By: Watson S.B. No. 1325
(In the Senate - Filed March 9, 2011; March 16, 2011, read
first time and referred to Committee on Higher Education;
April 18, 2011, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 7, Nays 0; April 18, 2011,
sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 1325 By: Watson
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 unit program and college savings plans and to the treatment
of a beneficiary's assets under a prepaid tuition program or a
college savings plan 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) "Accredited out-of-state institution of higher
education," "career school," "general academic teaching
institution," "private or independent institution of higher
education," and "two-year institution of higher education" have the
meanings assigned by Section 54.751.
(2) "Beneficiary" means a beneficiary on whose behalf
a purchaser enters into a prepaid tuition contract with the board
under Subchapter H or for whom a savings trust account is opened
under Subchapter G.
(3) "Board" means the Prepaid Higher Education Tuition
Board.
(4) "Fund" means the Texas save and match trust fund
established under Section 54.808.
(5) "Program" means the Texas Save and Match Program
established under this subchapter.
(6) "Program entity" means the Texas Match the Promise
Foundation, a Texas nonprofit corporation, or any other tax-exempt
charitable organization established by law to implement the
program.
Sec. 54.802. TEXAS SAVE AND MATCH PROGRAM. (a) The board,
in cooperation with the program entity, shall administer the Texas
Save and Match Program, under which money contributed to a savings
trust account by an account owner under a higher education savings
plan established under Subchapter G or paid by a purchaser under a
prepaid tuition contract under Subchapter H on behalf of an
eligible beneficiary may be matched with:
(1) contributions made by any person to the program
entity for use in making additional savings trust account
contributions under Subchapter G or in purchasing additional
tuition units under prepaid tuition contracts under Subchapter H;
or
(2) money appropriated by the legislature for the
program to be used by the board to make additional savings trust
account contributions under Subchapter G or to purchase additional
tuition units under Subchapter H.
(b) In addition to the board's powers assigned under
Subchapters F, G, and H, the board has the powers necessary or
proper to carry out its duties under this subchapter, including the
power to:
(1) sue and be sued;
(2) enter into contracts and other necessary
instruments;
(3) enter into agreements or other transactions with
the United States, state agencies, general academic teaching
institutions, two-year institutions of higher education, and local
governments;
(4) appear on its own behalf before governmental
agencies;
(5) contract for necessary goods and services,
including specifying in the contract duties to be performed by the
provider of a good or service that are a part of or are in addition
to the person's primary duties under the contract;
(6) engage the services of private consultants,
actuaries, trustees, records administrators, managers, legal
counsel, and auditors for administrative or technical assistance;
(7) solicit and accept gifts, grants, donations,
loans, and other aid from any source or participate in any other
manner in any government program to carry out this subchapter;
(8) impose administrative fees;
(9) contract with a person to market the program;
(10) purchase liability insurance covering the board
and employees and agents of the board; and
(11) establish other policies, procedures, and
eligibility criteria to implement this subchapter.
(c) Notwithstanding other law, for purposes of Subchapter
I, Chapter 659, Government Code:
(1) the program entity 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 entity 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 H or a
savings trust account is opened on the beneficiary's behalf under
Subchapter G, as applicable, must be:
(1) a resident of this state; or
(2) a dependent for purposes of Section 152, Internal
Revenue Code of 1986, of a resident of this state.
(b) To be initially eligible to receive matching funds
described by Section 54.802(a)(2) under the program, a beneficiary,
at the time a prepaid tuition contract is entered into on the
beneficiary's behalf under Subchapter H, or a savings trust account
is opened on the beneficiary's behalf under Subchapter G, as
applicable, must be eligible for free meals under the national free
or reduced-price breakfast and lunch program.
Sec. 54.804. LIMITATIONS. A matching account established
by the board or program entity on behalf of a beneficiary under this
subchapter is forfeited and reverts to the board or program entity
on the occurrence of any of the following:
(1) the 10th anniversary of the date the beneficiary
is projected to graduate from high school, as indicated by the
purchaser in the enrollment contract, except that time spent by the
beneficiary as an active duty member of the United States armed
services tolls the period described by this subdivision;
(2) a change of beneficiary by the account owner or
purchaser of the matched account;
(3) a contract cancellation of the matched account and
refund request;
(4) the successful completion by the beneficiary of an
associate or bachelor's degree program;
(5) transfer of the matched account to another
qualified tuition program of any state that meets the requirements
of Section 529, Internal Revenue Code of 1986; or
(6) any other event the board or program entity
determines would be inconsistent with the program's purposes.
Sec. 54.805. MATCHING ACCOUNT ADMINISTRATION. (a) A
matching account established by the board or program entity 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 or tuition units in a
beneficiary's matching account shall be used or redeemed after
money is used from the beneficiary's savings trust account under
Subchapter G or tuition units are redeemed from the prepaid tuition
contract for the beneficiary under Subchapter H.
(c) To the extent possible, the board shall include
information about a matching account in the periodic statement
provided to applicable account owners and purchasers under
Subchapters G and H.
Sec. 54.806. CONFIDENTIALITY. (a) Records in the custody
of the board or program entity relating to the participation of
specific purchasers, beneficiaries, applicants, scholarship
recipients, or donors under the program are confidential.
(b) Notwithstanding Subsection (a), the board or program
entity may release information described by Subsection (a) to the
extent required by 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 or school receiving
information described by Subsection (a) shall keep the information
confidential.
(c) Notwithstanding any other provision of this subchapter,
the board or program entity may release information to the Internal
Revenue Service or to any state tax agency as required by applicable
tax law.
(d) Notwithstanding any other provision of this subchapter,
the board or program entity may release information relating to
donors who authorize release of that information.
Sec. 54.807. PILOT PROJECTS UNDER PROGRAM. To fulfill the
intent of the program, the board may use funds described by Section
54.802(a)(2) to establish pilot projects under the program in an
effort to incentivize participation in 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) providing initial matching grants and paying
application fees;
(3) providing incentives for employers to contribute
matching funds to the program; and
(4) creating a program information portal designed to
increase program awareness and accessibility among school
districts, parents, and students.
Sec. 54.808. TEXAS SAVE AND MATCH TRUST FUND; AGREEMENTS
BETWEEN BOARD AND PROGRAM ENTITY REGARDING PROGRAM ENTITY FUNDS.
(a) The Texas save and match trust fund is established as a trust
fund to be held with the comptroller.
(b) Money in the fund may be spent without appropriation and
only to establish matching accounts, make deposits, purchase
tuition units, and award matching grants and scholarships under the
program and to pay the costs of program administration and
operations.
(c) The board may invest, reinvest, and direct the
investment of any available money in the fund.
(d) Interest and income from the assets of the fund shall be
credited to and deposited in the fund.
(e) The board and the program entity may enter into an
agreement under which the board may hold and manage funds of the
program entity and provide services to the program entity.
Sec. 54.809. RULES. The board shall adopt rules for the
administration of this subchapter.
SECTION 2. Subchapter A, Chapter 56, Education Code, is
amended by adding Section 56.007 to read as follows:
Sec. 56.007. EXCLUSION OF ASSETS IN PREPAID TUITION
PROGRAMS AND HIGHER EDUCATION SAVINGS PLANS. Notwithstanding any
other law, the right of a person to assets held in or the right to
receive payments or benefits under any fund or plan established
under Subchapter G, H, or I, Chapter 54, including an interest in a
savings trust account, prepaid tuition account, or related matching
account, may not be considered an asset of the person, or otherwise
included in the person's household income or other financial
resources, for purposes of determining the person's eligibility for
a TEXAS grant or any other state-funded student financial
assistance.
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 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 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 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 6. Section 54.7521, Education Code, is repealed.
SECTION 7. 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 May 31, 2012.
SECTION 8. 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 the repeal of Section 54.7521, Education Code, by this Act,
the tax-exempt charitable organization created under that section
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 9. 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
savings trust account opened for a beneficiary under Subchapter G,
Chapter 54, Education Code, on or after January 1, 2012.
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. (a) Except as provided by Subsection (b) of
this section, this Act takes effect September 1, 2011.
(b) Section 6 of this Act takes effect January 1, 2012.
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