By: Watson S.B. No. 1760
A BILL TO BE ENTITLED
AN ACT
relating to the Prepaid Tuition Unit Undergraduate Education
Program, Higher Education Savings Plans, the Texas Save & Match
Program and the treatment of a beneficiary's assets under the plans
in determining eligibility for student financial assistance and
other programs.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter H, Education Code, is amended to read
as follows:
Sec. 54.751. DEFINITIONS. In this subchapter:
(1) "Accredited out-of-state institution of higher
education" means a public or private institution of higher
education that:
(A) is located outside this state; and
(B) is accredited by a recognized accrediting
agency.
(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,
or accredited out-of-state institution of higher education.
(3) "Board" means the Prepaid Higher Education Tuition
Board.
(4) "Fund" means the Texas tomorrow fund II.
(5) "General academic teaching institution" has the
meaning assigned by Section 61.003, except that the term does not
include a public state college.
(6) "Matching account" means an account in the Texas
Save & Match Program established under this section.
(7) "Participating beneficiary" means a beneficiary
for whom a matching account has been opened under this section.
(8) [(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, or accredited
out-of-state institution of higher education.
(9) [(7)] "Private or independent institution of
higher education," "public junior college," "public state
college," "public technical institute," and "recognized
accrediting agency" have the meanings assigned by Section 61.003.
(10) [(8)] "Program" means the prepaid tuition unit
undergraduate education program.
(11) [(9)] "Purchaser" means a person who enters into
a prepaid tuition contract with the board on behalf of a beneficiary
for the purchase of one or more tuition units.
(12) [(10)] "Required fee" means a fee, other than a
laboratory fee for a specific course, that is charged by a public or
private institution of higher education to all students at the
institution who are not exempt from the fee. For purposes of this
subdivision, a fee is a required fee only to the extent that the fee
is considered a qualified higher education expense under Internal
Revenue Code provisions applicable to the program.
(13) [(11)] "Two-year institution of higher
education" means a public junior college, a public state college,
and a public technical institute.
SECTION 2. Section 54.7521, Education Code, is amended to
read as follows:
Sec. 54.7521. TEXAS SAVE AND MATCH PROGRAM. 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 or higher education savings plan, applicable to
plans and programs under Subchapters F, G, and H of this section,
may be matched with:
(1) contributions made by any person to the Texas Save
and Match program and used to purchase additional tuition units or
savings plan contributions 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 or savings plan contributions on behalf of
beneficiaries:
(A) whose annual household income is below 400%
of the Federal Poverty Level [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.
SECTION 3. Subchapter H, Education Code, is amended by
adding Sections 54.7522, 54.7523, 54.7524, and 54.7525 as follows:
Sec. 54.7522. SAVE & MATCH PROGRAM RATIOS. For those
beneficiaries deemed eligible under Section 75.7521 of this
subchapter, the board shall develop a variable formula to match
purchases based upon annual household income. Depending on
availability of funds, for each eligible dollar contributed to the
prepaid tuition unit contract account or higher education savings
plan, the board shall match these contributions 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. 54.7523 ADMINISTRATION OF MATCH ACCOUNT
(1) Contributions made to the beneficiary's savings
trust account or prepaid tuition contract are matched with grant
funds to the beneficiary's matching account as provided by this
section.
(2) A matching account opened on behalf of a
beneficiary under this section must be accounted separately from
the beneficiary's traditional prepaid tuition unit balance or
savings trust account balance.
(3) To the extent possible, assets in match accounts
shall be expended prior to redemption of tuition units or qualified
withdrawal from the beneficiary's primary account.
(4) Information relating to the beneficiary of a
matching account established on behalf of the beneficiary under
Section 54.717, including any personally identifiable information
about the beneficiary, is confidential and is not subject to
disclosure under Chapter 552, Government Code.
(5) The board shall, to the extent possible, provide
the matching account balance with the periodic account statement
for each beneficiary participating in the program established under
Section 54.7521.
Sec. 54.7524 LIMITS ON PARTICIPATION
(a) To be initially eligible to participate in the program,
a beneficiary, at the time a savings trust account is opened on the
beneficiary's behalf, 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 individual who purchases tuition units or opens a savings
trust account on the beneficiary's behalf under this subchapter, at
the time the individual enters into a savings trust agreement with
the board and in the manner prescribed by board rule, information
necessary to determine the beneficiary's eligibility.
(c) An eligible beneficiary may participate in the program
for a time period not to exceed five years if the beneficiary
continues to meet the eligibility criteria prescribed by Subsection
(d). The five-year period can be either consecutive or
non-consecutive. The board shall prescribe procedures for
verifying a participating beneficiary's annual and continual
eligibility under this section.
(d) A participating beneficiary may receive a matching
grant to the beneficiary's matching account in any particular
calendar year only if at least $100 is contributed to the
beneficiary's savings trust account during that year.
Contributions to a beneficiary's savings trust account or prepaid
tuition contract account in excess of $500 in any calendar year are
not eligible for a matching grant to the beneficiary's matching
account.
(e) Any funds in a matching account that are not withdrawn
by the beneficiary's 30th birthday are forfeited and shall be
returned to the pool of matching funds maintained by the
direct-support organization established to operate this section.
Sec. 54.7525 DEMONSTRATIONS To fulfill the intent of the
Texas Save & Match Program established under Section 54.7521, the
Board may establish pilot projects under the program in an effort to
incentivize participation in the plan, including projects that
encourage participation by:
(a) awarding additional matching grants based on a
beneficiary's achievement of specified academic goals;
(b) offering additional seed matching grants on the opening
of a savings trust account; and
(c) providing incentives for employers to contribute
matching funds to the program.
SECTION 4. Subchapter H, Chapter 54, Education Code, is
amended by adding Sections 54.761 to read as follows
Sec. 54.761. EFFECT OF ACCOUNT BALANCE ON BENEFICIARY'S
ELIGIBILITY FOR STUDENT FINANCIAL ASSISTANCE. Money in a
beneficiary's savings trust account or 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.
SECTION 5. Subchapter H, Education Code, is amended by
adding Section 54.762 as follows:
Sec. 54.762. REMITTANCE OF ACTUARIAL SOUNDNESS (OR
ENROLLMENT) FEE FOR CERTAIN INDIVIDUALS. For beneficiaries deemed
eligible under Section 54.7521, the board may waive the amount of
any enrollment fee charged by the board for a new account under this
subchapter only for a beneficiary whose household adjusted gross
income for the most recently completed tax year is not more than 200
percent of the federal poverty level. If waived for any
beneficiary, the actuarial soundness fee must be remitted to the
plan fund through funds collected or appropriated to operate the
program.
SECTION 6. 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 UNIT
UNDERGRADUATE EDUCATION 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 any fund or plan established under Subchapters F, G and H,
Chapter 54, Education Code, including an interest in a savings
trust account, prepaid tuition contract account, or related
matching account.
SECTION 7. 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 UNIT
UNDERGRADUATE EDUCATION 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 any fund or plan established under Subchapters F, G and H,
Chapter 54, Education Code, including an interest in a savings
trust account, prepaid tuition unit contract account, or related
matching account.
SECTION 8. 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 UNIT
UNDERGRADUATE EDUCATION PROGRAMS AND HIGHER EDUCATION SAVINGS
PLANS. 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 any
fund or plan established under Subchapters G and H, Chapter 54,
Education Code, including an interest in a savings trust account,
prepaid tuition contract account, or related matching account.
SECTION 9. The Prepaid Higher Education Tuition Board shall
adopt rules as required by Section 54.752, Education Code, as added
by this Act, not later than November 1, 2009.
SECTION 10. The changes in law made by this Act to
Subchapter H, Chapter 54, Education Code, apply to a prepaid
tuition unit undergraduate contract account opened for a
beneficiary under Subchapter H, Chapter 54, Education Code, on or
after January 1, 2010.
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. This Act takes effect September 1, 2009.