By: Turner of Tarrant (Senate Sponsor - Buckingham) H.B. No. 3655
(In the Senate - Received from the House May 6, 2019;
May 6, 2019, read first time and referred to Committee on Higher
Education; May 9, 2019, reported favorably by the following vote:
Yeas 8, Nays 0; May 9, 2019, sent to printer.)
Click here to see the committee vote
A BILL TO BE ENTITLED
AN ACT
relating to the administration and operation of the state's
programs for paying, prepaying, or saving toward the costs of
attending an institution of higher education, including the powers
and duties of the Prepaid Higher Education Tuition Board.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 54.602, Education Code, is amended by
adding Subsection (c) to read as follows:
(c) Unless otherwise specified, the provisions of this
subchapter concerning the following requirements applicable to the
board under this subchapter also apply to the board for purposes of
Subchapters G, H, I, and J of this chapter:
(1) membership;
(2) appointments of members;
(3) removal of members;
(4) ethics policy;
(5) training;
(6) board officers;
(7) compensation;
(8) meetings;
(9) public interest information and complaints;
(10) use of technology;
(11) program and facility accessibility;
(12) executive director; and
(13) staff.
SECTION 2. Section 54.641(a), Education Code, is amended to
read as follows:
(a) Not later than January 31 [1] of each year, the board
shall furnish without charge to each purchaser a statement of:
(1) the amount paid by the purchaser under the prepaid
tuition contract;
(2) the number of credit hours originally covered by
the contract;
(3) the number of credit hours remaining under the
contract; and
(4) any other information the board determines by rule
is necessary or appropriate.
SECTION 3. Section 54.701(8), Education Code, is amended to
read as follows:
(8) "Qualified higher education expenses" has the
meaning assigned by [means tuition, fees, or expenses for books,
supplies, and equipment required for the enrollment or attendance
of an individual at an eligible educational institution, the costs
of room and board, and any other higher education expenses that may
be permitted under] Section 529, Internal Revenue Code of 1986, as
amended.
SECTION 4. Section 54.702(a), Education Code, is amended to
read as follows:
(a) The board shall:
(1) develop and implement the plan in a manner
consistent with this subchapter;
(2) select the financial institution or institutions
to serve as plan manager; and
(3) adopt rules to implement this subchapter
[governing withdrawal of money from a savings trust account and
develop policies and penalties for nonqualified withdrawals].
SECTION 5. The heading to Section 54.708, Education Code,
is amended to read as follows:
Sec. 54.708. CONTRIBUTIONS AND WITHDRAWALS[; PENALTY FOR
NONQUALIFIED WITHDRAWAL].
SECTION 6. Section 54.708(b), Education Code, is amended to
read as follows:
(b) An account owner may withdraw all or part of the balance
of an account on prior notice as authorized by board rules. [The
board shall adopt rules governing the determination whether a
withdrawal is a qualified withdrawal or a nonqualified withdrawal.
The rules may require an account owner requesting to make a
qualified withdrawal to provide a certification of qualified higher
education expenses.]
SECTION 7. Sections 54.751(2), (6), and (7), Education
Code, are amended to read as follows:
(2) "Beneficiary" means the person designated under a
prepaid tuition contract as the person entitled to apply one or more
tuition units purchased under the contract to the payment of the
person's undergraduate tuition and required fees at a general
academic teaching institution, two-year institution of higher
education, private or independent institution of higher education,
medical and dental unit, career school, or accredited out-of-state
institution of higher education.
(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, medical and dental unit, career
school, or accredited out-of-state institution of higher
education.
(7) "Medical and dental unit," "private ["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.
SECTION 8. Section 54.753, Education Code, is amended by
amending Subsection (a) and adding Subsection (c-1) to read as
follows:
(a) Under the program, a purchaser may prepay the costs of
all or a portion of a beneficiary's undergraduate tuition and
required fees at a general academic teaching institution, two-year
institution of higher education, private or independent
institution of higher education, medical and dental unit, career
school, or accredited out-of-state institution of higher education
by entering into a prepaid tuition contract with the board to
purchase one or more tuition units of a type described by this
section at the applicable price established by the board for that
type of unit for the year in which the unit is purchased. The
portion of the beneficiary's undergraduate tuition and required
fees for which a tuition unit may be redeemed at a particular
general academic teaching institution or two-year institution of
higher education is assigned to the tuition unit at the time of
purchase, and the tuition unit may be redeemed to pay that portion
of the tuition and fees at the general academic teaching
institution or two-year institution of higher education in any
academic year in which the unit is redeemed in accordance with this
subchapter. The purchaser may purchase one type of unit or a
combination of two or three types of units.
(c-1) On or before June 1, each general academic teaching
institution and each two-year institution of higher education shall
annually provide information for the next fall semester to the
board in a format requested by the board, to assist the board in
determining tuition unit sales prices for the next sales period and
redemption values for the next academic year.
SECTION 9. Sections 54.754(a) and (d), Education Code, are
amended to read as follows:
(a) In accordance with this subchapter, when a beneficiary
under a prepaid tuition contract redeems one or more tuition units
to pay costs of tuition and required fees, the board shall apply
money in the fund, in the amount provided by Section 54.765 to pay
all or the applicable portion of the costs of the beneficiary's
tuition and required fees at the general academic teaching
institution, two-year institution of higher education, private or
independent institution of higher education, medical and dental
unit, or accredited out-of-state institution of higher education in
which the beneficiary enrolls. Subject to Subsection (b)(2) and the
other provisions of this section, a beneficiary may redeem any type
of tuition unit for attendance at an institution or unit described
by this section. A general academic teaching institution or
two-year institution of higher education shall accept the amount
transferred to the institution under Section 54.765(c) when the
unit or units are redeemed as payment for all or the applicable
portion of the beneficiary's tuition and required fees.
(d) If a beneficiary redeems fewer tuition units of the type
or combination of types necessary to pay the total cost of the
beneficiary's tuition and required fees at the general academic
teaching institution, two-year institution of higher education,
private or independent institution of higher education, medical and
dental unit, career school, or accredited out-of-state institution
of higher education at which the beneficiary enrolls, the
beneficiary is responsible for paying the amount of the difference
between the amount of tuition and required fees for which the
beneficiary pays through the redemption of one or more tuition
units and the total cost of the beneficiary's tuition and required
fees at the institution or unit.
SECTION 10. Section 54.765(f), Education Code, is amended
to read as follows:
(f) When a beneficiary enrolls at a private or independent
institution of higher education, medical and dental unit, career
school, or accredited out-of-state institution of higher
education, on written authorization from the purchaser of the
tuition unit or units for that beneficiary, the comptroller or the
comptroller's authorized representative shall transfer to the
institution the lesser of:
(1) an amount equal to the current cost of the tuition
and required fees that would be covered by redemption of the number
and type of tuition units the beneficiary is redeeming if the
beneficiary were redeeming the unit or units at a general academic
teaching institution or two-year institution of higher education as
follows:
(A) for a Type I unit, at the general academic
teaching institution that had the highest tuition and required fee
cost;
(B) for a Type II unit, at a general academic
teaching institution that had tuition and required fee cost at the
weighted average; and
(C) for a Type III unit, at a two-year
institution of higher education that had tuition and required fee
cost at the weighted average; or
(2) an amount equal to the total purchase price of the
tuition unit or units the beneficiary redeems for the semester or
other academic term plus the portion of the total return on assets
of the fund attributable to that amount.
SECTION 11. Section 54.767, Education Code, is amended to
read as follows:
Sec. 54.767. USE OF FUND ASSETS. The assets of the fund may
be used only to:
(1) pay the costs of program administration and
operations;
(2) make payments to general academic teaching
institutions, two-year institutions of higher education, private
or independent institutions of higher education, medical and dental
units, career schools, and accredited out-of-state institutions of
higher education on behalf of beneficiaries; and
(3) make refunds under prepaid tuition contracts.
SECTION 12. Sections 54.769(b) and (c), Education Code, are
amended to read as follows:
(b) The rights of a purchaser, beneficiary, or successor in
interest of a purchaser or beneficiary in and under a prepaid
tuition contract and the payment of tuition and required fees for a
beneficiary under a prepaid tuition contract to a general academic
teaching institution, two-year institution of higher education,
private or independent institution of higher education, medical and
dental unit, career school, or accredited out-of-state institution
of higher education under this chapter are exempt from attachment,
levy, garnishment, execution, and seizure for the satisfaction of
any debt, judgment, or claim against a purchaser, beneficiary, or
successor in interest of a purchaser or beneficiary.
(c) A claim or judgment against a purchaser, beneficiary, or
successor in interest of a purchaser or beneficiary does not impair
or entitle the claim or judgment holder to assert or enforce a lien
against:
(1) the rights of a purchaser, beneficiary, or
successor in interest of a purchaser or beneficiary in and under a
prepaid tuition contract; or
(2) the right of a beneficiary to the payment of
tuition and required fees to a general academic teaching
institution, two-year institution of higher education, private or
independent institution of higher education, medical and dental
unit, career school, or accredited out-of-state institution of
higher education under a prepaid tuition contract.
SECTION 13. Section 54.774(a), Education Code, is amended
to read as follows:
(a) A prepaid tuition contract remains in effect after the
program is terminated if, when the program is terminated, the
beneficiary:
(1) has been accepted by or is enrolled at a general
academic teaching institution, two-year institution of higher
education, private or independent institution of higher education,
medical and dental unit, career school, or accredited out-of-state
institution of higher education; or
(2) is projected to graduate from high school not
later than the third anniversary of the date the program is
terminated.
SECTION 14. Section 54.775(b), Education Code, is amended
to read as follows:
(b) Notwithstanding Subsection (a), the board may release
information described by that subsection to a general academic
teaching institution, two-year institution of higher education,
private or independent institution of higher education, medical and
dental unit, career school, or accredited out-of-state institution
of higher education at which a beneficiary may enroll or is
enrolled. The institution or unit shall keep the information
confidential.
SECTION 15. Section 54.776, Education Code, is amended to
read as follows:
Sec. 54.776. STATEMENT REGARDING STATUS OF PREPAID TUITION
CONTRACT. Not later than January 31 [1] of each year, the board
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;
(4) the value of the purchasers' tuition units if
redeemed at any general academic teaching institution or two-year
institution of higher education designated for that year by the
purchaser in the time and manner required by the board, not to
exceed five institutions; and
(5) any other information the board determines by rule
is necessary or appropriate.
SECTION 16. Sections 54.708(c), (d), (e), and (f),
Education Code, are repealed.
SECTION 17. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2019.
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