S.B. No. 1760

AN ACT

relating to the administration of the Texas Save and Match Program to assist qualifying beneficiaries under the state's prepaid tuition plans and college savings plans and to the treatment of a beneficiary's assets under prepaid tuition plans and college savings plans in determining eligibility for student financial assistance and other assistance programs.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 54, Education Code, is amended by adding Subchapter I to read as follows:

SUBCHAPTER I. TEXAS SAVE AND MATCH PROGRAM

Sec. 54.801. DEFINITIONS. In this subchapter:

(1) "Beneficiary" means a beneficiary on whose behalf a purchaser enters into a prepaid tuition contract with the board under Subchapter F or H or for whom a savings trust account is opened under Subchapter G.

(2) "Board" means the Prepaid Higher Education Tuition Board.

(3) "Participating beneficiary" means a beneficiary for whom a matching account has been opened under this subchapter.

(4) "Program" means the Texas Save and Match Program established under this subchapter.

Sec. 54.802. TEXAS SAVE AND MATCH PROGRAM. (a) The board shall develop and implement the Texas Save and Match Program under which the board:

(1) opens a matching account for each eligible beneficiary, as determined by Section 54.803; and

(2) matches money paid by a purchaser under a prepaid tuition contract under Subchapter F or H on behalf of the beneficiary, or contributed to a savings trust account by an account owner under the Higher Education Savings Plan under Subchapter G on behalf of the beneficiary with matching contributions or a matching purchase of tuition units, as applicable, using money appropriated by the legislature for the program and any contributions made by any person to the beneficiary's matching account.

(b) Notwithstanding other law, for purposes of Subchapter I, Chapter 659, Government Code:

(1) the Texas Save and Match Program is considered an eligible charitable organization entitled to participate in a state employee charitable campaign under Subchapter I, Chapter 659, Government Code; and

(2) a state employee is entitled to authorize a payroll deduction for contributions to the Texas Save and Match Program as a charitable contribution under Section 659.132, Government Code.

Sec. 54.803. INITIAL ELIGIBILITY FOR PARTICIPATION IN PROGRAM. (a) To be initially eligible to participate in the program, a beneficiary, at the time a prepaid tuition contract is entered into on the beneficiary's behalf under Subchapter F or H, or a savings trust account is opened on the beneficiary's behalf under Subchapter G, as applicable, must:

(1) be:

(A) a resident of this state; or

(B) a dependent for purposes of Section 152, Internal Revenue Code of 1986, of a resident described by Paragraph (A);

(2) be younger than seven years of age; and

(3) have a household adjusted gross income, for the most recently completed tax year, that is not more than 400 percent of the federal poverty level.

(b) To determine whether a beneficiary is initially eligible to participate in the program, the board shall solicit from the purchaser who enters into a prepaid tuition contract on the beneficiary's behalf under Subchapter F or H, or the individual who opens a savings trust account on the beneficiary's behalf under Subchapter G, as applicable, at the time the purchaser or individual enters into the contract or agreement with the board and in the manner prescribed by board rule, information necessary to determine the beneficiary's eligibility.

Sec. 54.804. LIMITATIONS. (a) An eligible beneficiary may participate in the program for not more than five calendar years if the beneficiary continues to meet the criteria prescribed by Section 54.803(a). The five-year period may be consecutive or nonconsecutive. The board shall prescribe procedures for verifying a participating beneficiary's continued eligibility under this section.

(b) A participating beneficiary may receive a matching grant or a purchase of matching tuition units to the beneficiary's matching account in any particular calendar year only if at least $100 is paid under a prepaid tuition contract under Subchapter F or H or is contributed to the beneficiary's savings trust account under Subchapter G, as applicable, during that year. Contributions or purchases in excess of $500 in any calendar year are not eligible for a match under the program.

(c) Withdrawals from a matching account may be used only for qualified higher educational expenses of the participating beneficiary for whom the matching account is established. Funds in a matching account must be disbursed directly to providers of qualified higher education services and may not be disbursed directly to the beneficiary.

(d) Tuition units in a participating beneficiary's matching account may be redeemed only by the board or by a qualified institution of higher education in the manner prescribed by the board on behalf of the participating beneficiary.

(e) Any funds or unused tuition units in a matching account that are not withdrawn or redeemed by the participating beneficiary before the beneficiary's 30th birthday are forfeited and shall be returned to a pool of matching funds maintained by the board.

Sec. 54.805. MATCH RATIOS. The board shall develop a variable formula based on adjusted annual household income to determine the amount of matching funds or matching purchases of tuition units to which eligible participating beneficiaries are entitled under the program in a year. Depending on the availability of funds, for each dollar contributed to a participating beneficiary's savings trust account under Subchapter G or paid by a purchaser under a prepaid tuition contract on behalf of the beneficiary under Subchapter F or H in a calendar year, the board shall match the contribution or purchase using the following guidelines:

(1) $2, if the beneficiary's household adjusted income for the most recently completed tax year is less than or equal to 200 percent of the federal poverty level;

(2) $1, if the beneficiary's household adjusted income for the most recently completed tax year is more than 200 percent of the federal poverty level but not more than 300 percent of the federal poverty level; or

(3) 50 cents, if the beneficiary's household adjusted income for the most recently completed tax year is more than 300 percent of the federal poverty level but not more than 400 percent of the federal poverty level.

Sec. 54.806. MATCHING ACCOUNT ADMINISTRATION. (a) A matching account opened on behalf of a beneficiary under this subchapter must be accounted separately from the beneficiary's prepaid tuition contract balance or savings trust account balance.

(b) To the extent possible, money or tuition units in a participating beneficiary's matching account shall be withdrawn or redeemed before money is withdrawn or tuition units are redeemed under Subchapter F, G, or H, as applicable.

(c) Information relating to the beneficiary of a matching account, including personally identifiable information regarding the beneficiary, is confidential and is not subject to disclosure under Chapter 552, Government Code.

(d) The board shall, to the extent possible, provide with any periodic statement provided by the board in regard to a beneficiary the balance of the matching account opened on the beneficiary's behalf under this subchapter.

Sec. 54.807. EFFECT OF ACCOUNT BALANCE ON BENEFICIARY'S ELIGIBILITY FOR STUDENT FINANCIAL ASSISTANCE. Money or tuition units in a beneficiary's matching account may not be considered as available to the beneficiary, or otherwise included in the beneficiary's household income or financial resources, for purposes of determining the beneficiary's eligibility for a TEXAS grant or any other state-funded student financial assistance.

Sec. 54.808. SOLICITATION AND ACCEPTANCE OF GIFTS, GRANTS, AND DONATIONS. The board may accept gifts, grants, and donations from any public or private source for the purposes of this subchapter.

Sec. 54.809. PILOT PROJECTS UNDER PROGRAM. To fulfill the intent of the program, the board may establish pilot projects under the program in an effort to incentivize participation in the Prepaid Higher Education Tuition Program under Subchapter F, the Higher Education Savings Program under Subchapter G, and the Prepaid Tuition Unit Undergraduate Education Program under Subchapter H, including projects that incentivize participation by:

(1) awarding additional matching grants based on a beneficiary's achievement of specified academic goals;

(2) offering additional seed matching grants on the opening of a savings trust account or the purchase of a prepaid tuition contract; and

(3) providing incentives for employers to contribute matching funds to the program.

Sec. 54.810. RULES. The board shall adopt rules for the administration of this subchapter.

SECTION 2. Section 54.702, Education Code, is amended by adding Subsection (c-1) to read as follows:

(c-1) The board shall waive the amount of any enrollment fee charged by the board for a new account under this subchapter for any beneficiary whose household adjusted gross income for the most recently completed tax year is not more than 200 percent of the federal poverty level.

SECTION 3. Subchapter C, Chapter 62, Health and Safety Code, is amended by adding Section 62.1012 to read as follows:

Sec. 62.1012. EXCLUSION OF ASSETS IN PREPAID TUITION PROGRAMS AND HIGHER EDUCATION SAVINGS PLANS. For purposes of determining whether a child meets family income and resource requirements for eligibility for the child health plan, the commission may not consider as income or resources a right to assets held in or a right to receive payments or benefits under:

(1) any fund or plan established under Subchapter F, G, H, or I, Chapter 54, Education Code, including an interest in a savings trust account, prepaid tuition contract, or related matching account; or

(2) any qualified tuition program of any state that meets the requirements of Section 529, Internal Revenue Code of 1986.

SECTION 4. Subchapter A, Chapter 31, Human Resources Code, is amended by adding Section 31.0039 to read as follows:

Sec. 31.0039. EXCLUSION OF ASSETS IN PREPAID TUITION PROGRAMS AND HIGHER EDUCATION SAVINGS PLANS. For purposes of determining the amount of financial assistance granted to an individual under this chapter for the support of dependent children or determining whether the family meets household income and resource requirements for financial assistance under this chapter, the department may not consider the right to assets held in or the right to receive payments or benefits under:

(1) any fund or plan established under Subchapter F, G, H, or I, Chapter 54, Education Code, including an interest in a savings trust account, prepaid tuition contract, or related matching account; or

(2) any qualified tuition program of any state that meets the requirements of Section 529, Internal Revenue Code of 1986.

SECTION 5. Subchapter B, Chapter 32, Human Resources Code, is amended by adding Section 32.02611 to read as follows:

Sec. 32.02611. EXCLUSION OF ASSETS IN PREPAID TUITION PROGRAMS AND HIGHER EDUCATION SAVINGS PLANS. (a) Except as provided by Subsection (b), in determining eligibility and need for medical assistance, the department may not consider as assets or resources a right to assets held in or a right to receive payments or benefits under:

(1) any fund or plan established under Subchapter F, G, H, or I, Chapter 54, Education Code, including an interest in a savings trust account, prepaid tuition contract, or related matching account; or

(2) any qualified tuition program of any state that meets the requirements of Section 529, Internal Revenue Code of 1986.

(b) In determining eligibility and need for medical assistance for an applicant who may be eligible on the basis of the applicant's eligibility for medical assistance for the aged, blind, or disabled under 42 U.S.C. Section 1396a(a)(10), as amended, the department may consider as assets or resources a right to assets held in or a right to receive payments or benefits under any fund, plan, or tuition program described by Subsection (a).

(c) Notwithstanding Subsection (b), the department shall seek a federal waiver authorizing the department to exclude, for purposes of determining the eligibility of an applicant described by that subsection, the right to assets held in or a right to receive payments or benefits under any fund, plan, or tuition program described by Subsection (a) if the fund, plan, or tuition program was established before the 21st birthday of the beneficiary of the fund, plan, or tuition program.

SECTION 6. Section 54.7521, Education Code, is repealed.

SECTION 7. The Prepaid Higher Education Tuition Board shall adopt rules as required by Subchapter I, Chapter 54, Education Code, as added by this Act, not later than November 1, 2009.

SECTION 8. Subchapter I, Chapter 54, Education Code, as added by this Act, applies only to a prepaid tuition contract purchased for a beneficiary under Subchapter F or H, Chapter 54, Education Code, or a savings trust account opened for a beneficiary under Subchapter G, Chapter 54, Education Code, on or after January 1, 2010.

SECTION 9. The Texas Save and Match Program is entitled to participate in the state employee charitable campaign conducted during the autumn of 2009 without regard to any limitation on the time during which an organization must apply to participate in the campaign.

SECTION 10. If before implementing any provision of this Act a state agency determines that a waiver or authorization from a federal agency is necessary for implementation of that provision, the agency affected by the provision shall request the waiver or authorization and may delay implementing that provision until the waiver or authorization is granted.

SECTION 11. The changes in law made by this Act apply to a person who receives health benefits coverage under Chapter 62, Health and Safety Code, financial assistance under Chapter 31, Human Resources Code, or medical assistance under Chapter 32, Human Resources Code, on or after the effective date of this Act, regardless of the date on which eligibility for coverage or assistance was initially determined.

SECTION 12. This Act takes effect September 1, 2009.

______________________________ ______________________________

President of the Senate Speaker of the House

I hereby certify that S.B. No. 1760 passed the Senate on April 22, 2009, by the following vote: Yeas 30, Nays 0; and that the Senate concurred in House amendment on May 29, 2009, by the following vote: Yeas 31, Nays 0.

______________________________ Secretary of the Senate

I hereby certify that S.B. No. 1760 passed the House, with amendment, on May 26, 2009, by the following vote: Yeas 146, Nays 0, one present not voting.

______________________________ Chief Clerk of the House

Approved:

______________________________

Date

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Governor