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A BILL TO BE ENTITLED
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AN ACT
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relating to the administration and operation of the state's |
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programs for paying, prepaying, or saving toward the costs of |
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attending an institution of higher education, including the powers |
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and duties of the Prepaid Higher Education Tuition Board. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 54.602, Education Code, is amended by |
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adding Subsection (c) to read as follows: |
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(c) Unless otherwise specified, the provisions of this |
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subchapter concerning the following requirements applicable to the |
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board under this subchapter also apply to the board for purposes of |
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Subchapters G, H, I, and J of this chapter: |
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(1) membership; |
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(2) appointments of members; |
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(3) removal of members; |
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(4) ethics policy; |
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(5) training; |
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(6) board officers; |
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(7) compensation; |
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(8) meetings; |
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(9) public interest information and complaints; |
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(10) use of technology; |
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(11) program and facility accessibility; |
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(12) executive director; and |
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(13) staff. |
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SECTION 2. Section 54.641(a), Education Code, is amended to |
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read as follows: |
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(a) Not later than January 31 [1] of each year, the board |
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shall furnish without charge to each purchaser a statement of: |
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(1) the amount paid by the purchaser under the prepaid |
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tuition contract; |
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(2) the number of credit hours originally covered by |
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the contract; |
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(3) the number of credit hours remaining under the |
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contract; and |
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(4) any other information the board determines by rule |
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is necessary or appropriate. |
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SECTION 3. Section 54.701(8), Education Code, is amended to |
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read as follows: |
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(8) "Qualified higher education expenses" has the |
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meaning assigned by [means tuition, fees, or expenses for books,
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supplies, and equipment required for the enrollment or attendance
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of an individual at an eligible educational institution, the costs
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of room and board, and any other higher education expenses that may
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be permitted under] Section 529, Internal Revenue Code of 1986, as |
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amended. |
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SECTION 4. Section 54.702(a), Education Code, is amended to |
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read as follows: |
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(a) The board shall: |
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(1) develop and implement the plan in a manner |
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consistent with this subchapter; |
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(2) select the financial institution or institutions |
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to serve as plan manager; and |
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(3) adopt rules to implement this subchapter |
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[governing withdrawal of money from a savings trust account and
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develop policies and penalties for nonqualified withdrawals]. |
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SECTION 5. The heading to Section 54.708, Education Code, |
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is amended to read as follows: |
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Sec. 54.708. CONTRIBUTIONS AND WITHDRAWALS[; PENALTY FOR
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NONQUALIFIED WITHDRAWAL]. |
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SECTION 6. Section 54.708(b), Education Code, is amended to |
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read as follows: |
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(b) An account owner may withdraw all or part of the balance |
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of an account on prior notice as authorized by board rules. [The
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board shall adopt rules governing the determination whether a
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withdrawal is a qualified withdrawal or a nonqualified withdrawal.
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The rules may require an account owner requesting to make a
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qualified withdrawal to provide a certification of qualified higher
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education expenses.] |
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SECTION 7. Sections 54.751(2), (6), and (7), Education |
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Code, are amended to read as follows: |
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(2) "Beneficiary" means the person designated under a |
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prepaid tuition contract as the person entitled to apply one or more |
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tuition units purchased under the contract to the payment of the |
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person's undergraduate tuition and required fees at a general |
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academic teaching institution, medical and dental unit, two-year |
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institution of higher education, private or independent |
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institution of higher education, career school, or accredited |
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out-of-state institution of higher education. |
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(6) "Prepaid tuition contract" means a contract under |
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which a person purchases from the board on behalf of a beneficiary |
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one or more tuition units that the beneficiary is entitled to apply |
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to the payment of the beneficiary's undergraduate tuition and |
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required fees at a general academic teaching institution, medical |
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and dental unit, two-year institution of higher education, private |
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or independent institution of higher education, career school, or |
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accredited out-of-state institution of higher education. |
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(7) "Medical and dental unit," "private ["Private] or |
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independent institution of higher education," "public junior |
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college," "public state college," "public technical institute," |
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and "recognized accrediting agency" have the meanings assigned by |
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Section 61.003. |
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SECTION 8. Section 54.752(b), Education Code, is amended to |
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read as follows: |
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(b) In addition to the board's powers assigned under |
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Subchapters F and G, the board has the powers necessary or proper to |
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carry out this subchapter, including the power to: |
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(1) adopt rules to implement this subchapter; |
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(2) sue and be sued; |
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(3) enter into contracts and other necessary |
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instruments; |
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(4) enter into agreements or other transactions with |
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the United States, state agencies, general academic teaching |
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institutions, medical and dental units, two-year institutions of |
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higher education, and local governments; |
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(5) appear on its own behalf before governmental |
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agencies; |
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(6) contract for necessary goods and services, |
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including specifying in the contract duties to be performed by the |
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provider of a good or service that are a part of or are in addition |
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to the person's primary duties under the contract; |
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(7) engage the services of private consultants, |
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actuaries, trustees, records administrators, managers, legal |
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counsel, and auditors for administrative or technical assistance; |
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(8) solicit and accept gifts, grants, loans, and other |
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aid from any source or participate in any other way in any |
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government program to carry out this subchapter; |
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(9) impose administrative fees; |
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(10) contract with a person to market the program; |
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(11) purchase liability insurance covering the board |
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and employees and agents of the board; and |
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(12) establish other policies, procedures, and |
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eligibility criteria to implement this subchapter. |
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SECTION 9. Sections 54.753(a), (b), (c), (d), and (e), |
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Education Code, are amended to read as follows: |
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(a) Under the program, a purchaser may prepay the costs of |
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all or a portion of a beneficiary's undergraduate tuition and |
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required fees at a general academic teaching institution, medical |
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and dental unit, two-year institution of higher education, private |
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or independent institution of higher education, career school, or |
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accredited out-of-state institution of higher education by |
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entering into a prepaid tuition contract with the board to purchase |
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one or more tuition units of a type described by this section at the |
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applicable price established by the board for that type of unit for |
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the year in which the unit is purchased. The portion of the |
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beneficiary's undergraduate tuition and required fees for which a |
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tuition unit may be redeemed at a particular general academic |
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teaching institution, medical and dental unit, or two-year |
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institution of higher education is assigned to the tuition unit at |
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the time of purchase, and the tuition unit may be redeemed to pay |
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that portion of the tuition and fees at the general academic |
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teaching institution, medical and dental unit, or two-year |
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institution of higher education in any academic year in which the |
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unit is redeemed in accordance with this subchapter. The purchaser |
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may purchase one type of unit or a combination of two or three types |
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of units. |
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(b) The assigned value of a tuition unit, purchased as |
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provided by this section, when used to pay the cost of tuition and |
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required fees at a general academic teaching institution, medical |
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and dental unit, or two-year institution of higher education, is |
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equal to one percent of the amount necessary for the academic year |
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in which the unit is redeemed to cover the applicable cost of |
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undergraduate resident tuition and required fees for one academic |
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year consisting of 30 semester credit hours as follows: |
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(1) for a Type I tuition unit, the cost of |
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undergraduate resident tuition and required fees charged by the |
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general academic teaching institution or medical and dental unit, |
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as applicable, with the highest such tuition and fee costs, |
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determined as provided by Subsection (d); |
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(2) for a Type II tuition unit, the weighted average |
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undergraduate resident tuition and required fees charged by general |
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academic teaching institutions or medical and dental units, as |
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applicable, determined as provided by Subsection (e); and |
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(3) for a Type III tuition unit, the weighted average |
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undergraduate resident tuition and required fees of two-year |
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institutions of higher education, determined as provided by |
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Subsection (f). |
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(c) Each year, the board shall establish the price at which |
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each type of tuition unit may be purchased during the next sales |
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period and the percentage of the total cost of undergraduate |
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resident tuition and required fees for one academic year consisting |
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of 30 semester credit hours for which each type of tuition unit may |
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be redeemed at each general academic teaching institution, medical |
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and dental unit, and two-year institution. The percentage shall be |
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based on the total cost of required tuition and fees at a particular |
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general academic teaching institution, medical and dental unit, or |
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two-year institution of higher education in relation to the amount |
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determined for the institution or unit with the highest cost or |
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weighted average cost, as applicable. The purchase price |
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established for each type of unit must be equal to the applicable |
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cost of tuition and required fees as determined under this section |
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for the most recent academic year that began before the beginning of |
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the sales period. The sales period to which those prices apply |
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expires on the first anniversary of the date the units become |
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available for purchase at the prices established for that year. On |
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or before June 1, each general academic teaching institution, |
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medical and dental unit, and two-year institution of higher |
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education shall annually provide information for the upcoming fall |
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semester to the board in a format requested by the board, to assist |
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the board in determining tuition unit sales prices for the upcoming |
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sales period and redemption values for the upcoming academic year. |
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(d) The board shall base the purchase price of a Type I |
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tuition unit on one percent of the cost of the undergraduate |
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resident tuition and required fees for the applicable academic year |
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at the general academic teaching institution or medical and dental |
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unit, as applicable, with the highest such tuition and fee cost for |
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that academic year. |
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(e) The board shall base the purchase price of a Type II |
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tuition unit on one percent of the cost of the weighted average |
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general academic teaching institution or medical and dental unit, |
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as applicable, undergraduate resident tuition and required fees for |
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the applicable academic year. That cost is determined by: |
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(1) for each general academic teaching institution or |
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medical and dental unit, as applicable, multiplying the average |
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amount of the institution's or unit's undergraduate resident |
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tuition and required fees for an academic year consisting of 30 |
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semester credit hours by the number of full-time equivalent |
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undergraduate resident students at that institution or unit; |
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(2) adding together the products computed under |
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Subdivision (1) for each institution or unit; and |
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(3) dividing the sum determined under Subdivision (2) |
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by the total number of full-time equivalent undergraduate resident |
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students at all general academic teaching institutions or medical |
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and dental units, as applicable. |
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SECTION 10. Sections 54.754(a), (b), (c), and (d), |
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Education Code, are amended to read as follows: |
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(a) In accordance with this subchapter, when a beneficiary |
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under a prepaid tuition contract redeems one or more tuition units |
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to pay costs of tuition and required fees, the board shall apply |
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money in the fund, in the amount provided by Section 54.765 to pay |
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all or the applicable portion of the costs of the beneficiary's |
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tuition and required fees at the general academic teaching |
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institution, medical and dental unit, two-year institution of |
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higher education, private or independent institution of higher |
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education, or accredited out-of-state institution of higher |
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education in which the beneficiary enrolls. Subject to Subsection |
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(b)(2) and the other provisions of this section, a beneficiary may |
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redeem any type of tuition unit for attendance at an institution or |
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unit described by this section. A general academic teaching |
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institution, medical and dental unit, or two-year institution of |
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higher education shall accept the amount transferred to the |
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institution or unit under Section 54.765(c) when the unit or units |
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are redeemed as payment for all or the applicable portion of the |
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beneficiary's tuition and required fees. |
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(b) To pay for the entire cost of undergraduate resident |
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tuition and required fees for an academic year consisting of 30 |
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semester credit hours, redemption of 100 Type I tuition units is |
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required at the general academic teaching institution or medical |
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and dental unit, as applicable, with the highest tuition and fee |
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cost as described by Section 54.753(d), redemption of 100 Type II |
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tuition units is required at a general academic teaching |
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institution or medical and dental unit, as applicable, with the |
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applicable tuition and fee cost at the weighted average as |
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described by Subsection (e) of that section, and redemption of 100 |
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Type III units is required at a two-year institution of higher |
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education with the applicable tuition and fee cost at the weighted |
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average as described by Subsection (f) of that section. The number |
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of tuition units that must be redeemed to pay for the entire cost of |
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tuition and required fees for an academic year at another general |
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academic teaching institution, medical and dental unit, or two-year |
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institution of higher education may be higher or lower: |
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(1) in proportion to the amount that the cost of |
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tuition and required fees at that institution or unit is higher or |
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lower than the amount determined for the institution or unit with |
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the highest cost or weighted average cost, as applicable; or |
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(2) if a more or less valuable type of tuition unit is |
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redeemed. |
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(c) To assist purchasers in determining the number of |
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tuition units a beneficiary must redeem to cover the costs of |
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tuition and required fees at general academic teaching |
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institutions, medical and dental units, and two-year institutions |
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of higher education, each year the board shall prepare a tuition |
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unit redemption chart and shall post the chart on an Internet |
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website. The chart must show for each general academic teaching |
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institution, for each medical and dental unit, and for each |
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two-year institution of higher education the number of each type of |
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units purchased that year that would be required to cover the cost |
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of tuition and required fees, based on an academic year consisting |
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of 30 semester credit hours. |
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(d) If a beneficiary redeems fewer tuition units of the type |
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or combination of types necessary to pay the total cost of the |
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beneficiary's tuition and required fees at the general academic |
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teaching institution, medical and dental unit, two-year |
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institution of higher education, private or independent |
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institution of higher education, career school, or accredited |
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out-of-state institution of higher education at which the |
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beneficiary enrolls, the beneficiary is responsible for paying the |
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amount of the difference between the amount of tuition and required |
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fees for which the beneficiary pays through the redemption of one or |
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more tuition units and the total cost of the beneficiary's tuition |
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and required fees at the institution or unit. |
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SECTION 11. Section 54.756(e), Education Code, is amended |
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to read as follows: |
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(e) Notwithstanding any provision of Subchapter B, the |
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tuition and required fees charged by a general academic teaching |
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institution, medical and dental unit, or two-year institution of |
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higher education that are paid for with tuition units shall be |
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determined as if the beneficiary of that contract were a resident |
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student. |
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SECTION 12. Sections 54.765(c) and (f), Education Code, are |
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amended to read as follows: |
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(c) When a beneficiary enrolls at a general academic |
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teaching institution, medical and dental unit, or two-year |
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institution of higher education, on written authorization from the |
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purchaser of the tuition unit or units for that beneficiary, the |
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comptroller or the comptroller's authorized representative shall |
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transfer to the institution or unit an amount equal to the lesser |
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of: |
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(1) the sum of: |
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(A) the total purchase price of the tuition unit |
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or units the beneficiary redeems for the semester or other academic |
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term; and |
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(B) the amount determined under Subsection (d); |
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or |
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(2) an amount equal to 101 percent of the amount of |
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tuition and required fees covered by the tuition units being |
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redeemed. |
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(f) When a beneficiary enrolls at a private or independent |
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institution of higher education, career school, or accredited |
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out-of-state institution of higher education, on written |
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authorization from the purchaser of the tuition unit or units for |
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that beneficiary, the comptroller or the comptroller's authorized |
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representative shall transfer to the institution the lesser of: |
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(1) an amount equal to the current cost of the tuition |
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and required fees that would be covered by redemption of the number |
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and type of tuition units the beneficiary is redeeming if the |
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beneficiary were redeeming the unit or units at a general academic |
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teaching institution, medical and dental unit, or two-year |
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institution of higher education as follows: |
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(A) for a Type I unit, at the general academic |
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teaching institution or medical and dental unit, as applicable, |
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that had the highest tuition and required fee cost; |
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(B) for a Type II unit, at a general academic |
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teaching institution or medical and dental unit, as applicable, |
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that had tuition and required fee cost at the weighted average; and |
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(C) for a Type III unit, at a two-year |
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institution of higher education that had tuition and required fee |
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cost at the weighted average; or |
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(2) an amount equal to the total purchase price of the |
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tuition unit or units the beneficiary redeems for the semester or |
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other academic term plus the portion of the total return on assets |
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of the fund attributable to that amount. |
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SECTION 13. Section 54.767, Education Code, is amended to |
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read as follows: |
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Sec. 54.767. USE OF FUND ASSETS. The assets of the fund may |
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be used only to: |
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(1) pay the costs of program administration and |
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operations; |
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(2) make payments to general academic teaching |
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institutions, medical and dental units, two-year institutions of |
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higher education, private or independent institutions of higher |
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education, career schools, and accredited out-of-state |
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institutions of higher education on behalf of beneficiaries; and |
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(3) make refunds under prepaid tuition contracts. |
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SECTION 14. Section 54.7671(b), Education Code, is amended |
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to read as follows: |
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(b) For purposes of a transfer of money from an account |
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under this subchapter, the value of the account at the time of |
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transfer is the lesser of: |
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(1) an amount equal to the cost, at the time of the |
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transfer, of the tuition and required fees that would be covered by |
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redemption of the number and type of tuition units to be transferred |
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from the account if the beneficiary were redeeming the units at a |
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general academic teaching institution, medical and dental unit, or |
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two-year institution of higher education as follows: |
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(A) for a Type I unit, at the general academic |
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teaching institution or medical and dental unit, as applicable, |
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that had the highest tuition and required fee cost; |
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(B) for a Type II unit, at a general academic |
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teaching institution or medical and dental unit, as applicable, |
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that had tuition and required fee cost at the weighted average; and |
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(C) for a Type III unit, at a two-year |
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institution of higher education that had tuition and required fee |
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cost at the weighted average; or |
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(2) an amount equal to the total purchase price of the |
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tuition units to be transferred from the account, plus the portion |
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of the total return on assets of the fund attributable to that |
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amount. |
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SECTION 15. Sections 54.769(b) and (c), Education Code, are |
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amended to read as follows: |
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(b) The rights of a purchaser, beneficiary, or successor in |
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interest of a purchaser or beneficiary in and under a prepaid |
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tuition contract and the payment of tuition and required fees for a |
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beneficiary under a prepaid tuition contract to a general academic |
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teaching institution, medical and dental unit, two-year |
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institution of higher education, private or independent |
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institution of higher education, career school, or accredited |
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out-of-state institution of higher education under this chapter are |
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exempt from attachment, levy, garnishment, execution, and seizure |
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for the satisfaction of any debt, judgment, or claim against a |
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purchaser, beneficiary, or successor in interest of a purchaser or |
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beneficiary. |
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(c) A claim or judgment against a purchaser, beneficiary, or |
|
successor in interest of a purchaser or beneficiary does not impair |
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or entitle the claim or judgment holder to assert or enforce a lien |
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against: |
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(1) the rights of a purchaser, beneficiary, or |
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successor in interest of a purchaser or beneficiary in and under a |
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prepaid tuition contract; or |
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(2) the right of a beneficiary to the payment of |
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tuition and required fees to a general academic teaching |
|
institution, medical and dental unit, 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. |
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SECTION 16. Section 54.774(a), Education Code, is amended |
|
to read as follows: |
|
(a) A prepaid tuition contract remains in effect after the |
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program is terminated if, when the program is terminated, the |
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beneficiary: |
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(1) has been accepted by or is enrolled at a general |
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academic teaching institution, medical and dental unit, 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 |
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terminated. |
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SECTION 17. Section 54.775(b), Education Code, is amended |
|
to read as follows: |
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(b) Notwithstanding Subsection (a), the board may release |
|
information described by that subsection to a general academic |
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teaching institution, medical and dental unit, 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 |
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may enroll or is enrolled. The institution or unit shall keep the |
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information confidential. |
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SECTION 18. Section 54.776, Education Code, is amended to |
|
read as follows: |
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Sec. 54.776. STATEMENT REGARDING STATUS OF PREPAID TUITION |
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CONTRACT. Not later than January 31 [1] of each year, the board |
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shall provide without charge to each purchaser a statement of: |
|
(1) the amount paid by the purchaser under the prepaid |
|
tuition contract; |
|
(2) the total number of each type of tuition unit |
|
covered by the contract at any one time; |
|
(3) the number of each type of tuition unit remaining |
|
under the contract; |
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(4) the value of the purchasers' tuition units if |
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redeemed at any general academic teaching institution, medical and |
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dental unit, or two-year institution of higher education designated |
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for that year by the purchaser in the time and manner required by |
|
the board, not to exceed five institutions or units; and |
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(5) any other information the board determines by rule |
|
is necessary or appropriate. |
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SECTION 19. Sections 54.708(c), (d), (e), and (f), |
|
Education Code, are repealed. |
|
SECTION 20. 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. |
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If this Act does not receive the vote necessary for immediate |
|
effect, this Act takes effect September 1, 2019. |