1-1 By: Kamel, et al. (Senate Sponsor - Barrientos) H.B. No.
1-2 1214
1-3 (In the Senate - Received from the House May 12, 1995;
1-4 May 15, 1995, read first time and referred to Committee on Finance;
1-5 May 25, 1995, reported favorably by the following vote: Yeas 9,
1-6 Nays 0; May 25, 1995, sent to printer.)
1-7 A BILL TO BE ENTITLED
1-8 AN ACT
1-9 relating to the establishment of a prepaid higher education tuition
1-10 program.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Chapter 54, Education Code, is amended by adding
1-13 Subchapter F to read as follows:
1-14 SUBCHAPTER F. PREPAID HIGHER EDUCATION TUITION PROGRAM
1-15 Sec. 54.6001. PUBLIC PURPOSE. An educated population being
1-16 necessary to the social development and economic health of this
1-17 state, the legislature finds and declares it to be an urgent public
1-18 necessity to assist young Texans in obtaining a higher education.
1-19 Because the state's population is rapidly growing and is diverse,
1-20 the state is required to use all of the higher education facilities
1-21 and resources within the state, both public and private, to provide
1-22 a wide variety of educational environments and instructional
1-23 options and to preserve the partnership between the state and
1-24 private or independent institutions of higher education.
1-25 Therefore, the prepaid higher education tuition program is
1-26 established to help Texas students attend the institution that best
1-27 meets their individual needs.
1-28 Sec. 54.601. DEFINITIONS. In this subchapter:
1-29 (1) "Beneficiary" means a person who is entitled to
1-30 receive benefits under a prepaid tuition contract.
1-31 (2) "Board" means the Prepaid Higher Education Tuition
1-32 Board.
1-33 (3) "Estimated average private tuition and required
1-34 fees" means an estimated average of tuition and required fees to be
1-35 charged by private or independent institutions of higher education
1-36 as determined annually by the board.
1-37 (4) "Fund" means the Texas tomorrow fund.
1-38 (5) "Institution of higher education" has the meaning
1-39 assigned by Section 61.003.
1-40 (6) "Prepaid tuition contract" means a contract
1-41 entered into under this subchapter by the board and a purchaser to
1-42 provide for the payment of higher education tuition and required
1-43 fees of a beneficiary.
1-44 (7) "Private or independent institution of higher
1-45 education" has the meaning assigned by Section 61.003.
1-46 (8) "Program" means the prepaid higher education
1-47 tuition program.
1-48 (9) "Public junior college" has the meaning assigned
1-49 by Section 61.003.
1-50 (10) "Public senior college or university" has the
1-51 meaning assigned by Section 61.003.
1-52 (11) "Purchaser" means a person who is obligated to
1-53 make payments under a prepaid tuition contract.
1-54 Sec. 54.602. ESTABLISHMENT OF BOARD; FUNCTION. (a) The
1-55 Prepaid Higher Education Tuition Board is in the office of the
1-56 comptroller.
1-57 (b) The board shall administer the program.
1-58 Sec. 54.603. SUNSET PROVISION. The Prepaid Higher Education
1-59 Tuition Board is subject to Chapter 325, Government Code (Texas
1-60 Sunset Act). Unless continued in existence as provided by that
1-61 chapter, the board is abolished and the program terminates
1-62 September 1, 2007.
1-63 Sec. 54.604. TERMINATION OR MODIFICATION OF PROGRAM. If the
1-64 comptroller determines the program is financially infeasible, the
1-65 comptroller shall notify the governor and the legislature and
1-66 recommend that the program be modified or terminated.
1-67 Sec. 54.605. EFFECT OF TERMINATION OF PROGRAM ON CONTRACT.
1-68 (a) A prepaid tuition contract remains in effect after the program
2-1 is terminated if, when the program is terminated, the beneficiary:
2-2 (1) has been accepted by or is enrolled in an
2-3 institution of higher education or a private or independent
2-4 institution of higher education; or
2-5 (2) is projected to graduate from high school not
2-6 later than the third anniversary of the date the program is
2-7 terminated.
2-8 (b) A prepaid tuition contract terminates when the program
2-9 is terminated if the contract does not remain in effect under
2-10 Subsection (a).
2-11 Sec. 54.606. MEMBERS OF BOARD; APPOINTMENT; TERMS OF OFFICE.
2-12 (a) The board consists of:
2-13 (1) the comptroller;
2-14 (2) two members appointed by the governor with the
2-15 advice and consent of the senate; and
2-16 (3) four members appointed by the lieutenant governor,
2-17 at least two of whom must be appointed from a list of persons
2-18 recommended by the speaker of the house of representatives.
2-19 (b) The appointed members must possess knowledge, skill, and
2-20 experience in higher education, business, or finance.
2-21 (c) The appointed members serve for staggered six-year
2-22 terms. The terms of one-third of the appointed members expire on
2-23 February 1 of each odd-numbered year.
2-24 Sec. 54.607. DUTY IN RECOMMENDING, MAKING, OR CONFIRMING
2-25 APPOINTMENTS. (a) In recommending, making, or confirming
2-26 appointments to the board, the governor, lieutenant governor,
2-27 speaker of the house of representatives, and senate shall ensure
2-28 that each appointee has the background and experience suitable for
2-29 performing the statutory responsibilities of a member of the board.
2-30 (b) Appointments to the board shall be made without regard
2-31 to the race, color, disability, sex, religion, age, or national
2-32 origin of the appointees.
2-33 Sec. 54.608. RESTRICTIONS ON BOARD APPOINTMENT, MEMBERSHIP,
2-34 AND EMPLOYMENT. (a) A person is not eligible for appointment as a
2-35 member of the board if the person or the person's spouse:
2-36 (1) is employed by or participates in the management
2-37 of a business entity receiving funds from the board;
2-38 (2) owns or controls, directly or indirectly, more
2-39 than a 10-percent interest in a business entity receiving funds
2-40 from the board; or
2-41 (3) uses or receives a substantial amount of tangible
2-42 goods, services, or funds from the board, other than compensation
2-43 or reimbursement authorized by law for board membership,
2-44 attendance, or expenses.
2-45 (b) An officer, employee, or paid consultant of a Texas
2-46 trade association in the field of higher education may not be a
2-47 member or employee of the board who is exempt from the state's
2-48 position classification plan or is compensated at or above the
2-49 amount prescribed by the General Appropriations Act for step 1,
2-50 salary group 17, of the position classification salary schedule.
2-51 (c) A person who is the spouse of an officer, manager, or
2-52 paid consultant of a Texas trade association in the field of higher
2-53 education may not be a board member and may not be a board employee
2-54 who is exempt from the state's position classification plan or is
2-55 compensated at or above the amount prescribed by the General
2-56 Appropriations Act for step 1, salary group 17, of the position
2-57 classification salary schedule.
2-58 (d) A person may not serve as a member of the board or act
2-59 as the general counsel to the board if the person is required to
2-60 register as a lobbyist under Chapter 305, Government Code, because
2-61 of the person's activities for compensation on behalf of a
2-62 profession related to the operation of the board.
2-63 (e) A person may not serve as an appointed member of the
2-64 board if the person is related in the second degree by affinity or
2-65 consanguinity, as determined under Subchapter B, Chapter 573,
2-66 Government Code, to a person who is an officer, employee, or paid
2-67 consultant of a Texas trade association in the banking, securities,
2-68 or investment industry.
2-69 (f) For the purposes of this section, a Texas trade
2-70 association is a nonprofit, cooperative, and voluntarily joined
3-1 association of business or professional competitors in this state
3-2 designed to assist its members and its industry or profession in
3-3 dealing with mutual business or professional problems and in
3-4 promoting their common interest.
3-5 Sec. 54.609. REMOVAL OF BOARD MEMBER. (a) It is a ground
3-6 for removal from the board if a member:
3-7 (1) violates a prohibition established by Section
3-8 54.608;
3-9 (2) cannot because of illness or disability discharge
3-10 the member's duties for a substantial part of the term for which
3-11 the member is appointed; or
3-12 (3) is absent from more than half of the regularly
3-13 scheduled board meetings that the member is eligible to attend
3-14 during a calendar year unless the absence is excused by majority
3-15 vote of the board.
3-16 (b) The validity of an action of the board is not affected
3-17 by the fact that the action was taken when a ground for removal of
3-18 a board member existed.
3-19 Sec. 54.610. TRAINING OF BOARD MEMBERS. (a) Before a
3-20 member of the board may assume the member's duties and before an
3-21 appointed member may be confirmed by the senate, the member must
3-22 complete at least one course of the training program established
3-23 under this section.
3-24 (b) A training program established under this section shall
3-25 provide information to the member regarding:
3-26 (1) the enabling legislation that created the board;
3-27 (2) the programs operated by the board;
3-28 (3) the role and functions of the board;
3-29 (4) the rules of the board, with an emphasis on the
3-30 rules that relate to disciplinary and investigatory authority;
3-31 (5) the current budget for the board;
3-32 (6) the results of the most recent formal audit of the
3-33 board;
3-34 (7) the requirements of the:
3-35 (A) open meetings law, Chapter 551, Government
3-36 Code;
3-37 (B) open records law, Chapter 552, Government
3-38 Code; and
3-39 (C) administrative procedure law, Chapter 2001,
3-40 Government Code;
3-41 (8) the requirements of the conflict of interest laws
3-42 and other laws relating to public officials; and
3-43 (9) any applicable ethics policies adopted by the
3-44 board or the Texas Ethics Commission.
3-45 Sec. 54.611. BOARD OFFICERS. (a) The comptroller serves as
3-46 the presiding officer of the board.
3-47 (b) The board shall appoint a secretary of the board whose
3-48 duties may be prescribed by law and by the board.
3-49 Sec. 54.612. COMPENSATION AND EXPENSES OF APPOINTED BOARD
3-50 MEMBERS. Appointed members of the board shall serve without pay
3-51 but shall be reimbursed for their actual expenses incurred in
3-52 attending meetings of the board or in performing other work of the
3-53 board when that work is approved by the presiding officer of the
3-54 board.
3-55 Sec. 54.613. MEETINGS. (a) The board shall hold regular
3-56 quarterly meetings in the city of Austin and other meetings at
3-57 places and times scheduled by the board in formal sessions and
3-58 called by the presiding officer.
3-59 (b) The board shall develop and implement policies that
3-60 provide the public with a reasonable opportunity to appear before
3-61 the board and to speak on any issue under the jurisdiction of the
3-62 board.
3-63 (c) Minutes of all meetings shall be available in the
3-64 board's office for public inspection.
3-65 Sec. 54.614. APPLICABILITY OF OPEN MEETINGS LAW AND
3-66 ADMINISTRATIVE PROCEDURE LAW. The board is subject to the open
3-67 meetings law, Chapter 551, Government Code, and the administrative
3-68 procedure law, Chapter 2001, Government Code.
3-69 Sec. 54.615. EXECUTIVE DIRECTOR; STAFF. (a) The
3-70 comptroller serves as the executive director of the board.
4-1 (b) The employees of the comptroller selected by the
4-2 comptroller for that purpose serve as the staff of the board.
4-3 (c) The comptroller shall select and supervise the staff of
4-4 the board and perform other duties delegated to the comptroller by
4-5 the board.
4-6 (d) The comptroller shall provide to members of the board
4-7 and to board staff, as often as necessary, information regarding
4-8 their qualifications for office or employment under this subchapter
4-9 and their responsibilities under applicable laws relating to
4-10 standards of conduct for state officers or employees.
4-11 (e) The board shall develop and implement policies that
4-12 clearly separate the policy-making responsibilities of the board
4-13 and the management responsibilities of the comptroller and the
4-14 staff of the board.
4-15 Sec. 54.616. PROGRAM AND FACILITY ACCESSIBILITY. (a) The
4-16 board shall comply with federal and state laws related to program
4-17 and facility accessibility.
4-18 (b) The board shall prepare and maintain a written plan that
4-19 describes how a person who does not speak English can be provided
4-20 reasonable access to the board's programs and services.
4-21 Sec. 54.617. PUBLIC INTEREST INFORMATION AND COMPLAINTS.
4-22 (a) The board shall prepare information of public interest
4-23 describing the functions of the board and the board's procedures by
4-24 which complaints are filed with and resolved by the board. The
4-25 board shall make the information available to the public and
4-26 appropriate state agencies.
4-27 (b) The board by rule shall establish methods by which
4-28 consumers and service recipients are notified of the name, mailing
4-29 address, and telephone number of the board for the purpose of
4-30 directing complaints to the board.
4-31 (c) The board shall keep information about each complaint
4-32 filed with the board. The information shall include:
4-33 (1) the date the complaint is received;
4-34 (2) the name of the complainant;
4-35 (3) the subject matter of the complaint;
4-36 (4) a record of all persons contacted in relation to
4-37 the complaint;
4-38 (5) a summary of the results of the review or
4-39 investigation of the complaint; and
4-40 (6) for complaints for which the board took no action,
4-41 an explanation of the reason the complaint was closed without
4-42 action.
4-43 (d) The board shall keep a file for each written complaint
4-44 filed with the board that the board has authority to resolve. The
4-45 board shall provide to the person filing the complaint and the
4-46 persons or entities complained about the board's policies and
4-47 procedures pertaining to complaint investigation and resolution.
4-48 The board, at least quarterly and until final disposition of the
4-49 complaint, shall notify the person filing the complaint and the
4-50 persons or entities complained about of the status of the complaint
4-51 unless the notice would jeopardize an undercover investigation.
4-52 Sec. 54.618. POWERS OF BOARD. (a) The board has the powers
4-53 necessary or proper to carry out this subchapter.
4-54 (b) The board may:
4-55 (1) adopt an official seal;
4-56 (2) adopt rules to implement this subchapter;
4-57 (3) sue and be sued;
4-58 (4) enter into contracts and other necessary
4-59 instruments;
4-60 (5) enter into agreements or other transactions with
4-61 the United States, state agencies, including institutions of higher
4-62 education, private or independent institutions of higher education,
4-63 and local governments;
4-64 (6) appear in its own behalf before governmental
4-65 agencies;
4-66 (7) contract for necessary goods and services and
4-67 engage the services of private consultants, actuaries, trustees,
4-68 records administrators, managers, legal counsel, and auditors for
4-69 administrative or technical assistance;
4-70 (8) solicit and accept gifts, grants, loans, and other
5-1 aid from any source or participate in any other way in any
5-2 government program to carry out this subchapter;
5-3 (9) impose administrative fees;
5-4 (10) contract with a person to market the program;
5-5 (11) purchase liability insurance covering the board
5-6 and employees and agents of the board; and
5-7 (12) establish other policies, procedures, and
5-8 eligibility criteria to implement this subchapter.
5-9 Sec. 54.619. PREPAID HIGHER EDUCATION TUITION PROGRAM. (a)
5-10 Under the program, a purchaser may enter into a prepaid tuition
5-11 contract with the board under which the purchaser agrees to prepay
5-12 the tuition and required fees for a beneficiary to attend an
5-13 institution of higher education or private or independent
5-14 institution of higher education.
5-15 (b) The board shall deposit the money paid under a prepaid
5-16 tuition contract in the fund, invest the money and credit the
5-17 income earned to the fund, and apply money in the fund to the
5-18 tuition and required fees of the institution of higher education or
5-19 private or independent institution of higher education in which the
5-20 beneficiary enrolls as provided by the prepaid tuition contract.
5-21 (c) If the beneficiary of a plan described by Section
5-22 54.623, 54.624, or 54.625 enrolls in a private or independent
5-23 institution of higher education, the board shall pay the
5-24 institution the tuition and required fees the board would have paid
5-25 had the beneficiary enrolled in an institution of higher education
5-26 covered by the plan selected in the prepaid tuition contract. The
5-27 beneficiary is responsible for paying the private or independent
5-28 institution of higher education the amount by which the tuition and
5-29 required fees of the institution exceed the tuition and required
5-30 fees paid by the board.
5-31 (d) If the beneficiary of a plan described by Section
5-32 54.6251 enrolls in an institution of higher education, the board
5-33 shall pay:
5-34 (1) to the institution the tuition and required fees
5-35 of the institution; and
5-36 (2) to the beneficiary the amount by which the
5-37 estimated average private tuition and required fees exceeds the
5-38 tuition and required fees of the institution.
5-39 (e) If the beneficiary of a plan described by Section
5-40 54.6251 enrolls in a private or independent institution of higher
5-41 education, the board shall pay:
5-42 (1) to the institution the lesser of:
5-43 (A) the tuition and required fees of the
5-44 institution; or
5-45 (B) the estimated average private tuition and
5-46 required fees; and
5-47 (2) to the beneficiary the amount by which the
5-48 estimated average private tuition and required fees exceeds the
5-49 tuition and required fees of the institution.
5-50 (f) If the beneficiary of a plan described by Section
5-51 54.6251 enrolls in a private or independent institution of higher
5-52 education, the beneficiary is responsible for paying the
5-53 institution the amount by which the tuition and required fees of
5-54 the institution exceeds the estimated average private tuition and
5-55 required fees.
5-56 (g) If there is not enough money in the fund to pay the
5-57 tuition and required fees of the institution of higher education in
5-58 which a beneficiary enrolls or the appropriate portion of the
5-59 tuition and required fees of the private or independent institution
5-60 of higher education in which the beneficiary enrolls as provided by
5-61 the prepaid tuition contract, the legislature may appropriate to
5-62 the fund the amount necessary for the board to pay the applicable
5-63 amount of tuition and required fees of the institution.
5-64 Sec. 54.620. PREPAID TUITION CONTRACT. (a) The board may
5-65 contract with a purchaser for the purchaser to prepay the tuition
5-66 and required fees for a beneficiary to attend an institution of
5-67 higher education or private or independent institution of higher
5-68 education to which the beneficiary is admitted as a student.
5-69 (b) The terms of a prepaid tuition contract shall be based
5-70 on an actuarial analysis of:
6-1 (1) the rates of increase of:
6-2 (A) tuition and required fees at institutions of
6-3 higher education; or
6-4 (B) estimated average private tuition and
6-5 required fees;
6-6 (2) expected investment returns;
6-7 (3) estimated administrative costs; and
6-8 (4) the period between the date the contract is
6-9 entered into and the date the beneficiary is projected to graduate
6-10 from high school.
6-11 (c) The board shall adopt a form for a prepaid tuition
6-12 contract to be used by the board and purchasers.
6-13 (d) A prepaid tuition contract must:
6-14 (1) specify the amount and number of payments required
6-15 from the purchaser on behalf of the beneficiary;
6-16 (2) specify the terms under which the purchaser shall
6-17 make payments, including the date on which each payment is due;
6-18 (3) specify the consequences of default;
6-19 (4) specify the name and date of birth of the
6-20 beneficiary of the contract and the terms under which another
6-21 person may be substituted as the beneficiary;
6-22 (5) specify the number of credit hours contracted by
6-23 the purchaser;
6-24 (6) specify the type of plan toward which the
6-25 contracted credit hours shall be applied;
6-26 (7) contain an assumption of a contractual obligation
6-27 by the board to the beneficiary to provide for a specified number
6-28 of credit hours of undergraduate instruction at an institution of
6-29 higher education or private or independent institution of higher
6-30 education, not to exceed the typical number of credit hours
6-31 required for the degree that corresponds to the plan purchased on
6-32 behalf of the beneficiary;
6-33 (8) specify the date the beneficiary is projected to
6-34 graduate from high school; and
6-35 (9) contain any other provisions the board considers
6-36 necessary or appropriate.
6-37 (e) A prepaid tuition contract does not cover the cost of
6-38 laboratory fees charged for specific courses.
6-39 Sec. 54.621. BENEFICIARY. (a) The beneficiary of a prepaid
6-40 tuition contract must be younger than 18 years of age at the time
6-41 the purchaser enters into the contract and must be:
6-42 (1) a resident of this state at the time the purchaser
6-43 enters into the contract; or
6-44 (2) a nonresident who is the child of a parent who is
6-45 a resident of this state at the time that parent enters into the
6-46 contract.
6-47 (b) The board may require a reasonable period of residence
6-48 in this state for a beneficiary or the parent of a beneficiary.
6-49 (c) A beneficiary is considered a resident for purposes of
6-50 tuition regardless of the beneficiary's residence on the date of
6-51 enrollment.
6-52 Sec. 54.622. TYPES OF PLANS. The board shall make prepaid
6-53 tuition contracts available for the:
6-54 (1) junior college plan;
6-55 (2) senior college plan;
6-56 (3) junior-senior college plan; and
6-57 (4) private college plan.
6-58 Sec. 54.623. JUNIOR COLLEGE PLAN. Through the junior
6-59 college plan, a prepaid tuition contract shall provide prepaid
6-60 tuition and required fees for the beneficiary to attend a public
6-61 junior college for a specified number of undergraduate credit hours
6-62 not to exceed the typical number of hours required for a
6-63 certificate or an associate degree awarded by a public junior
6-64 college.
6-65 Sec. 54.624. SENIOR COLLEGE PLAN. Through the senior
6-66 college plan, a prepaid tuition contract shall provide prepaid
6-67 tuition and required fees for the beneficiary to attend a public
6-68 senior college or university for a specified number of
6-69 undergraduate credit hours not to exceed the typical number of
6-70 hours required for a baccalaureate degree awarded by a public
7-1 senior college or university.
7-2 Sec. 54.625. JUNIOR-SENIOR COLLEGE PLAN. Through the
7-3 junior-senior college plan, a prepaid tuition contract shall
7-4 provide prepaid tuition and required fees for the beneficiary to
7-5 attend:
7-6 (1) a public junior college for a specified number of
7-7 undergraduate credit hours not to exceed the typical number of
7-8 hours required for a person to receive a certificate or associate
7-9 degree awarded by a public junior college; and
7-10 (2) a public senior college or university for a
7-11 specified number of credit hours not to exceed the typical number
7-12 of additional hours required for the person to receive a
7-13 baccalaureate degree awarded by a public senior college or
7-14 university.
7-15 Sec. 54.6251. PRIVATE COLLEGE PLAN. Through the private
7-16 college plan, a prepaid tuition contract shall provide prepaid
7-17 estimated average private tuition and required fees for the
7-18 beneficiary to attend a private or independent institution of
7-19 higher education for a specified number of undergraduate credit
7-20 hours not to exceed the typical number of hours required for a
7-21 baccalaureate degree awarded by a private or independent
7-22 institution of higher education.
7-23 Sec. 54.626. CONTRACT PAYMENT. (a) The board may provide
7-24 for the receipt of payments under prepaid tuition contracts in lump
7-25 sums or installment payments.
7-26 (b) A purchaser may make payments under a prepaid tuition
7-27 contract by electronic funds transfer.
7-28 (c) An employee of the state or a political subdivision of
7-29 the state may make payments under a prepaid tuition contract by
7-30 payroll deductions made by the appropriate officer of the state or
7-31 political subdivision.
7-32 (d) The board may impose a fee for a late payment under a
7-33 prepaid tuition contract.
7-34 Sec. 54.627. CHANGE OF BENEFICIARY. (a) The purchaser of a
7-35 prepaid tuition contract may designate a new beneficiary instead of
7-36 the original beneficiary if the new beneficiary meets the
7-37 requirements of a beneficiary on the date the designation is
7-38 changed. If the purchaser is an individual, the new beneficiary
7-39 must be a sibling, step-sibling, or half-sibling of the original
7-40 beneficiary.
7-41 (b) The board may adjust the terms of the contract so that
7-42 the purchaser is required to pay the amount the purchaser would
7-43 have been required to pay had the purchaser originally designated
7-44 the new beneficiary as the beneficiary, taking into account any
7-45 payments made before the date the designation is changed.
7-46 (c) The purchaser of a prepaid tuition contract may not sell
7-47 the contract.
7-48 Sec. 54.628. CONVERSION TO ANOTHER PLAN. (a) A purchaser
7-49 may convert a prepaid tuition contract from one plan to another
7-50 plan.
7-51 (b) The board may adjust the terms of the contract so that
7-52 the purchaser is required to pay the amount required under the plan
7-53 to which the contract is converted, taking into account any
7-54 payments made before the date the contract is converted.
7-55 Sec. 54.629. VERIFICATION UNDER OATH. The board may require
7-56 a purchaser to verify under oath a request to:
7-57 (1) change a beneficiary;
7-58 (2) convert a contract to another plan; or
7-59 (3) terminate a contract.
7-60 Sec. 54.630. PROMISE OR GUARANTEE OF ADMISSION. This
7-61 subchapter is not a promise or guarantee that a beneficiary will
7-62 be:
7-63 (1) admitted to any institution of higher education or
7-64 private or independent institution of higher education;
7-65 (2) admitted to a particular institution of higher
7-66 education or private or independent institution of higher
7-67 education;
7-68 (3) allowed to continue enrollment at an institution
7-69 of higher education or private or independent institution of higher
7-70 education after admission; or
8-1 (4) graduated from an institution of higher education
8-2 or private or independent institution of higher education.
8-3 Sec. 54.631. CONTRACT TERMINATION. (a) A prepaid tuition
8-4 contract shall specify:
8-5 (1) the name of any person who may terminate the
8-6 contract; and
8-7 (2) the terms under which the contract may be
8-8 terminated.
8-9 (b) A prepaid tuition contract terminates on the 10th
8-10 anniversary of the date the beneficiary is projected to graduate
8-11 from high school, not counting time spent by the beneficiary as an
8-12 active duty member of the United States armed services.
8-13 Sec. 54.632. REFUND. (a) A prepaid tuition contract shall
8-14 specify:
8-15 (1) the name of the person entitled to any refund if
8-16 the contract is terminated;
8-17 (2) the terms under which a person is entitled to a
8-18 refund; and
8-19 (3) the method by which the amount of the refund is
8-20 calculated.
8-21 (b) The person named in the contract is entitled to a refund
8-22 following termination of a prepaid tuition contract.
8-23 (c) The board shall determine the method by which the amount
8-24 of the refund is calculated.
8-25 Sec. 54.633. PREPAID HIGHER EDUCATION TUITION SCHOLARSHIPS
8-26 FOR NEEDY STUDENTS. (a) To the extent money is available, the
8-27 board may award a prepaid higher education tuition scholarship to a
8-28 student who meets economic and academic requirements adopted by the
8-29 board by rule.
8-30 (b) A scholarship awarded under this section terminates if
8-31 the student to whom the scholarship is awarded is:
8-32 (1) convicted of, or adjudicated as having engaged in
8-33 delinquent conduct constituting, an offense under Chapter 481,
8-34 Health and Safety Code; or
8-35 (2) convicted of, or adjudicated as having engaged in
8-36 delinquent conduct constituting, a felony or Class A misdemeanor.
8-37 (c) The board shall ensure that each region of the state is
8-38 equitably represented in the awarding of scholarships under this
8-39 section.
8-40 (d) Scholarships under this section are funded by the
8-41 private sector.
8-42 (e) The board may establish a direct-support organization
8-43 under the Texas Non-Profit Corporation Act (Article 1396-1.01 et
8-44 seq., Vernon's Texas Civil Statutes) to:
8-45 (1) receive, hold, invest, and administer money,
8-46 gifts, grants, loans, or other property for or on behalf of the
8-47 program; and
8-48 (2) purchase scholarships under this section.
8-49 (f) The board of directors of the direct-support
8-50 organization consists of:
8-51 (1) the comptroller;
8-52 (2) a member appointed by the governor with the advice
8-53 and consent of the senate; and
8-54 (3) three members appointed jointly by the comptroller
8-55 and the member appointed by the governor.
8-56 (g) The board must certify that the direct-support
8-57 organization operates in a manner consistent with the goals of this
8-58 state and in the best interests of this state.
8-59 (h) The board may contract with an independent certified
8-60 public accountant to annually audit the direct-support organization
8-61 under rules adopted by the board. The board shall submit the audit
8-62 to the comptroller, governor, lieutenant governor, speaker of the
8-63 house of representatives, Legislative Budget Board, Legislative
8-64 Audit Committee, state auditor, and Texas Higher Education
8-65 Coordinating Board. The comptroller or state auditor may require
8-66 the direct-support organization or independent certified public
8-67 accountant to provide additional information relating to the
8-68 operation of the organization.
8-69 (i) The identity of a donor under this section who desires
8-70 to remain anonymous and the records of the direct-support
9-1 organization, other than the records disclosed under Subsection
9-2 (h), are confidential.
9-3 Sec. 54.634. ESTABLISHMENT OF FUND. (a) The Texas tomorrow
9-4 fund is outside the state treasury. The fund consists of:
9-5 (1) state appropriations for purposes of the fund;
9-6 (2) money acquired from other governmental or private
9-7 sources;
9-8 (3) money paid under prepaid tuition contracts; and
9-9 (4) the income from money deposited in the fund.
9-10 (b) The board shall administer the assets of the fund. The
9-11 board is the trustee of the fund's assets.
9-12 (c) The board may:
9-13 (1) segregate contributions and payments to the fund
9-14 into various accounts; and
9-15 (2) acquire, hold, manage, purchase, sell, assign,
9-16 trade, transfer, and dispose of any security, evidence of
9-17 indebtedness, or other investment in which the fund's assets may be
9-18 invested.
9-19 Sec. 54.635. STATE TREASURER. (a) Except as provided by
9-20 Subsections (d) and (e), the state treasurer is the custodian of
9-21 the assets of the fund.
9-22 (b) The state treasurer shall pay money from the fund on a
9-23 warrant drawn by the comptroller supported only on a voucher signed
9-24 by the comptroller or the comptroller's authorized representative.
9-25 (c) The state treasurer annually shall furnish to the board
9-26 a sworn statement of the amount of the fund's assets in the
9-27 treasurer's custody.
9-28 (d) The board may select one or more commercial banks,
9-29 depository trust companies, or other entities to serve as custodian
9-30 of all or part of the fund's assets.
9-31 (e) If the office of the state treasurer is abolished, the
9-32 comptroller is the custodian of the assets of the fund.
9-33 Sec. 54.636. INVESTMENT OF FUND ASSETS. (a) The board
9-34 shall invest the assets of the fund.
9-35 (b) The board may contract with private professional
9-36 investment managers to assist the board in investing the assets of
9-37 the fund.
9-38 (c) The board shall develop written investment objectives
9-39 concerning the investment of the assets of the fund. The
9-40 objectives may address desired rates of return, risks involved,
9-41 investment time frames, and any other relevant considerations.
9-42 (d) The comptroller shall develop a comprehensive plan for
9-43 the investment of the assets of the fund consistent with the
9-44 objectives developed by the board under Subsection (c). The plan
9-45 shall specify the policies under which the board shall invest the
9-46 assets of the fund. The board must approve the plan.
9-47 (e) The board shall invest the assets of the fund in
9-48 accordance with the Public Funds Investment Act (Subchapter A,
9-49 Chapter 2256, Government Code).
9-50 Sec. 54.637. USE OF FUND ASSETS. The assets of the fund may
9-51 be used only to:
9-52 (1) pay the costs of program administration and
9-53 operations;
9-54 (2) make payments to institutions of higher education
9-55 or private or independent institutions of higher education on
9-56 behalf of beneficiaries; and
9-57 (3) make refunds under prepaid tuition contracts.
9-58 Sec. 54.638. REQUEST OF RULINGS FROM INTERNAL REVENUE
9-59 SERVICE AND SECURITIES AND EXCHANGE COMMISSION. (a) The board
9-60 shall request rulings from:
9-61 (1) the Internal Revenue Service regarding the tax
9-62 consequences to purchasers and beneficiaries of participating in
9-63 the program; and
9-64 (2) the Securities and Exchange Commission regarding
9-65 the application of federal securities laws to the fund.
9-66 (b) The board shall inform a purchaser of the status of the
9-67 requests under Subsection (a) before the purchaser enters into a
9-68 prepaid tuition contract.
9-69 Sec. 54.6385. EXEMPTION FROM SECURITIES LAWS. The
9-70 registration requirements of The Securities Act (Article 581-1 et
10-1 seq., Vernon's Texas Civil Statutes) do not apply to the sale of a
10-2 prepaid tuition contract by the board or by a registered securities
10-3 dealer.
10-4 Sec. 54.639. EXEMPTION FROM CREDITORS' CLAIMS. Money in the
10-5 fund is exempt from claims of creditors of a purchaser or
10-6 beneficiary.
10-7 Sec. 54.640. ACTUARIAL SOUNDNESS OF FUND. (a) The board
10-8 shall administer the fund in a manner that is sufficiently
10-9 actuarially sound to pay the costs of program administration and
10-10 operations and meet the obligations of the program.
10-11 (b) The board shall annually evaluate the actuarial
10-12 soundness of the fund.
10-13 (c) The board may adjust the terms of subsequent prepaid
10-14 tuition contracts as necessary to ensure the actuarial soundness of
10-15 the fund.
10-16 Sec. 54.641. STATEMENT REGARDING STATUS OF PREPAID TUITION
10-17 CONTRACT. (a) Not later than December 1 of each year, the board
10-18 shall furnish without charge to each purchaser a statement of:
10-19 (1) the amount paid by the purchaser under the prepaid
10-20 tuition contract;
10-21 (2) the number of credit hours originally covered by
10-22 the contract;
10-23 (3) the number of credit hours remaining under the
10-24 contract; and
10-25 (4) any other information the board determines by rule
10-26 is necessary or appropriate.
10-27 (b) The board shall furnish a statement complying with
10-28 Subsection (a) to a purchaser or beneficiary on written request.
10-29 The board may charge a reasonable fee for each statement furnished
10-30 under this subsection.
10-31 Sec. 54.642. REPORTS. (a) Not later than December 1 of
10-32 each year, the board shall submit to the governor, lieutenant
10-33 governor, speaker of the house of representatives, Legislative
10-34 Budget Board, Legislative Audit Committee, state auditor, and Texas
10-35 Higher Education Coordinating Board a report including:
10-36 (1) the board's fiscal transactions during the
10-37 preceding fiscal year;
10-38 (2) the market and book value of the fund as of the
10-39 end of the preceding fiscal year;
10-40 (3) the asset allocations of the fund expressed in
10-41 percentages of stocks, fixed income, cash, or other financial
10-42 investments;
10-43 (4) the rate of return on the investment of the fund's
10-44 assets during the preceding fiscal year; and
10-45 (5) an actuarial valuation of the assets and
10-46 liabilities of the program, including the extent to which the
10-47 program's liabilities are unfunded.
10-48 (b) The board shall make the report described by Subsection
10-49 (a) available to purchasers of prepaid tuition contracts.
10-50 (c) Not later than December 1 of each year, the board shall
10-51 provide to the Texas Higher Education Coordinating Board complete
10-52 prepaid tuition contract sales information, including projected
10-53 enrollments of beneficiaries at institutions of higher education.
10-54 Sec. 54.643. CONFIDENTIALITY. (a) Records in the custody
10-55 of the board relating to the participation of specific purchasers
10-56 and beneficiaries in the program are confidential.
10-57 (b) Notwithstanding Subsection (a), the board may release
10-58 information described by that subsection to an institution of
10-59 higher education in which a beneficiary may enroll or is enrolled.
10-60 The institution of higher education shall keep the information
10-61 confidential.
10-62 SECTION 2. (a) As soon as possible on or after the
10-63 effective date of this Act, the governor and lieutenant governor
10-64 shall appoint the members of the Prepaid Higher Education Tuition
10-65 Board appointed by those officers. In making the appointments, the
10-66 governor shall designate one member for a term expiring February 1,
10-67 1997, and one member for a term expiring February 1, 1999. In
10-68 making the appointments, the lieutenant governor shall designate
10-69 one member for a term expiring February 1, 1997, one member
10-70 appointed from a list of persons recommended by the speaker of the
11-1 house of representatives for a term expiring February 1, 1999, and
11-2 two members for terms expiring February 1, 2001, one of whom must
11-3 be appointed from a list of persons recommended by the speaker of
11-4 the house of representatives.
11-5 (b) The legislature may appropriate to the board an amount
11-6 sufficient to cover the board's administrative costs for the state
11-7 fiscal biennium ending August 31, 1997.
11-8 (c) The board shall be prepared to enter into a prepaid
11-9 tuition contract not later than the 90th day after the date all the
11-10 members are appointed or January 1, 1996, whichever occurs later.
11-11 SECTION 3. This Act takes effect September 1, 1995.
11-12 SECTION 4. The importance of this legislation and the
11-13 crowded condition of the calendars in both houses create an
11-14 emergency and an imperative public necessity that the
11-15 constitutional rule requiring bills to be read on three several
11-16 days in each house be suspended, and this rule is hereby suspended.
11-17 * * * * *