By Ellis                                        S.B. No. 1299

      75R6467 JSA-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to a program to authorize prepaid tuition savings

 1-3     accounts.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Subchapter F, Chapter 54, Education Code, is

 1-6     amended by adding Section 54.6255 to read as follows:

 1-7           Sec.  54.6255.  TUITION SAVINGS PLAN.  (a)  In addition to

 1-8     the plans listed in Section 54.622, the board shall establish and

 1-9     administer a tuition savings plan as provided by this section.

1-10           (b)  The plan shall permit a person to establish an account

1-11     in the fund for the benefit of a designated individual beneficiary

1-12     who is younger than 18 years of age when the account is

1-13     established, for the purpose of prepaying tuition for the

1-14     beneficiary to attend a public or private institution of higher

1-15     education.  The person may make deposits to the account at any

1-16     time, except that the board may prohibit deposits to an account

1-17     more frequently than once a month and may require that a deposit

1-18     equal or exceed a specified minimum amount, which may not be less

1-19     than $25.

1-20           (c)  The board shall credit to each account established under

1-21     this section at least monthly the income earned by the fund

1-22     attributable to the amount in the account and shall deduct from the

1-23     current balance any amount paid out from the account. In

1-24     determining the income attributable to the amount in the account,

 2-1     the board shall take into account the appropriate proportion of the

 2-2     board's costs of program administration and operations attributable

 2-3     to the account.

 2-4           (d)  The beneficiary of the account may apply any portion of

 2-5     the current balance in the account to pay tuition and required fees

 2-6     at any accredited public or private institution of higher education

 2-7     in or outside this state at which the beneficiary is enrolled.  The

 2-8     board shall establish payment procedures to ensure that the money

 2-9     is applied to tuition and fees as required by this subsection.

2-10           (e)  The person who established the account may close the

2-11     account or change the beneficiary of the account, but only if:

2-12                 (1)  the beneficiary or, if the beneficiary is a minor,

2-13     the beneficiary's parent or guardian consents in writing to the

2-14     closing or change; or

2-15                 (2)  the beneficiary dies.

2-16           (f)  If an account is closed, the board shall refund to the

2-17     person who established the account the current value of the

2-18     account, less any amount required by federal law to be retained or

2-19     withheld as a penalty or tax payment.

2-20           (g)  The person who established the account may apply all or

2-21     part of the current value of the account to the purchase of a plan

2-22     listed in Section 54.622 if that plan is established for the same

2-23     beneficiary.

2-24           (h)  The board by rule shall prescribe procedures for the

2-25     person establishing an account to transfer all rights of the person

2-26     over the account to another person, including the beneficiary, or

2-27     to name a successor to take the person's place if the person dies

 3-1     or becomes incapacitated or, if the person is not an individual,

 3-2     ceases to exist.  If the person establishing the account dies,

 3-3     becomes incapacitated, or ceases to exist without transferring the

 3-4     person's rights over the account or designating a successor or if

 3-5     the successor is not available or is unwilling or unable to serve,

 3-6     the beneficiary or the beneficiary's parent or guardian may

 3-7     exercise the rights of the person who established the account,

 3-8     except that the right to close the account may not be exercised

 3-9     during the incapacity of the person.

3-10           (i)  An account may be maintained as long as the beneficiary

3-11     is living.

3-12           (j)  If the program is abolished, the board shall refund to

3-13     the person who established the account the current value of the

3-14     account when the refund is made.

3-15           SECTION 2.  (a)  This Act takes effect September 1, 1997.

3-16           (b)  The Prepaid Higher Education Tuition Board shall

3-17     establish the program provided by Section 56.6255, Education Code,

3-18     as added by this Act, and begin establishing accounts under that

3-19     section not later than January 1, 1998.

3-20           SECTION 3.  The importance of this legislation and the

3-21     crowded condition of the calendars in both houses create an

3-22     emergency and an imperative public necessity that the

3-23     constitutional rule requiring bills to be read on three several

3-24     days in each house be suspended, and this rule is hereby suspended.