By: Shapiro S.B. No. 1941

(In the Senate - Filed March 12, 2009; March 24, 2009, read first time and referred to Committee on Higher Education; April 15, 2009, reported adversely, with favorable Committee Substitute by the following vote: Yeas 5, Nays 0; April 15, 2009, sent to printer.)

COMMITTEE SUBSTITUTE FOR S.B. No. 1941 By: Duncan

A BILL TO BE ENTITLED

AN ACT

relating to the administration and operation of the state's programs for prepaying or saving toward the costs of attending an institution of higher education.

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

SECTION 1. Section 54.603, Education Code, is amended to read as follows:

Sec. 54.603. SUNSET PROVISION. The Prepaid Higher Education Tuition Board is subject to Chapter 325, Government Code (Texas Sunset Act). Unless continued in existence as provided by that chapter, the board is abolished and the programs established under this subchapter and under Subchapters [Subchapter] G and H terminate September 1, 2019.

SECTION 2. Section 54.751, Education Code, is amended by amending Subdivisions (2) and (6) and adding Subdivision (3-a) to read as follows:

(2) "Beneficiary" means the person designated under a prepaid tuition contract as the person entitled to apply one or more tuition units purchased under the contract to the payment of the person's undergraduate tuition and required fees at a general academic teaching institution, two-year institution of higher education, private or independent institution of higher education, career school, or accredited out-of-state institution of higher education.

(3-a) "Career school" means a career school or college as defined by Section 132.001 that offers a two-year associate degree as approved by the Texas Higher Education Coordinating Board.

(6) "Prepaid tuition contract" means a contract under which a person purchases from the board on behalf of a beneficiary one or more tuition units that the beneficiary is entitled to apply to the payment of the beneficiary's undergraduate tuition and required fees at a general academic teaching institution, two-year institution of higher education, private or independent institution of higher education, career school, or accredited out-of-state institution of higher education.

SECTION 3. Section 54.7521, Education Code, is amended to read as follows:

Sec. 54.7521. TEXAS SAVE AND MATCH PROGRAM. (a) The board by rule shall develop and shall implement the Texas Save and Match program under which money paid by a purchaser under a prepaid tuition contract may be matched with:

(1) contributions made by any person to the Texas Save and Match program and used to purchase additional tuition units on behalf of beneficiaries selected as provided by board rule; and

(2) money appropriated by the legislature for the Texas Save and Match program and used to purchase additional tuition units on behalf of beneficiaries:

(A) whose annual household income is below the state median family income, adjusted for household size;

(B) whose enrollment in the program would, as determined by the board, promote the participation goals and targets of the most recent revision of "Closing the Gaps," the state's master plan for higher education; or

(C) who meet other criteria established by board rule.

(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.

SECTION 4. Subsection (a), Section 54.753, Education Code, is amended to read as follows:

(a) Under the program, a purchaser may prepay the costs of all or a portion of a beneficiary's undergraduate tuition and required fees at a general academic teaching institution, two-year institution of higher education, private or independent institution of higher education, career school, or accredited out-of-state institution of higher education by entering into a prepaid tuition contract with the board to purchase one or more tuition units of a type described by this section at the applicable price established by the board for that type of unit for the year in which the unit is purchased. The portion of the beneficiary's undergraduate tuition and required fees for which a tuition unit may be redeemed at a particular general academic teaching institution or two-year institution of higher education is assigned to the tuition unit at the time of purchase, and the tuition unit may be redeemed to pay that portion of the tuition and fees at the general academic teaching institution or two-year institution of higher education in any academic year in which the unit is redeemed in accordance with this subchapter. The purchaser may purchase one type of unit or a combination of two or three types of units.

SECTION 5. Subsection (d), Section 54.754, Education Code, is amended to read as follows:

(d) If a beneficiary redeems fewer tuition units of the type or combination of types necessary to pay the total cost of the beneficiary's tuition and required fees at the general academic teaching institution, two-year institution of higher education, private or independent institution of higher education, career school, or accredited out-of-state institution of higher education at which the beneficiary enrolls, the beneficiary is responsible for paying the amount of the difference between the amount of tuition and required fees for which the beneficiary pays through the redemption of one or more tuition units and the total cost of the beneficiary's tuition and required fees at the institution.

SECTION 6. Subsections (a), (b), (c), (f), and (g), Section 54.765, Education Code, are amended to read as follows:

(a) Except as provided by Subsection (h) [(e)], the comptroller is the custodian of the assets of the fund.

(b) The comptroller shall pay money from the fund [on a warrant drawn by the comptroller] supported only by [on] a voucher signed by the comptroller or the comptroller's authorized representative. The comptroller may designate the plan manager as the comptroller's authorized representative to pay expenditures or transfer funds under this section and Sections 54.766 and 54.767.

(c) When a beneficiary enrolls at a general academic teaching institution or two-year institution of higher education, on written authorization from the purchaser of the tuition unit or units for that beneficiary, the comptroller or the comptroller's authorized representative shall transfer to the institution an amount equal to the lesser of:

(1) the sum of:

(A) the total purchase price of the tuition unit or units the beneficiary redeems for the semester or other academic term; and

(B) the amount determined under Subsection (d); or

(2) an amount equal to 101 percent of the amount of tuition and required fees covered by the tuition units being redeemed.

(f) When a beneficiary enrolls at a private or independent institution of higher education, career school, or accredited out-of-state institution of higher education, on written authorization from the purchaser of the tuition unit or units for that beneficiary, the comptroller or the comptroller's authorized representative shall transfer to the institution the lesser of:

(1) an amount equal to the current cost of the tuition and required fees that would be covered by redemption of the number and type of tuition units the beneficiary is redeeming if the beneficiary were redeeming the unit or units at a general academic teaching institution or two-year institution of higher education as follows:

(A) for a Type I unit, at the general academic teaching institution that[, in the sales year in which the unit was purchased,] had the highest tuition and required fee cost;

(B) for a Type II unit, at a general academic teaching institution that[, in the sales year in which the unit was purchased,] had tuition and required fee cost at the weighted average; and

(C) for a Type III unit, at a two-year institution of higher education that[, in the sales year in which the unit was purchased,] had tuition and required fee cost at the weighted average; or

(2) an amount equal to the total purchase price of the tuition unit or units the beneficiary redeems for the semester or other academic term plus the portion of the total return on assets of the fund attributable to that amount.

(g) The comptroller annually shall provide to the board a sworn statement of the amount of the fund's assets in the comptroller's or plan manager's custody. The plan manager shall provide to the comptroller a quarterly report of all funds distributed during the previous quarter. The comptroller may require more frequent reports or may request that the plan manager provide any additional information at any time necessary to ensure that the fund's assets are adequately protected.

SECTION 7. Section 54.767, Education Code, is amended to read as follows:

Sec. 54.767. USE OF FUND ASSETS. The assets of the fund may be used only to:

(1) pay the costs of program administration and operations;

(2) make payments to general academic teaching institutions, two-year institutions of higher education, private or independent institutions of higher education, career schools, and accredited out-of-state institutions of higher education on behalf of beneficiaries; and

(3) make refunds under prepaid tuition contracts.

SECTION 8. Subsection (b), Section 54.7671, Education Code, is amended to read as follows:

(b) For purposes of a transfer of money from an account under this subchapter, the value of the account at the time of transfer is the lesser of:

(1) an amount equal to the cost, at the time of the transfer, of the tuition and required fees that would be covered by redemption of the number and type of tuition units to be transferred from the account if the beneficiary were redeeming the units at a general academic teaching institution or two-year institution of higher education as follows:

(A) for a Type I unit, at the general academic teaching institution that[, in the sales year in which the unit was purchased,] had the highest tuition and required fee cost;

(B) for a Type II unit, at a general academic teaching institution that[, in the sales year in which the unit was purchased,] had tuition and required fee cost at the weighted average; and

(C) for a Type III unit, at a two-year institution of higher education that[, in the sales year in which the unit was purchased,] had tuition and required fee cost at the weighted average; or

(2) an amount equal to the total purchase price of the tuition units to be transferred from the account, plus the portion of the total return on assets of the fund attributable to that amount.

SECTION 9. Subsections (b) and (c), Section 54.769, Education Code, are amended to read as follows:

(b) The rights of a purchaser, beneficiary, or successor in interest of a purchaser or beneficiary in and under a prepaid tuition contract and the payment of tuition and required fees for a beneficiary under a prepaid tuition contract to a general academic teaching institution, two-year institution of higher education, private or independent institution of higher education, career school, or accredited out-of-state institution of higher education under this chapter are exempt from attachment, levy, garnishment, execution, and seizure for the satisfaction of any debt, judgment, or claim against a purchaser, beneficiary, or successor in interest of a purchaser or beneficiary.

(c) A claim or judgment against a purchaser, beneficiary, or successor in interest of a purchaser or beneficiary does not impair or entitle the claim or judgment holder to assert or enforce a lien against:

(1) the rights of a purchaser, beneficiary, or successor in interest of a purchaser or beneficiary in and under a prepaid tuition contract; or

(2) the right of a beneficiary to the payment of tuition and required fees to a general academic teaching institution, two-year institution of higher education, private or independent institution of higher education, career school, or accredited out-of-state institution of higher education under a prepaid tuition contract.

SECTION 10. Subsection (a), Section 54.774, Education Code, is amended to read as follows:

(a) A prepaid tuition contract remains in effect after the program is terminated if, when the program is terminated, the beneficiary:

(1) has been accepted by or is enrolled at a general academic teaching institution, two-year institution of higher education, private or independent institution of higher education, career school, or accredited out-of-state institution of higher education; or

(2) is projected to graduate from high school not later than the third anniversary of the date the program is terminated.

SECTION 11. Subsection (b), Section 54.775, Education Code, is amended to read as follows:

(b) Notwithstanding Subsection (a), the board may release information described by that subsection to a general academic teaching institution, two-year institution of higher education, private or independent institution of higher education, career school, or accredited out-of-state institution of higher education at which a beneficiary may enroll or is enrolled. The institution shall keep the information confidential.

SECTION 12. 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 13. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2009.

* * * * *