By Barrientos S.B. No. 1539
74R3068 SMH-D
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 prepaid higher education tuition
1-14 trust fund.
1-15 (4) "Institution of higher education" has the meaning
1-16 assigned by Section 61.003.
1-17 (5) "Prepaid tuition contract" means a contract
1-18 entered into under this subchapter by the board and a purchaser to
1-19 provide for the payment of higher education tuition and required
1-20 fees of a beneficiary.
1-21 (6) "Private or independent institution of higher
1-22 education" has the meaning assigned by Section 61.003.
1-23 (7) "Program" means the prepaid higher education
1-24 tuition program.
2-1 (8) "Public junior college" has the meaning assigned
2-2 by Section 61.003.
2-3 (9) "Public senior college or university" has the
2-4 meaning assigned by Section 61.003.
2-5 (10) "Purchaser" means a person who is obligated to
2-6 make payments under a prepaid tuition contract.
2-7 Sec. 54.602. ESTABLISHMENT OF BOARD; FUNCTION. (a) The
2-8 Prepaid Higher Education Tuition Board is an agency of the state.
2-9 The board shall maintain its office in Austin.
2-10 (b) The board shall administer the program.
2-11 Sec. 54.603. SUNSET PROVISION. (a) The Prepaid Higher
2-12 Education Tuition Board is subject to Chapter 325, Government Code
2-13 (Texas Sunset Act). Unless continued in existence as provided by
2-14 that chapter, the board is abolished and this subchapter expires
2-15 September 1, 2007.
2-16 (b) If the board is abolished and this subchapter expires as
2-17 provided by Subsection (a), the board shall refund to the purchaser
2-18 of each prepaid tuition contract the amount provided by Section
2-19 54.630(c).
2-20 Sec. 54.604. MEMBERS OF BOARD; APPOINTMENT; TERMS OF OFFICE.
2-21 (a) The board consists of:
2-22 (1) the comptroller;
2-23 (2) two members appointed by the governor with the
2-24 advice and consent of the senate; and
2-25 (3) four members appointed by the lieutenant governor,
2-26 at least two of whom must be appointed from a list of persons
2-27 recommended by the speaker of the house of representatives.
3-1 (b) The appointed members must possess knowledge, skill, and
3-2 experience in higher education, business, or finance.
3-3 (c) The appointed members serve for staggered six-year
3-4 terms. The terms of one-third of the appointed members expire on
3-5 February 1 of each odd-numbered year.
3-6 Sec. 54.605. DUTY IN RECOMMENDING, MAKING, OR CONFIRMING
3-7 APPOINTMENTS. (a) In recommending, making, or confirming
3-8 appointments to the board, the governor, lieutenant governor,
3-9 speaker of the house of representatives, and senate shall ensure
3-10 that each appointee has the background and experience suitable for
3-11 performing the statutory responsibilities of a member of the board.
3-12 (b) Appointments to the board shall be made without regard
3-13 to the race, color, disability, sex, religion, age, or national
3-14 origin of the appointees.
3-15 Sec. 54.606. RESTRICTIONS ON BOARD APPOINTMENT, MEMBERSHIP,
3-16 AND EMPLOYMENT. (a) A person is not eligible for appointment as a
3-17 member of the board if the person or the person's spouse:
3-18 (1) is employed by or participates in the management
3-19 of a business entity receiving funds from the board;
3-20 (2) owns or controls, directly or indirectly, more
3-21 than a 10-percent interest in a business entity receiving funds
3-22 from the board; or
3-23 (3) uses or receives a substantial amount of tangible
3-24 goods, services, or funds from the board, other than compensation
3-25 or reimbursement authorized by law for board membership,
3-26 attendance, or expenses.
3-27 (b) An officer, employee, or paid consultant of a Texas
4-1 trade association in the field of higher education may not be a
4-2 member or employee of the board who is exempt from the state's
4-3 position classification plan or is compensated at or above the
4-4 amount prescribed by the General Appropriations Act for step 1,
4-5 salary group 17, of the position classification salary schedule.
4-6 (c) A person who is the spouse of an officer, manager, or
4-7 paid consultant of a Texas trade association in the field of higher
4-8 education may not be a board member and may not be a board employee
4-9 who is exempt from the state's position classification plan or is
4-10 compensated at or above the amount prescribed by the General
4-11 Appropriations Act for step 1, salary group 17, of the position
4-12 classification salary schedule.
4-13 (d) A person may not serve as a member of the board or act
4-14 as the general counsel to the board if the person is required to
4-15 register as a lobbyist under Chapter 305, Government Code, because
4-16 of the person's activities for compensation on behalf of a
4-17 profession related to the operation of the board.
4-18 (e) For the purposes of this section, a Texas trade
4-19 association is a nonprofit, cooperative, and voluntarily joined
4-20 association of business or professional competitors in this state
4-21 designed to assist its members and its industry or profession in
4-22 dealing with mutual business or professional problems and in
4-23 promoting their common interest.
4-24 Sec. 54.607. REMOVAL OF BOARD MEMBER. (a) It is a ground
4-25 for removal from the board if a member:
4-26 (1) violates a prohibition established by Section
4-27 54.606;
5-1 (2) cannot because of illness or disability discharge
5-2 the member's duties for a substantial part of the term for which
5-3 the member is appointed; or
5-4 (3) is absent from more than half of the regularly
5-5 scheduled board meetings that the member is eligible to attend
5-6 during a calendar year unless the absence is excused by majority
5-7 vote of the board.
5-8 (b) The validity of an action of the board is not affected
5-9 by the fact that the action was taken when a ground for removal of
5-10 a board member existed.
5-11 (c) If the executive director has knowledge that a potential
5-12 ground for removal exists, the executive director shall notify the
5-13 presiding officer of the board of the potential ground. The
5-14 presiding officer shall then notify the governor and the attorney
5-15 general that a potential ground for removal exists. If the
5-16 potential ground for removal involves the presiding officer, the
5-17 executive director shall notify the next highest officer of the
5-18 board, who shall notify the governor and the attorney general that
5-19 a potential ground for removal exists.
5-20 Sec. 54.608. TRAINING OF BOARD MEMBERS. (a) Before a
5-21 member of the board may assume the member's duties and before an
5-22 appointed member may be confirmed by the senate, the member must
5-23 complete at least one course of the training program established
5-24 under this section.
5-25 (b) A training program established under this section shall
5-26 provide information to the member regarding:
5-27 (1) the enabling legislation that created the board;
6-1 (2) the programs operated by the board;
6-2 (3) the role and functions of the board;
6-3 (4) the rules of the board, with an emphasis on the
6-4 rules that relate to disciplinary and investigatory authority;
6-5 (5) the current budget for the board;
6-6 (6) the results of the most recent formal audit of the
6-7 board;
6-8 (7) the requirements of the:
6-9 (A) open meetings law, Chapter 551, Government
6-10 Code;
6-11 (B) open records law, Chapter 552, Government
6-12 Code; and
6-13 (C) administrative procedure law, Chapter 2001,
6-14 Government Code;
6-15 (8) the requirements of the conflict of interest laws
6-16 and other laws relating to public officials; and
6-17 (9) any applicable ethics policies adopted by the
6-18 board or the Texas Ethics Commission.
6-19 Sec. 54.609. BOARD OFFICERS. (a) The comptroller serves as
6-20 the presiding officer of the board.
6-21 (b) The board shall appoint a secretary of the board whose
6-22 duties may be prescribed by law and by the board.
6-23 Sec. 54.610. COMPENSATION AND EXPENSES OF APPOINTED BOARD
6-24 MEMBERS. Appointed members of the board shall serve without pay
6-25 but shall be reimbursed for their actual expenses incurred in
6-26 attending meetings of the board or in performing other work of the
6-27 board when that work is approved by the presiding officer of the
7-1 board.
7-2 Sec. 54.611. MEETINGS. (a) The board shall hold regular
7-3 quarterly meetings in the city of Austin and other meetings at
7-4 places and times scheduled by the board in formal sessions and
7-5 called by the presiding officer.
7-6 (b) The board shall develop and implement policies that
7-7 provide the public with a reasonable opportunity to appear before
7-8 the board and to speak on any issue under the jurisdiction of the
7-9 board.
7-10 (c) Minutes of all meetings shall be available in the
7-11 board's office for public inspection.
7-12 Sec. 54.612. APPLICABILITY OF OPEN MEETINGS LAW AND
7-13 ADMINISTRATIVE PROCEDURE LAW. The board is subject to the open
7-14 meetings law, Chapter 551, Government Code, and the administrative
7-15 procedure law, Chapter 2001, Government Code.
7-16 Sec. 54.613. EXECUTIVE DIRECTOR. (a) The board shall
7-17 appoint an executive director, who shall select and supervise the
7-18 board's staff and perform other duties delegated to the executive
7-19 director by the board. The executive director serves at the
7-20 pleasure of the board.
7-21 (b) The executive director must be a person of high
7-22 professional qualifications having a thorough background by
7-23 training and experience in the fields of higher education,
7-24 business, or finance, and must possess any other qualifications the
7-25 board prescribes.
7-26 (c) The executive director shall develop an intra-agency
7-27 career ladder program that addresses opportunities for mobility and
8-1 advancement for employees of the board. The program shall require
8-2 intra-agency postings of all positions concurrently with any public
8-3 posting.
8-4 (d) The executive director shall develop a system of annual
8-5 performance evaluations based on documented employee performance.
8-6 All merit pay for board employees must be based on the system
8-7 established under this subsection.
8-8 (e) The executive director shall prepare and maintain a
8-9 written policy statement to assure implementation of a program of
8-10 equal employment opportunity under which all personnel transactions
8-11 are made without regard to race, color, disability, sex, religion,
8-12 age, or national origin. The policy statement must include:
8-13 (1) personnel policies, including policies relating to
8-14 recruitment, evaluation, selection, appointment, training, and
8-15 promotion of personnel that are in compliance with requirements of
8-16 Chapter 21, Labor Code;
8-17 (2) a comprehensive analysis of the board's workforce
8-18 that meets federal and state guidelines;
8-19 (3) procedures by which a determination can be made of
8-20 the extent of underuse in the board's workforce of all persons for
8-21 whom federal or state guidelines encourage a more equitable
8-22 balance; and
8-23 (4) reasonable methods to appropriately address those
8-24 areas of underuse.
8-25 (f) A policy statement prepared under Subsection (e) must
8-26 cover an annual period, be updated annually and reviewed by the
8-27 Texas Commission on Human Rights for compliance with Subsection
9-1 (e)(1), and be filed with the governor's office.
9-2 (g) The governor's office shall deliver a biennial report to
9-3 the legislature based on the information received under Subsection
9-4 (f). The report may be made separately or as a part of other
9-5 biennial reports made to the legislature.
9-6 (h) The executive director shall provide to members of the
9-7 board and to board employees, as often as necessary, information
9-8 regarding their qualifications for office or employment under this
9-9 subchapter and their responsibilities under applicable laws
9-10 relating to standards of conduct for state officers or employees.
9-11 (i) The board shall develop and implement policies that
9-12 clearly separate the policy-making responsibilities of the board
9-13 and the management responsibilities of the executive director and
9-14 the staff of the board.
9-15 Sec. 54.614. PROGRAM AND FACILITY ACCESSIBILITY. (a) The
9-16 board shall comply with federal and state laws related to program
9-17 and facility accessibility.
9-18 (b) The board shall prepare and maintain a written plan that
9-19 describes how a person who does not speak English can be provided
9-20 reasonable access to the board's programs and services.
9-21 Sec. 54.615. PUBLIC INTEREST INFORMATION AND COMPLAINTS.
9-22 (a) The board shall prepare information of public interest
9-23 describing the functions of the board and the board's procedures by
9-24 which complaints are filed with and resolved by the board. The
9-25 board shall make the information available to the public and
9-26 appropriate state agencies.
9-27 (b) The board by rule shall establish methods by which
10-1 consumers and service recipients are notified of the name, mailing
10-2 address, and telephone number of the board for the purpose of
10-3 directing complaints to the board.
10-4 (c) The board shall keep information about each complaint
10-5 filed with the board. The information shall include:
10-6 (1) the date the complaint is received;
10-7 (2) the name of the complainant;
10-8 (3) the subject matter of the complaint;
10-9 (4) a record of all persons contacted in relation to
10-10 the complaint;
10-11 (5) a summary of the results of the review or
10-12 investigation of the complaint; and
10-13 (6) for complaints for which the board took no action,
10-14 an explanation of the reason the complaint was closed without
10-15 action.
10-16 (d) The board shall keep a file for each written complaint
10-17 filed with the board that the board has authority to resolve. The
10-18 board shall provide to the person filing the complaint and the
10-19 persons or entities complained about the board's policies and
10-20 procedures pertaining to complaint investigation and resolution.
10-21 The board, at least quarterly and until final disposition of the
10-22 complaint, shall notify the person filing the complaint and the
10-23 persons or entities complained about of the status of the complaint
10-24 unless the notice would jeopardize an undercover investigation.
10-25 Sec. 54.616. POWERS OF BOARD. (a) The board has the powers
10-26 necessary or proper to carry out this subchapter.
10-27 (b) The board may:
11-1 (1) adopt an official seal;
11-2 (2) adopt rules to implement this subchapter;
11-3 (3) sue and be sued;
11-4 (4) enter into contracts and other necessary
11-5 instruments;
11-6 (5) enter into agreements or other transactions with
11-7 the United States, state agencies, including institutions of higher
11-8 education, and local governments;
11-9 (6) appear in its own behalf before governmental
11-10 agencies;
11-11 (7) contract for necessary goods and services, employ
11-12 necessary personnel, and engage the services of private
11-13 consultants, actuaries, managers, legal counsel, and auditors for
11-14 administrative or technical assistance;
11-15 (8) solicit and accept gifts, grants, loans, and other
11-16 aid from any source or participate in any other way in any
11-17 government program to carry out this subchapter;
11-18 (9) impose administrative fees;
11-19 (10) contract with a person to market the program;
11-20 (11) purchase liability insurance covering the board
11-21 and employees and agents of the board; and
11-22 (12) establish other policies, procedures, and
11-23 eligibility criteria to implement this subchapter.
11-24 Sec. 54.617. PREPAID HIGHER EDUCATION TUITION PROGRAM. (a)
11-25 Under the program, a purchaser may enter into a prepaid tuition
11-26 contract with the board under which the purchaser agrees to prepay
11-27 the tuition and required fees for a beneficiary to attend an
12-1 institution of higher education.
12-2 (b) The board shall deposit the money paid under a prepaid
12-3 tuition contract in the fund, invest the money and credit the
12-4 income earned to the fund, and apply money in the fund to the
12-5 tuition and required fees of the institution of higher education in
12-6 which the beneficiary enrolls as provided by the prepaid tuition
12-7 contract.
12-8 (c) If there is not enough money in the fund to pay the
12-9 tuition and required fees of the institution of higher education in
12-10 which a beneficiary enrolls as provided by the prepaid tuition
12-11 contract, the legislature shall appropriate to the fund the amount
12-12 necessary for the board to pay the tuition and required fees of the
12-13 institution.
12-14 (d) If the beneficiary enrolls in a private or independent
12-15 institution of higher education, the board shall pay the
12-16 institution the tuition and required fees the board would have paid
12-17 had the student enrolled in an institution of higher education
12-18 covered by the plan selected in the prepaid tuition contract. The
12-19 purchaser must pay the private or independent institution of higher
12-20 education the amount by which the tuition and required fees of the
12-21 institution exceed the tuition and required fees paid by the board.
12-22 Sec. 54.618. PREPAID TUITION CONTRACT. (a) The board may
12-23 contract with a purchaser for the purchaser to prepay the tuition
12-24 and required fees for a beneficiary to attend an institution of
12-25 higher education to which the beneficiary is admitted as a student.
12-26 (b) The board shall adopt a form for a prepaid tuition
12-27 contract to be used by the board and purchasers.
13-1 (c) A prepaid tuition contract must:
13-2 (1) specify the amount and number of payments required
13-3 from the purchaser on behalf of the beneficiary;
13-4 (2) specify the terms under which the purchaser shall
13-5 make payments, including the date on which each payment is due;
13-6 (3) specify the consequences of default;
13-7 (4) specify the name and date of birth of the
13-8 beneficiary of the contract and the terms under which another
13-9 person may be substituted as the beneficiary;
13-10 (5) specify the number of credit hours contracted by
13-11 the purchaser;
13-12 (6) specify the type of plan toward which the
13-13 contracted credit hours shall be applied;
13-14 (7) contain an assumption of a contractual obligation
13-15 by the board to the beneficiary to provide for a specified number
13-16 of credit hours of undergraduate instruction at an institution of
13-17 higher education, not to exceed the typical number of credit hours
13-18 required for the degree that corresponds to the plan purchased on
13-19 behalf of the beneficiary;
13-20 (8) specify the date the beneficiary is projected to
13-21 graduate from the institution of higher education; and
13-22 (9) contain any other provisions the board considers
13-23 necessary or appropriate.
13-24 (d) A prepaid tuition contract does not cover the cost of
13-25 laboratory fees charged for specific courses.
13-26 Sec. 54.619. BENEFICIARY. (a) The beneficiary of a prepaid
13-27 tuition contract must be younger than 18 years of age at the time
14-1 the purchaser enters into the contract and must be:
14-2 (1) a resident of this state at the time the purchaser
14-3 enters into the contract; or
14-4 (2) a nonresident who is the child of a parent who is
14-5 a resident of this state at the time that parent enters into the
14-6 contract.
14-7 (b) The board may require a reasonable period of residence
14-8 in this state for a beneficiary or the parent of a beneficiary.
14-9 (c) A beneficiary is considered a resident for purposes of
14-10 tuition regardless of the beneficiary's residence on the date of
14-11 enrollment.
14-12 Sec. 54.620. TYPES OF PLANS; RESTRICTION ON NUMBER OF
14-13 PARTICIPANTS. (a) The board shall make prepaid tuition contracts
14-14 available for the:
14-15 (1) junior college plan;
14-16 (2) senior college plan; and
14-17 (3) junior-senior college plan.
14-18 (b) The board may restrict the number of participants in the
14-19 junior college plan, senior college plan, or junior-senior college
14-20 plan.
14-21 Sec. 54.621. JUNIOR COLLEGE PLAN. (a) Through the junior
14-22 college plan, a prepaid tuition contract shall provide prepaid
14-23 tuition and required fees for the beneficiary to attend a public
14-24 junior college for a specified number of undergraduate credit hours
14-25 not to exceed the typical number of hours required for a
14-26 certificate or an associate degree awarded by a public junior
14-27 college.
15-1 (b) The cost of participation in the junior college plan
15-2 shall be based on:
15-3 (1) the current tuition and required fees of public
15-4 junior colleges;
15-5 (2) the projected rate of inflation of tuition and
15-6 required fees of public junior colleges; and
15-7 (3) the number of years expected to elapse between the
15-8 purchase of the plan on behalf of a beneficiary and the
15-9 beneficiary's exercise of the benefits provided in the plan.
15-10 Sec. 54.622. SENIOR COLLEGE PLAN. (a) Through the senior
15-11 college plan, a prepaid tuition contract shall provide prepaid
15-12 tuition and required fees for the beneficiary to attend a public
15-13 senior college or university for a specified number of
15-14 undergraduate credit hours not to exceed the typical number of
15-15 hours required for a baccalaureate degree awarded by a public
15-16 senior college or university.
15-17 (b) The cost of participation in the senior college plan
15-18 shall be based on:
15-19 (1) the current tuition and required fees of public
15-20 senior colleges or universities;
15-21 (2) the projected rate of inflation of tuition and
15-22 required fees of public senior colleges or universities; and
15-23 (3) the number of years expected to elapse between the
15-24 purchase of the plan on behalf of a beneficiary and the
15-25 beneficiary's exercise of the benefits provided in the plan.
15-26 Sec. 54.623. JUNIOR-SENIOR COLLEGE PLAN. (a) Through the
15-27 junior-senior college plan, a prepaid tuition contract shall
16-1 provide prepaid tuition and required fees for the beneficiary to
16-2 attend:
16-3 (1) a public junior college for a specified number of
16-4 undergraduate credit hours not to exceed the typical number of
16-5 hours required for a person to receive a certificate or associate
16-6 degree awarded by a public junior college; and
16-7 (2) a public senior college or university for a
16-8 specified number of credit hours not to exceed the typical number
16-9 of additional hours required for the person to receive a
16-10 baccalaureate degree awarded by a public senior college or
16-11 university.
16-12 (b) The cost of participation in the junior-senior college
16-13 plan shall be based on:
16-14 (1) the current tuition and required fees of public
16-15 junior colleges and public senior colleges or universities;
16-16 (2) the projected rate of inflation of tuition and
16-17 required fees of public junior colleges and public senior colleges
16-18 or universities; and
16-19 (3) the number of years expected to elapse between the
16-20 purchase of the plan on behalf of a beneficiary and the
16-21 beneficiary's exercise of the benefits provided in the plan.
16-22 Sec. 54.624. CONTRACT PAYMENT. (a) The board may provide
16-23 for the receipt of payments under prepaid tuition contracts in lump
16-24 sums or installment payments.
16-25 (b) A purchaser may make payments under a prepaid tuition
16-26 contract by electronic funds transfer.
16-27 (c) An employee of the state or a political subdivision of
17-1 the state may make payments under a prepaid tuition contract by
17-2 payroll deductions made by the appropriate officer of the state or
17-3 political subdivision.
17-4 (d) The board may impose a fee for a late payment under a
17-5 prepaid tuition contract.
17-6 Sec. 54.625. CHANGE OF BENEFICIARY. (a) The purchaser of a
17-7 prepaid tuition contract may designate a sibling, step-sibling, or
17-8 half-sibling of the original beneficiary as the beneficiary in
17-9 place of the original beneficiary if the sibling, step-sibling, or
17-10 half-sibling meets the requirements of a beneficiary on the date
17-11 the designation is changed.
17-12 (b) The board may adjust the terms of the contract so that
17-13 the purchaser is required to pay the amount the purchaser would
17-14 have been required to pay had the purchaser originally designated
17-15 the new beneficiary as the beneficiary, taking into account any
17-16 payments made before the date the designation is changed.
17-17 Sec. 54.626. CONVERSION TO ANOTHER PLAN. (a) A purchaser
17-18 may convert a prepaid tuition contract from one plan to another
17-19 plan.
17-20 (b) The board may adjust the terms of the contract so that
17-21 the purchaser is required to pay the amount required under the plan
17-22 to which the contract is converted, taking into account any
17-23 payments made before the date the contract is converted.
17-24 Sec. 54.627. VERIFICATION UNDER OATH. The board may require
17-25 a purchaser to verify under oath a request to:
17-26 (1) change a beneficiary;
17-27 (2) convert a contract to another plan; or
18-1 (3) terminate a contract.
18-2 Sec. 54.628. PROMISE OR GUARANTEE OF ADMISSION. (a) Except
18-3 as provided by Subsection (b), this subchapter is not a promise or
18-4 guarantee that a beneficiary will be:
18-5 (1) admitted to any institution of higher education;
18-6 (2) admitted to a particular institution of higher
18-7 education;
18-8 (3) allowed to continue enrollment at an institution
18-9 of higher education after admission; or
18-10 (4) graduated from an institution of higher education.
18-11 (b) A beneficiary may not be denied admission to a public
18-12 junior college on academic grounds.
18-13 Sec. 54.629. CONTRACT TERMINATION. (a) A prepaid tuition
18-14 contract shall specify:
18-15 (1) the name of any person who may terminate the
18-16 contract; and
18-17 (2) the terms under which the contract may be
18-18 terminated.
18-19 (b) A prepaid tuition contract terminates if:
18-20 (1) the purchaser:
18-21 (A) gives notice of termination; or
18-22 (B) defaults on the contract; or
18-23 (2) the beneficiary:
18-24 (A) dies;
18-25 (B) becomes permanently and totally disabled;
18-26 (C) is denied admission by each institution of
18-27 higher education to which the beneficiary applies; or
19-1 (D) enrolls in an institution of higher
19-2 education but does not graduate from the institution on or before
19-3 the 10th anniversary of the projected graduation date, not counting
19-4 time spent by the beneficiary as an active duty member of the
19-5 United States armed services.
19-6 Sec. 54.630. REFUND. (a) A prepaid tuition contract shall
19-7 specify:
19-8 (1) the name of the person entitled to any refund if
19-9 the contract is terminated; and
19-10 (2) the terms under which a person is entitled to a
19-11 refund.
19-12 (b) The person named in the contract is entitled to a refund
19-13 following termination of a prepaid tuition contract.
19-14 (c) The amount of the refund is the sum of the payments made
19-15 under the prepaid tuition contract, together with five percent
19-16 interest on each payment accruing from the date the payment is
19-17 received to the date the refund is paid, multiplied by a fraction,
19-18 the numerator of which is the number of credit hours remaining
19-19 under the contract and the denominator of which is the number of
19-20 credit hours originally covered by the contract.
19-21 Sec. 54.631. PREPAID HIGHER EDUCATION TUITION SCHOLARSHIPS
19-22 FOR NEEDY STUDENTS. (a) To the extent money is available, the
19-23 board may award a prepaid higher education tuition scholarship to a
19-24 student who meets economic and academic requirements adopted by the
19-25 board by rule.
19-26 (b) A scholarship awarded under this section terminates if
19-27 the student to whom the scholarship is awarded is:
20-1 (1) convicted of, or adjudicated as having engaged in
20-2 delinquent conduct constituting, an offense under Chapter 481,
20-3 Health and Safety Code; or
20-4 (2) convicted of, or adjudicated as having engaged in
20-5 delinquent conduct constituting, a felony or Class A misdemeanor.
20-6 (c) The board shall ensure that each region of the state is
20-7 equitably represented in the awarding of scholarships under this
20-8 section.
20-9 (d) Scholarships under this section are funded by the
20-10 private sector, the United States, and this state. The legislature
20-11 shall appropriate an amount for the scholarships equal to the
20-12 amount provided by the private sector and the United States.
20-13 Sec. 54.632. ESTABLISHMENT OF FUND. (a) The prepaid higher
20-14 education tuition trust fund is outside the state treasury. The
20-15 fund consists of:
20-16 (1) state appropriations for purposes of the fund;
20-17 (2) money acquired from other governmental or private
20-18 sources;
20-19 (3) money paid under prepaid tuition contracts; and
20-20 (4) the income from money deposited in the fund.
20-21 (b) The board shall administer the assets of the fund. The
20-22 board is the trustee of the fund's assets.
20-23 (c) The board may:
20-24 (1) segregate contributions and payments to the fund
20-25 into various accounts;
20-26 (2) acquire, hold, manage, purchase, sell, assign,
20-27 trade, transfer, and dispose of any security, evidence of
21-1 indebtedness, or other investment in which the fund's assets may be
21-2 invested;
21-3 (3) pay money in the fund to an institution of higher
21-4 education; and
21-5 (4) refund money in the fund to the person designated
21-6 by a prepaid tuition contract.
21-7 Sec. 54.633. STATE TREASURER. (a) Except as provided by
21-8 Subsection (d), the state treasurer is the custodian of the assets
21-9 of the fund.
21-10 (b) The state treasurer shall pay money from the fund on a
21-11 warrant drawn by the comptroller supported only on a voucher signed
21-12 by the comptroller and the executive director or their authorized
21-13 representatives.
21-14 (c) The state treasurer annually shall furnish to the board
21-15 a sworn statement of the amount of the fund's assets in the
21-16 treasurer's custody.
21-17 (d) The board may select one or more commercial banks,
21-18 depository trust companies, or other entities to serve as custodian
21-19 of all or part of the fund's assets.
21-20 Sec. 54.634. INVESTMENT OF FUND ASSETS. (a) The board
21-21 shall invest the assets of the fund.
21-22 (b) The board may contract with private professional
21-23 investment managers to assist the board in investing the assets of
21-24 the fund.
21-25 (c) The board shall develop written investment objectives
21-26 concerning the investment of assets of the fund. The objectives
21-27 may address desired rates of return, risks involved, investment
22-1 time frames, and any other relevant considerations.
22-2 (d) In investing the assets of the fund, the board shall
22-3 exercise the judgment and care, under the circumstances prevailing
22-4 at the time of the investment, that persons of ordinary prudence,
22-5 discretion, and intelligence exercise in the management of their
22-6 own affairs, not in speculation but when making a permanent
22-7 disposition of their money, considering the probable income from
22-8 the disposition and the probable safety of their capital.
22-9 Sec. 54.635. USE OF FUND ASSETS. The assets of the fund may
22-10 be used only to:
22-11 (1) pay the costs of program administration and
22-12 operations;
22-13 (2) make payments to institutions of higher education
22-14 on behalf of beneficiaries; and
22-15 (3) make refunds under prepaid tuition contracts.
22-16 Sec. 54.636. REQUEST OF RULINGS FROM INTERNAL REVENUE
22-17 SERVICE AND SECURITIES AND EXCHANGE COMMISSION. (a) The board
22-18 shall request rulings from:
22-19 (1) the Internal Revenue Service regarding the tax
22-20 consequences to purchasers and beneficiaries of participating in
22-21 the program; and
22-22 (2) the Securities and Exchange Commission regarding
22-23 the application of federal securities laws to the fund.
22-24 (b) The board shall inform a purchaser of the status of the
22-25 requests under Subsection (a) before the purchaser enters into a
22-26 prepaid tuition contract.
22-27 Sec. 54.637. EXEMPTION FROM CREDITORS' CLAIMS. Money in the
23-1 fund is exempt from claims of creditors of a purchaser or
23-2 beneficiary.
23-3 Sec. 54.638. ACTUARIAL SOUNDNESS OF FUND. (a) The board
23-4 shall administer the fund in a manner that is sufficiently
23-5 actuarially sound to meet the obligations of the program.
23-6 (b) The board shall annually evaluate the actuarial
23-7 soundness of the fund.
23-8 (c) The board may adjust the terms of subsequent prepaid
23-9 tuition contracts as necessary to ensure the actuarial soundness of
23-10 the fund.
23-11 Sec. 54.639. STATEMENT REGARDING STATUS OF PREPAID TUITION
23-12 CONTRACT. (a) Not later than December 1 of each year, the board
23-13 shall furnish without charge to each purchaser a statement of:
23-14 (1) the amount paid by the purchaser under the prepaid
23-15 tuition contract;
23-16 (2) the number of credit hours originally covered by
23-17 the contract;
23-18 (3) the number of credit hours remaining under the
23-19 contract;
23-20 (4) the amount of the refund to which the person
23-21 designated by the contract would be entitled if the contract were
23-22 terminated on the date of the statement; and
23-23 (5) any other information the board determines by rule
23-24 is necessary or appropriate.
23-25 (b) The board shall furnish a statement complying with
23-26 Subsection (a) to a purchaser or beneficiary on written request.
23-27 The board may charge a reasonable fee for each statement furnished
24-1 under this subsection.
24-2 Sec. 54.640. REPORTS. (a) Not later than December 1 of
24-3 each year, the board shall submit to the governor, lieutenant
24-4 governor, speaker of the house of representatives, Legislative
24-5 Budget Board, Legislative Audit Committee, state auditor, and Texas
24-6 Higher Education Coordinating Board a report including:
24-7 (1) the board's fiscal transactions during the
24-8 preceding fiscal year;
24-9 (2) the market and book value of the fund as of the
24-10 end of the preceding fiscal year;
24-11 (3) the asset allocations of the fund expressed in
24-12 percentages of stocks, fixed income, cash, or other financial
24-13 investments;
24-14 (4) the rate of return on the investment of the fund's
24-15 assets during the preceding fiscal year; and
24-16 (5) an actuarial valuation of the assets and
24-17 liabilities of the program, including the extent to which the
24-18 program's liabilities are unfunded.
24-19 (b) The board shall make the report described by Subsection
24-20 (a) available to purchasers of prepaid tuition contracts.
24-21 (c) Not later than December 1 of each year, the board shall
24-22 provide to the Texas Higher Education Coordinating Board complete
24-23 prepaid tuition contract sales information, including projected
24-24 enrollments of beneficiaries at institutions of higher education.
24-25 Sec. 54.641. CONFIDENTIALITY. (a) Records in the custody
24-26 of the board relating to the participation of specific purchasers
24-27 and beneficiaries in the program are confidential.
25-1 (b) Notwithstanding Subsection (a), the board may release
25-2 information described by that subsection to an institution of
25-3 higher education in which a beneficiary may enroll or is enrolled.
25-4 The institution of higher education shall keep the information
25-5 confidential.
25-6 SECTION 2. (a) As soon as possible on or after the
25-7 effective date of this Act, the governor and lieutenant governor
25-8 shall appoint the members of the Prepaid Higher Education Tuition
25-9 Board appointed by those officers. In making the appointments, the
25-10 governor shall designate one member for a term expiring February 1,
25-11 1997, and one member for a term expiring February 1, 1999. In
25-12 making the appointments, the lieutenant governor shall designate
25-13 one member for a term expiring February 1, 1997, one member
25-14 appointed from a list of persons recommended by the speaker of the
25-15 house of representatives for a term expiring February 1, 1999, and
25-16 two members for terms expiring February 1, 2001, one of whom must
25-17 be appointed from a list of persons recommended by the speaker of
25-18 the house of representatives.
25-19 (b) The legislature may appropriate to the board an amount
25-20 sufficient to cover the board's administrative costs for the state
25-21 fiscal biennium ending August 31, 1997.
25-22 (c) The board shall be prepared to enter into a prepaid
25-23 tuition contract not later than the 90th day after the date all the
25-24 members are appointed or January 1, 1996, whichever occurs later.
25-25 SECTION 3. This Act takes effect September 1, 1995.
25-26 SECTION 4. The importance of this legislation and the
25-27 crowded condition of the calendars in both houses create an
26-1 emergency and an imperative public necessity that the
26-2 constitutional rule requiring bills to be read on three several
26-3 days in each house be suspended, and this rule is hereby suspended.