 person may be substituted as the beneficiary;
12-14 (5) specify the number of credit hours contracted by
12-15 the purchaser;
12-16 (6) specify the type of plan toward which the
12-17 contracted credit hours shall be applied;
12-18 (7) contain an assumption of a contractual obligation
12-19 by the board to the beneficiary to provide for a specified number
12-20 of credit hours of undergraduate instruction at an institution of
12-21 higher education, not to exceed the typical number of credit hours
12-22 required for the degree that corresponds to the plan purchased on
12-23 behalf of the beneficiary;
12-24 (8) specify the date the beneficiary is projected to
12-25 graduate from high school; and
12-26 (9) contain any other provisions the board considers
12-27 necessary or appropriate.
13-1 (e) A prepaid tuition contract does not cover the cost of
13-2 laboratory fees charged for specific courses.
13-3 Sec. 54.621. BENEFICIARY. (a) The beneficiary of a prepaid
13-4 tuition contract must be younger than 18 years of age at the time
13-5 the purchaser enters into the contract and must be:
13-6 (1) a resident of this state at the time the purchaser
13-7 enters into the contract; or
13-8 (2) a nonresident who is the child of a parent who is
13-9 a resident of this state at the time that parent enters into the
13-10 contract.
13-11 (b) The board may require a reasonable period of residence
13-12 in this state for a beneficiary or the parent of a beneficiary.
13-13 (c) A beneficiary is considered a resident for purposes of
13-14 tuition regardless of the beneficiary's residence on the date of
13-15 enrollment.
13-16 Sec. 54.622. TYPES OF PLANS. The board shall make prepaid
13-17 tuition contracts available for the:
13-18 (1) junior college plan;
13-19 (2) senior college plan; and
13-20 (3) junior-senior college plan.
13-21 Sec. 54.623. JUNIOR COLLEGE PLAN. Through the junior
13-22 college plan, a prepaid tuition contract shall provide prepaid
13-23 tuition and required fees for the beneficiary to attend a public
13-24 junior college for a specified number of undergraduate credit hours
13-25 not to exceed the typical number of hours required for a
13-26 certificate or an associate degree awarded by a public junior
13-27 college.
14-1 Sec. 54.624. SENIOR COLLEGE PLAN. Through the senior
14-2 college plan, a prepaid tuition contract shall provide prepaid
14-3 tuition and required fees for the beneficiary to attend a public
14-4 senior college or university for a specified number of
14-5 undergraduate credit hours not to exceed the typical number of
14-6 hours required for a baccalaureate degree awarded by a public
14-7 senior college or university.
14-8 Sec. 54.625. JUNIOR-SENIOR COLLEGE PLAN. Through the
14-9 junior-senior college plan, a prepaid tuition contract shall
14-10 provide prepaid tuition and required fees for the beneficiary to
14-11 attend:
14-12 (1) a public junior college for a specified number of
14-13 undergraduate credit hours not to exceed the typical number of
14-14 hours required for a person to receive a certificate or associate
14-15 degree awarded by a public junior college; and
14-16 (2) a public senior college or university for a
14-17 specified number of credit hours not to exceed the typical number
14-18 of additional hours required for the person to receive a
14-19 baccalaureate degree awarded by a public senior college or
14-20 university.
14-21 Sec. 54.626. CONTRACT PAYMENT. (a) The board may provide
14-22 for the receipt of payments under prepaid tuition contracts in lump
14-23 sums or installment payments.
14-24 (b) A purchaser may make payments under a prepaid tuition
14-25 contract by electronic funds transfer.
14-26 (c) An employee of the state or a political subdivision of
14-27 the state may make payments under a prepaid tuition contract by
15-1 payroll deductions made by the appropriate officer of the state or
15-2 political subdivision.
15-3 (d) The board may impose a fee for a late payment under a
15-4 prepaid tuition contract.
15-5 Sec. 54.627. CHANGE OF BENEFICIARY. (a) The purchaser of a
15-6 prepaid tuition contract may designate a new beneficiary instead of
15-7 the original beneficiary if the new beneficiary meets the
15-8 requirements of a beneficiary on the date the designation is
15-9 changed. If the purchaser is an individual, the new beneficiary
15-10 must be a sibling, step-sibling, or half-sibling of the original
15-11 beneficiary.
15-12 (b) The board may adjust the terms of the contract so that
15-13 the purchaser is required to pay the amount the purchaser would
15-14 have been required to pay had the purchaser originally designated
15-15 the new beneficiary as the beneficiary, taking into account any
15-16 payments made before the date the designation is changed.
15-17 Sec. 54.628. CONVERSION TO ANOTHER PLAN. (a) A purchaser
15-18 may convert a prepaid tuition contract from one plan to another
15-19 plan.
15-20 (b) The board may adjust the terms of the contract so that
15-21 the purchaser is required to pay the amount required under the plan
15-22 to which the contract is converted, taking into account any
15-23 payments made before the date the contract is converted.
15-24 Sec. 54.629. VERIFICATION UNDER OATH. The board may require
15-25 a purchaser to verify under oath a request to:
15-26 (1) change a beneficiary;
15-27 (2) convert a contract to another plan; or
16-1 (3) terminate a contract.
16-2 Sec. 54.630. PROMISE OR GUARANTEE OF ADMISSION. This
16-3 subchapter is not a promise or guarantee that a beneficiary will
16-4 be:
16-5 (1) admitted to any institution of higher education;
16-6 (2) admitted to a particular institution of higher
16-7 education;
16-8 (3) allowed to continue enrollment at an institution
16-9 of higher education after admission; or
16-10 (4) graduated from an institution of higher education.
16-11 Sec. 54.631. CONTRACT TERMINATION. (a) A prepaid tuition
16-12 contract shall specify:
16-13 (1) the name of any person who may terminate the
16-14 contract; and
16-15 (2) the terms under which the contract may be
16-16 terminated.
16-17 (b) A prepaid tuition contract terminates if:
16-18 (1) the purchaser:
16-19 (A) gives notice of termination; or
16-20 (B) defaults on the contract; or
16-21 (2) the beneficiary:
16-22 (A) dies;
16-23 (B) becomes permanently and totally disabled;
16-24 (C) is denied admission by each institution of
16-25 higher education to which the beneficiary applies; or
16-26 (D) enrolls in an institution of higher
16-27 education but does not graduate from the institution on or before
17-1 the 10th anniversary of the projected date of graduation from that
17-2 institution, not counting time spent by the beneficiary as an
17-3 active duty member of the United States armed services.
17-4 Sec. 54.632. REFUND. (a) A prepaid tuition contract shall
17-5 specify:
17-6 (1) the name of the person entitled to any refund if
17-7 the contract is terminated; and
17-8 (2) the terms under which a person is entitled to a
17-9 refund.
17-10 (b) The person named in the contract is entitled to a refund
17-11 following termination of a prepaid tuition contract.
17-12 (c) The amount of the refund is the sum of the payments made
17-13 under the prepaid tuition contract, together with five percent
17-14 interest on each payment accruing from the date the payment is
17-15 received to the date the refund is paid, multiplied by a fraction,
17-16 the numerator of which is the number of credit hours remaining
17-17 under the contract and the denominator of which is the number of
17-18 credit hours originally covered by the contract.
17-19 Sec. 54.633. PREPAID HIGHER EDUCATION TUITION SCHOLARSHIPS
17-20 FOR NEEDY STUDENTS. (a) To the extent money is available, the
17-21 board may award a prepaid higher education tuition scholarship to a
17-22 student who meets economic and academic requirements adopted by the
17-23 board by rule.
17-24 (b) A scholarship awarded under this section terminates if
17-25 the student to whom the scholarship is awarded is:
17-26 (1) convicted of, or adjudicated as having engaged in
17-27 delinquent conduct constituting, an offense under Chapter 481,
18-1 Health and Safety Code; or
18-2 (2) convicted of, or adjudicated as having engaged in
18-3 delinquent conduct constituting, a felony or Class A misdemeanor.
18-4 (c) The board shall ensure that each region of the state is
18-5 equitably represented in the awarding of scholarships under this
18-6 section.
18-7 (d) Scholarships under this section are funded by the
18-8 private sector, the United States, and this state. The legislature
18-9 may appropriate an amount for the scholarships not to exceed the
18-10 amount provided by the private sector and the United States.
18-11 (e) The board may establish a direct-support organization
18-12 under the Texas Non-Profit Corporation Act (Article 1396-1.01 et
18-13 seq., Vernon's Texas Civil Statutes) to:
18-14 (1) receive, hold, invest, and administer money,
18-15 gifts, grants, loans, or other property for or on behalf of the
18-16 program; and
18-17 (2) purchase scholarships under this section.
18-18 (f) The board of directors of the direct-support
18-19 organization consists of:
18-20 (1) the comptroller;
18-21 (2) a member appointed by the governor with the advice
18-22 and consent of the senate; and
18-23 (3) three members appointed jointly by the comptroller
18-24 and the member appointed by the governor.
18-25 (g) The board must certify that the direct-support
18-26 organization operates in a manner consistent with the goals of this
18-27 state and in the best interests of this state.
19-1 (h) The board may contract with an independent certified
19-2 public accountant to annually audit the direct-support organization
19-3 under rules adopted by the board. The board shall submit the audit
19-4 to the comptroller, governor, lieutenant governor, speaker of the
19-5 house of representatives, Legislative Budget Board, Legislative
19-6 Audit Committee, state auditor, and Texas Higher Education
19-7 Coordinating Board. The comptroller or state auditor may require
19-8 the direct-support organization or independent certified public
19-9 accountant to provide additional information relating to the
19-10 operation of the organization.
19-11 (i) The identity of a donor under this section who desires
19-12 to remain anonymous and the records of the direct-support
19-13 organization, other than the records disclosed under Subsection
19-14 (h), are confidential.
19-15 Sec. 54.634. ESTABLISHMENT OF FUND. (a) The Texas tomorrow
19-16 fund is outside the state treasury. The fund consists of:
19-17 (1) state appropriations for purposes of the fund;
19-18 (2) money acquired from other governmental or private
19-19 sources;
19-20 (3) money paid under prepaid tuition contracts; and
19-21 (4) the income from money deposited in the fund.
19-22 (b) The board shall administer the assets of the fund. The
19-23 board is the trustee of the fund's assets.
19-24 (c) The board may:
19-25 (1) segregate contributions and payments to the fund
19-26 into various accounts; and
19-27 (2) acquire, hold, manage, purchase, sell, assign,
20-1 trade, transfer, and dispose of any security, evidence of
20-2 indebtedness, or other investment in which the fund's assets may be
20-3 invested.
20-4 Sec. 54.635. STATE TREASURER. (a) Except as provided by
20-5 Subsections (d) and (e), the state treasurer is the custodian of
20-6 the assets of the fund.
20-7 (b) The state treasurer shall pay money from the fund on a
20-8 warrant drawn by the comptroller supported only on a voucher signed
20-9 by the comptroller or the comptroller's authorized representative.
20-10 (c) The state treasurer annually shall furnish to the board
20-11 a sworn statement of the amount of the fund's assets in the
20-12 treasurer's custody.
20-13 (d) The board may select one or more commercial banks,
20-14 depository trust companies, or other entities to serve as custodian
20-15 of all or part of the fund's assets.
20-16 (e) If the office of the state treasurer is abolished, the
20-17 comptroller is the custodian of the assets of the fund.
20-18 Sec. 54.636. INVESTMENT OF FUND ASSETS. (a) The board
20-19 shall invest the assets of the fund.
20-20 (b) The board may contract with private professional
20-21 investment managers to assist the board in investing the assets of
20-22 the fund.
20-23 (c) The board shall develop written investment objectives
20-24 concerning the investment of the assets of the fund. The
20-25 objectives may address desired rates of return, risks involved,
20-26 investment time frames, and any other relevant considerations.
20-27 (d) The comptroller shall develop a comprehensive plan for
21-1 the investment of the assets of the fund consistent with the
21-2 objectives developed by the board under Subsection (c). The plan
21-3 shall specify the policies under which the board shall invest the
21-4 assets of the fund. The board must approve the plan.
21-5 (e) The assets of the fund may be invested only in:
21-6 (1) investments authorized by Section 404.024,
21-7 Government Code;
21-8 (2) corporate debt obligations that have received one
21-9 of the two highest credit ratings by at least two nationally
21-10 recognized rating services;
21-11 (3) preferred stocks;
21-12 (4) common stocks traded on the New York Stock
21-13 Exchange;
21-14 (5) institutional investment products, including fixed
21-15 annuities, variable annuities, and guaranteed insurance contracts
21-16 that are obligations of United States insurance companies; and
21-17 (6) mutual funds regulated by the Securities and
21-18 Exchange Commission.
21-19 (f) In investing the assets of the fund, the board shall
21-20 exercise the judgment and care, under the circumstances prevailing
21-21 at the time of the investment, that persons of ordinary prudence,
21-22 discretion, and intelligence exercise in the management of their
21-23 own affairs, not in speculation but when making a permanent
21-24 disposition of their money, considering the probable income from
21-25 the disposition and the probable safety of their capital.
21-26 Sec. 54.637. USE OF FUND ASSETS. The assets of the fund may
21-27 be used only to:
22-1 (1) pay the costs of program administration and
22-2 operations;
22-3 (2) make payments to institutions of higher education
22-4 on behalf of beneficiaries; and
22-5 (3) make refunds under prepaid tuition contracts.
22-6 Sec. 54.638. REQUEST OF RULINGS FROM INTERNAL REVENUE
22-7 SERVICE AND SECURITIES AND EXCHANGE COMMISSION. (a) The board
22-8 shall request rulings from:
22-9 (1) the Internal Revenue Service regarding the tax
22-10 consequences to purchasers and beneficiaries of participating in
22-11 the program; and
22-12 (2) the Securities and Exchange Commission regarding
22-13 the application of federal securities laws to the fund.
22-14 (b) The board shall inform a purchaser of the status of the
22-15 requests under Subsection (a) before the purchaser enters into a
22-16 prepaid tuition contract.
22-17 Sec. 54.639. EXEMPTION FROM CREDITORS' CLAIMS. Money in the
22-18 fund is exempt from claims of creditors of a purchaser or
22-19 beneficiary.
22-20 Sec. 54.640. ACTUARIAL SOUNDNESS OF FUND. (a) The board
22-21 shall administer the fund in a manner that is sufficiently
22-22 actuarially sound to pay the costs of program administration and
22-23 operations and meet the obligations of the program.
22-24 (b) The board shall annually evaluate the actuarial
22-25 soundness of the fund.
22-26 (c) The board may adjust the terms of subsequent prepaid
22-27 tuition contracts as necessary to ensure the actuarial soundness of
23-1 the fund.
23-2 Sec. 54.641. STATEMENT REGARDING STATUS OF PREPAID TUITION
23-3 CONTRACT. (a) Not later than December 1 of each year, the board
23-4 shall furnish without charge to each purchaser a statement of:
23-5 (1) the amount paid by the purchaser under the prepaid
23-6 tuition contract;
23-7 (2) the number of credit hours originally covered by
23-8 the contract;
23-9 (3) the number of credit hours remaining under the
23-10 contract;
23-11 (4) the amount of the refund to which the person
23-12 designated by the contract would be entitled if the contract were
23-13 terminated on the date of the statement; and
23-14 (5) any other information the board determines by rule
23-15 is necessary or appropriate.
23-16 (b) The board shall furnish a statement complying with
23-17 Subsection (a) to a purchaser or beneficiary on written request.
23-18 The board may charge a reasonable fee for each statement furnished
23-19 under this subsection.
23-20 Sec. 54.642. REPORTS. (a) Not later than December 1 of
23-21 each year, the board shall submit to the governor, lieutenant
23-22 governor, speaker of the house of representatives, Legislative
23-23 Budget Board, Legislative Audit Committee, state auditor, and Texas
23-24 Higher Education Coordinating Board a report including:
23-25 (1) the board's fiscal transactions during the
23-26 preceding fiscal year;
23-27 (2) the market and book value of the fund as of the
24-1 end of the preceding fiscal year;
24-2 (3) the asset allocations of the fund expressed in
24-3 percentages of stocks, fixed income, cash, or other financial
24-4 investments;
24-5 (4) the rate of return on the investment of the fund's
24-6 assets during the preceding fiscal year; and
24-7 (5) an actuarial valuation of the assets and
24-8 liabilities of the program, including the extent to which the
24-9 program's liabilities are unfunded.
24-10 (b) The board shall make the report described by Subsection
24-11 (a) available to purchasers of prepaid tuition contracts.
24-12 (c) Not later than December 1 of each year, the board shall
24-13 provide to the Texas Higher Education Coordinating Board complete
24-14 prepaid tuition contract sales information, including projected
24-15 enrollments of beneficiaries at institutions of higher education.
24-16 Sec. 54.643. CONFIDENTIALITY. (a) Records in the custody
24-17 of the board relating to the participation of specific purchasers
24-18 and beneficiaries in the program are confidential.
24-19 (b) Notwithstanding Subsection (a), the board may release
24-20 information described by that subsection to an institution of
24-21 higher education in which a beneficiary may enroll or is enrolled.
24-22 The institution of higher education shall keep the information
24-23 confidential.
24-24 SECTION 2. (a) As soon as possible on or after the
24-25 effective date of this Act, the governor and lieutenant governor
24-26 shall appoint the members of the Prepaid Higher Education Tuition
24-27 Board appointed by those officers. In making the appointments, the
25-1 governor shall designate one member for a term expiring February 1,
25-2 1997, and one member for a term expiring February 1, 1999. In
25-3 making the appointments, the lieutenant governor shall designate
25-4 one member for a term expiring February 1, 1997, one member
25-5 appointed from a list of persons recommended by the speaker of the
25-6 house of representatives for a term expiring February 1, 1999, and
25-7 two members for terms expiring February 1, 2001, one of whom must
25-8 be appointed from a list of persons recommended by the speaker of
25-9 the house of representatives.
25-10 (b) The legislature may appropriate to the board an amount
25-11 sufficient to cover the board's administrative costs for the state
25-12 fiscal biennium ending August 31, 1997.
25-13 (c) The board shall be prepared to enter into a prepaid
25-14 tuition contract not later than the 90th day after the date all the
25-15 members are appointed or January 1, 1996, whichever occurs later.
25-16 SECTION 3. This Act takes effect September 1, 1995.
25-17 SECTION 4. The importance of this legislation and the
25-18 crowded condition of the calendars in both houses create an
25-19 emergency and an imperative public necessity that the
25-20 constitutional rule requiring bills to be read on three several
25-21 days in each house be suspended, and this rule is hereby suspended.