82R2031 KSD-F

By: Watson S.B. No. 1325

A BILL TO BE ENTITLED

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) "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 money contributed to a savings trust account by an account owner under the higher education savings plan under Subchapter G or paid by a purchaser under a prepaid tuition contract under Subchapter F or H on behalf of an eligible beneficiary may be matched with:

(1) contributions made by any person to the program for use in making additional savings trust account contributions under Subchapter G or in prepaying additional tuition and fees or purchasing additional tuition units under prepaid tuition contracts under Subchapters F and H on behalf of eligible beneficiaries selected as provided by board rule; or

(2) money appropriated by the legislature for the program to be used for the purposes described by Subdivision (1).

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

(1) the 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 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 of this state; and

(2) have a household adjusted gross income, for the most recently completed tax year, that is not more than 120 percent of the state median household adjusted gross income.

(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 from 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) The board by rule shall prescribe:

(1) the maximum number of years for which a beneficiary is eligible for matching funds under the program; and

(2) the maximum annual amount of contributions to a savings trust account under Subchapter G or of payments under a prepaid tuition contract under Subchapter F or H that are eligible for a match under the program.

(b) In determining the amount of matching funds to which eligible beneficiaries are entitled under the program, the board by rule may adopt match ratios under which matching fund amounts are awarded in inverse relation to beneficiaries' household adjusted gross incomes.

(c) Withdrawals from a matching account for a savings trust account may be used only for qualified higher education expenses as defined by Subchapter G of the eligible beneficiary for whom the matching account is established. Funds in the matching account must be disbursed directly to providers of qualified higher education services and may not be disbursed directly to the beneficiary.

(d) Prepaid tuition and fees or tuition units in a matching account for the beneficiary of a prepaid tuition contract 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 beneficiary.

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

Sec. 54.805. MATCHING ACCOUNT ADMINISTRATION. (a) A matching account established on behalf of a beneficiary under this subchapter must be accounted for separately from the beneficiary's prepaid tuition contract balance or savings trust account balance.

(b) To the extent possible, money, prepaid tuition and fees, or tuition units in a beneficiary's matching account shall be withdrawn or redeemed before money is withdrawn from the beneficiary's savings trust account under Subchapter G or prepaid tuition and fees or tuition units are redeemed from the prepaid tuition contract for the beneficiary under Subchapter F or H.

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

(d) The board shall, to the extent possible, provide with any periodic statement for a savings trust account or prepaid tuition contract the balance of the matching account opened under this subchapter on behalf of the beneficiary of the account or contract.

Sec. 54.806. EFFECT OF ACCOUNT BALANCE ON BENEFICIARY'S ELIGIBILITY FOR STUDENT FINANCIAL ASSISTANCE. The balance of a beneficiary's matching account under this subchapter may not be considered as available to the beneficiary, or otherwise included in the beneficiary's household income or other financial resources, for purposes of determining the beneficiary's eligibility for a TEXAS grant or any other state-funded student financial assistance.

Sec. 54.807. GIFTS, GRANTS, AND DONATIONS. The board may solicit and accept gifts, grants, and donations from any public or private source for the purposes of this subchapter.

Sec. 54.808. 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;

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

(4) partnering with public school districts and educational agencies to create a program information portal designed to increase program awareness and accessibility among school districts, parents, and students; and

(5) partnering with financial institutions or prepaid card providers to develop user interface opportunities that increase the ease and efficiency with which contributions or purchases can be made under Subchapter F, G, or H.

Sec. 54.809. PROGRAM PROMOTION AND MARKETING; REPORT. (a) The board shall coordinate with community members throughout the state, including members of the medical, educational, nonprofit, and business communities, to promote and market the program to further the goals and targets of the most recent revision of "Closing the Gaps," the state's master plan for higher education.

(b) Not later than December 1 of each year, the board shall submit to the governor, lieutenant governor, speaker of the house of representatives, Legislative Budget Board, Legislative Audit Committee, state auditor, and Texas Higher Education Coordinating Board a report detailing the collaborative promotion and marketing efforts under this section. The board may include the report in the report required by Section 54.777.

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. Section 54.777(a), Education Code, is amended to read as follows:

(a) Not later than December 1 of each year, the board shall submit to the governor, lieutenant governor, speaker of the house of representatives, Legislative Budget Board, Legislative Audit Committee, state auditor, and Texas Higher Education Coordinating Board a report including:

(1) the fiscal transactions of the board and the plan manager under this subchapter during the preceding fiscal year;

(2) the market and book value of the fund as of the end of the preceding fiscal year;

(3) the asset allocations of the fund expressed in percentages of stocks, fixed income, cash, or other financial investments;

(4) the rate of return on the investment of the fund's assets during the preceding fiscal year; [and]

(5) an actuarial valuation of the assets and liabilities of the program, including the extent to which the program's liabilities are unfunded; and

(6) a breakdown of the following information relating to purchasers and beneficiaries of prepaid tuition contracts entered into during the preceding fiscal year:

(A) the annual gross household income of purchasers;

(B) the highest educational level achieved by purchasers; and

(C) the race or ethnicity of beneficiaries.

SECTION 4. 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 5. 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 6. 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), 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 7. Section 54.7521, Education Code, is repealed.

SECTION 8. The Prepaid Higher Education Tuition Board shall adopt the initial rules required by Subchapter I, Chapter 54, Education Code, as added by this Act, not later than November 1, 2011. For that purpose, the board may adopt the initial rules in the manner provided by law for the adoption of emergency rules.

SECTION 9. The Texas Save and Match Program established by this Act is an expansion of the Texas Save and Match program created under Section 54.7521, Education Code. On and after the effective date of Section 7 of this Act, the 501(c)(3) foundation created under Section 54.7521, Education Code, to provide matching funds under that program may continue to accept tax-deductible donations for the purpose of providing matching funds under the program established by this Act.

SECTION 10. Subchapter I, Chapter 54, Education Code, as added by this Act, applies to a prepaid tuition contract purchased for a beneficiary under Subchapter H, Chapter 54, Education Code, regardless of whether the prepaid tuition contract was purchased before, on, or after the effective date of this Act. 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, 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, 2012.

SECTION 11. 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 12. 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 13. (a) Except as provided by Subsection (b) of this section, this Act takes effect September 1, 2011.

(b) Section 7 of this Act takes effect January 1, 2012.