86R11170 MM-F
By: Buckingham S.B. No. 1664
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, 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.
(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, 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.
(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 54.752(b), Education Code, is amended to
read as follows:
(b) In addition to the board's powers assigned under
Subchapters F and G, the board has the powers necessary or proper to
carry out this subchapter, including the power to:
(1) adopt rules to implement this subchapter;
(2) sue and be sued;
(3) enter into contracts and other necessary
instruments;
(4) enter into agreements or other transactions with
the United States, state agencies, general academic teaching
institutions, medical and dental units, two-year institutions of
higher education, and local governments;
(5) appear on its own behalf before governmental
agencies;
(6) 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;
(7) engage the services of private consultants,
actuaries, trustees, records administrators, managers, legal
counsel, and auditors for administrative or technical assistance;
(8) solicit and accept gifts, grants, loans, and other
aid from any source or participate in any other way in any
government program to carry out this subchapter;
(9) impose administrative fees;
(10) contract with a person to market the program;
(11) purchase liability insurance covering the board
and employees and agents of the board; and
(12) establish other policies, procedures, and
eligibility criteria to implement this subchapter.
SECTION 9. Sections 54.753(a), (b), (c), (d), and (e),
Education Code, are amended 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, 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 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, medical and dental unit, 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, medical and dental unit, 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.
(b) The assigned value of a tuition unit, purchased as
provided by this section, when used to pay the cost of tuition and
required fees at a general academic teaching institution, medical
and dental unit, or two-year institution of higher education, is
equal to one percent of the amount necessary for the academic year
in which the unit is redeemed to cover the applicable cost of
undergraduate resident tuition and required fees for one academic
year consisting of 30 semester credit hours as follows:
(1) for a Type I tuition unit, the cost of
undergraduate resident tuition and required fees charged by the
general academic teaching institution or medical and dental unit,
as applicable, with the highest such tuition and fee costs,
determined as provided by Subsection (d);
(2) for a Type II tuition unit, the weighted average
undergraduate resident tuition and required fees charged by general
academic teaching institutions or medical and dental units, as
applicable, determined as provided by Subsection (e); and
(3) for a Type III tuition unit, the weighted average
undergraduate resident tuition and required fees of two-year
institutions of higher education, determined as provided by
Subsection (f).
(c) Each year, the board shall establish the price at which
each type of tuition unit may be purchased during the next sales
period and the percentage of the total cost of undergraduate
resident tuition and required fees for one academic year consisting
of 30 semester credit hours for which each type of tuition unit may
be redeemed at each general academic teaching institution, medical
and dental unit, and two-year institution. The percentage shall be
based on the total cost of required tuition and fees at a particular
general academic teaching institution, medical and dental unit, or
two-year institution of higher education in relation to the amount
determined for the institution or unit with the highest cost or
weighted average cost, as applicable. The purchase price
established for each type of unit must be equal to the applicable
cost of tuition and required fees as determined under this section
for the most recent academic year that began before the beginning of
the sales period. The sales period to which those prices apply
expires on the first anniversary of the date the units become
available for purchase at the prices established for that year. On
or before June 1, each general academic teaching institution,
medical and dental unit, and two-year institution of higher
education shall annually provide information for the upcoming fall
semester to the board in a format requested by the board, to assist
the board in determining tuition unit sales prices for the upcoming
sales period and redemption values for the upcoming academic year.
(d) The board shall base the purchase price of a Type I
tuition unit on one percent of the cost of the undergraduate
resident tuition and required fees for the applicable academic year
at the general academic teaching institution or medical and dental
unit, as applicable, with the highest such tuition and fee cost for
that academic year.
(e) The board shall base the purchase price of a Type II
tuition unit on one percent of the cost of the weighted average
general academic teaching institution or medical and dental unit,
as applicable, undergraduate resident tuition and required fees for
the applicable academic year. That cost is determined by:
(1) for each general academic teaching institution or
medical and dental unit, as applicable, multiplying the average
amount of the institution's or unit's undergraduate resident
tuition and required fees for an academic year consisting of 30
semester credit hours by the number of full-time equivalent
undergraduate resident students at that institution or unit;
(2) adding together the products computed under
Subdivision (1) for each institution or unit; and
(3) dividing the sum determined under Subdivision (2)
by the total number of full-time equivalent undergraduate resident
students at all general academic teaching institutions or medical
and dental units, as applicable.
SECTION 10. Sections 54.754(a), (b), (c), 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, medical and dental unit, two-year institution of
higher education, private or independent institution of higher
education, 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, medical and dental unit, or two-year institution of
higher education shall accept the amount transferred to the
institution or unit 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.
(b) To pay for the entire cost of undergraduate resident
tuition and required fees for an academic year consisting of 30
semester credit hours, redemption of 100 Type I tuition units is
required at the general academic teaching institution or medical
and dental unit, as applicable, with the highest tuition and fee
cost as described by Section 54.753(d), redemption of 100 Type II
tuition units is required at a general academic teaching
institution or medical and dental unit, as applicable, with the
applicable tuition and fee cost at the weighted average as
described by Subsection (e) of that section, and redemption of 100
Type III units is required at a two-year institution of higher
education with the applicable tuition and fee cost at the weighted
average as described by Subsection (f) of that section. The number
of tuition units that must be redeemed to pay for the entire cost of
tuition and required fees for an academic year at another general
academic teaching institution, medical and dental unit, or two-year
institution of higher education may be higher or lower:
(1) in proportion to the amount that the cost of
tuition and required fees at that institution or unit is higher or
lower than the amount determined for the institution or unit with
the highest cost or weighted average cost, as applicable; or
(2) if a more or less valuable type of tuition unit is
redeemed.
(c) To assist purchasers in determining the number of
tuition units a beneficiary must redeem to cover the costs of
tuition and required fees at general academic teaching
institutions, medical and dental units, and two-year institutions
of higher education, each year the board shall prepare a tuition
unit redemption chart and shall post the chart on an Internet
website. The chart must show for each general academic teaching
institution, for each medical and dental unit, and for each
two-year institution of higher education the number of each type of
units purchased that year that would be required to cover the cost
of tuition and required fees, based on an academic year consisting
of 30 semester credit hours.
(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, 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 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 11. Section 54.756(e), Education Code, is amended
to read as follows:
(e) Notwithstanding any provision of Subchapter B, the
tuition and required fees charged by a general academic teaching
institution, medical and dental unit, or two-year institution of
higher education that are paid for with tuition units shall be
determined as if the beneficiary of that contract were a resident
student.
SECTION 12. Sections 54.765(c) and (f), Education Code, are
amended to read as follows:
(c) When a beneficiary enrolls at a general academic
teaching institution, medical and dental unit, or two-year
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 or unit an amount equal to the lesser
of:
(1) the sum of:
(A) the total purchase price of the tuition unit
or units the beneficiary redeems for the semester or other academic
term; and
(B) the amount determined under Subsection (d);
or
(2) an amount equal to 101 percent of the amount of
tuition and required fees covered by the tuition units being
redeemed.
(f) When a beneficiary enrolls at a private or independent
institution of higher education, 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, medical and dental unit, or two-year
institution of higher education as follows:
(A) for a Type I unit, at the general academic
teaching institution or medical and dental unit, as applicable,
that had the highest tuition and required fee cost;
(B) for a Type II unit, at a general academic
teaching institution or medical and dental unit, as applicable,
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 13. 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, medical and dental units, two-year institutions of
higher education, private or independent institutions of higher
education, career schools, and accredited out-of-state
institutions of higher education on behalf of beneficiaries; and
(3) make refunds under prepaid tuition contracts.
SECTION 14. Section 54.7671(b), Education Code, is amended
to read as follows:
(b) For purposes of a transfer of money from an account
under this subchapter, the value of the account at the time of
transfer is the lesser of:
(1) an amount equal to the cost, at the time of the
transfer, of the tuition and required fees that would be covered by
redemption of the number and type of tuition units to be transferred
from the account if the beneficiary were redeeming the units at a
general academic teaching institution, medical and dental unit, or
two-year institution of higher education as follows:
(A) for a Type I unit, at the general academic
teaching institution or medical and dental unit, as applicable,
that had the highest tuition and required fee cost;
(B) for a Type II unit, at a general academic
teaching institution or medical and dental unit, as applicable,
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 units to be transferred from the account, plus the portion
of the total return on assets of the fund attributable to that
amount.
SECTION 15. 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, 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 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, 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.
SECTION 16. 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, 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
terminated.
SECTION 17. 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, 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
may enroll or is enrolled. The institution or unit shall keep the
information confidential.
SECTION 18. 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, medical and
dental unit, 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 or units; and
(5) any other information the board determines by rule
is necessary or appropriate.
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.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2019.