Senate Bill No. 151
(By Senators Craigo, Jackson, Manchin, Wagner,
Macnaughtan, Plymale, Walker and Chafin)
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[Introduced January 26, 1996; referred to the Committee
on Education; and then to the Committee on Finance.]
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A BILL to amend chapter eighteen-b of the code of West Virginia,
one thousand nine hundred thirty-one, as amended, by adding
thereto a new article, designated article eighteen, relating
to creating the prepaid post-secondary education expense
program; creating the prepaid post-secondary education
expense trust fund; defining terms; creating the prepaid
post-secondary expense board; marketing the program;
allowing the board to establish a direct-support
organization; providing for the minimum contents of advance
payment contracts; providing for limits on refunds;
providing for independent community college, university and
dormitory residence plans; requiring solicitation of proposals for the operation of the program; rendering the
state liable for the obligations of the board; providing for
the treatment of fund assets; creating an exemption from
creditors for the money paid out of the fund; allowing for
payments through payroll deductions; disclaiming guaranteed
admission to a state post-secondary institution; and
providing for the discontinuance of the program if
financially infeasible.
Be it enacted by the Legislature of West Virginia:
That chapter eighteen-b of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended by
adding thereto a new article, designated article eighteen, to
read as follows:
ARTICLE 18. WEST VIRGINIA PREPAID POSTSECONDARY EDUCATION
EXPENSE PROGRAM.
§18B-18-1. Legislative purpose.
The Legislature recognizes that educational opportunity at
the postsecondary level is a critical state interest. It further
recognizes that educational opportunity is best ensured through
the provision of postsecondary institutions that are
geographically and financially accessible. Accordingly, it is
the intent of the Legislature that a program be established through which many of the costs associated with postsecondary
attendance may be paid in advance and fixed at a guaranteed level
for the duration of undergraduate enrollment. It is similarly
the intent of the Legislature to provide a program that fosters
timely financial planning for postsecondary attendance and to
encourage employer participation in such planning through program
contributions on behalf of employees and the dependents of
employees.
§18B-18-2. Definition.
As used in this section:
(a) "Advance payment contract" means a contract entered into
by the board and a purchaser pursuant to this section.
(b) "Board" means the prepaid postsecondary education
expense board.
(c) "Fund" means the prepaid postsecondary education expense
trust fund.
(d) "Program" means the West Virginia prepaid postsecondary
education expense program.
(e) "Purchaser" means a person who makes or is obligated to
make advance registration or dormitory residence payments in
accordance with an advance payment contract.
(f) "Qualified beneficiary" means:
(1) A resident of this state at the time a purchaser enters
into an advance payment contract on behalf of the resident;
(2) A nonresident who is the child of a noncustodial parent
who is a resident of this state at the time that such parent
enters into an advance payment contract on behalf of the child;
or
(3) For purposes of advance payment contracts entered into
pursuant to section six of this article, a graduate of an
accredited high school in this state who is a resident of this
state at the time he is designated to receive the benefits of the
advance payment contract.
(g) "Registration fee" means enrollment fee, tuition,
registration, health service fee, infirmary fee and higher
education resource fee.
(h) "State postsecondary institution" means any state
institution of higher education as defined in section two,
article one of chapter eighteen-b of this code.
§18B-18-3. Creation of West Virginia prepaid postsecondary
education expense program.
There is hereby created a West Virginia prepaid postsecondary education expense program to provide a medium
through which the cost of registration and dormitory residence
may be paid in advance of enrollment in a state postsecondary
institution at a rate lower than the projected corresponding cost
at the time of actual enrollment. Such payments shall be
combined and invested in a manner that yields, at a minimum,
sufficient interest to generate the difference between the
prepaid amount and the cost of registration and dormitory
residence at the time of actual enrollment. Students who enroll
in a state postsecondary institution pursuant to this section
shall be charged no fees in excess of the terms delineated in the
advance payment contract.
§18B-18-4. Prepaid postsecondary education expense trust fund.
There is hereby created within the West Virginia state board
of investments the prepaid postsecondary education expense trust
fund. The fund shall consist of state appropriations, moneys
acquired from other governmental or private sources, and moneys
remitted in accordance with advance payment contracts. All funds
deposited into the trust fund may be invested pursuant to section
nine, article six, chapter twelve of this code. However, such
investment shall not be mandatory. Dividends, interest and gains accruing to the trust fund shall increase the total funds
available for the program. Any balance contained within the fund
at the end of a fiscal year shall remain therein and shall be
available for carrying out the purposes of the program. In the
event that dividends, interest and gains exceeds the amount
necessary for program administration and disbursements, the board
may designate an additional percentage of the fund to serve as a
contingency fund. Any funds of a direct-support organization
created pursuant to subsection (k), section five of this article
shall be exempt from the provisions of this section.
§18B-18-5. Prepaid postsecondary expense board.
(a) The West Virginia prepaid postsecondary education
expense program shall be administered by the prepaid
postsecondary education expense board as an agency of the state.
The prepaid postsecondary education expense board is hereby
created as a nonprofit corporation with all the powers of a
nonprofit corporation for the purposes delineated in this
section. The board shall consist of seven members to be composed
of the executive director of the West Virginia state board of
investments, cabinet secretary of the department of
administration, the state auditor, and one member of the board of directors of the state college system as voted upon by that
board, and three members appointed by the governor with the
advice and consent of the Senate. Each member appointed by the
governor shall possess knowledge, skill and experience in the
areas of accounting, actuary, risk management or investment
management. Each member of the board not appointed by the
governor may name a designee to serve the board on behalf of the
member; however, any designee so named shall meet the
qualifications required of gubernatorial appointees to the board.
Members appointed by the governor shall serve terms of three
years except that, in making the initial appointments, the
governor shall appoint one member to serve for one year, one
member to serve for two years and one member to serve for three
years. Any person appointed to fill a vacancy on the board shall
be appointed in a like manner and shall serve for only the
unexpired term. Any member shall be eligible for reappointment
and shall serve until a successor qualifies. Members of the
board shall serve without compensation but shall be reimbursed
for per diem and travel in accordance with section seven, article
three, chapter twelve of this code. Each member of the board
shall file a full and public disclosure of his financial interests.
(b) The governor shall appoint a member of the board to
serve as the initial chairman of the board. Thereafter, the
board shall elect a chairman annually. The board shall annually
elect a board member to serve as vice chairman and shall
designate a secretary-treasurer who need not be a member of the
board. The secretary-treasurer shall keep a record of the
proceedings of the board and shall be the custodian of all
printed material filed with or by the board and of its official
seal. Notwithstanding the existence of vacancies on the board,
a majority of the members shall constitute a quorum. The board
shall take no official action in the absence of a quorum. The
board shall meet, at a minimum, on a quarterly basis at the call
of the chairman.
(c) The board shall appoint an executive director to serve
as the chief administrative and operational officer of the board
and to perform other duties assigned to him or her by the board.
(d) The board shall have the powers necessary or proper to
carry out the provisions of this article, including, but not
limited to, the power to:
(1) Adopt an official seal and rules;
(2) Sue and be sued;
(3) Make and execute contracts and other necessary
instruments;
(4) Establish agreements or other transactions with federal,
state, and local agencies, including state universities and
colleges;
(5) Invest funds not required for immediate disbursement;
(6) Appear in its own behalf before boards, commissions or
other governmental agencies;
(7) Hold, buy and sell any instruments, obligations,
securities and property determined appropriate by the board, and
subject to limitations set forth in section nine, article six of
chapter twelve;
(8) Require a reasonable length of state residence for
qualified beneficiaries;
(9) Restrict the number of participants in the college plan,
university plan and dormitory residence plan, respectively.
However, any person denied participation solely on the basis of
such restriction shall be granted priority for participation
during the succeeding year;
(10) Segregate contributions and payments to the fund into various accounts and funds;
(11) Contract for necessary goods and services, employ
necessary personnel, and engage the services of private
consultants, actuaries, managers, legal counsel and auditors for
administrative or technical assistance;
(12) Solicit and accept gifts, grants, loans and other aids
from any source or participate in any other way in any government
program to carry out the purposes of this section;
(13) Require and collect administrative fees and charges in
connection with any transaction and impose reasonable penalties,
including default, for delinquent payments or for entering into
an advance payment contract on a fraudulent basis;
(14) Procure insurance against any loss in connection with
the property, assets and activities of the fund or the board;
(15) Impose reasonable time limits on use of the tuition
benefits provided by the program. However, any such limitation
shall be specified within the advance payment contract;
(16) Delineate the terms and conditions under which payments
may be withdrawn from the fund and impose reasonable fees and
charges for such withdrawal. Such terms and conditions shall be
specified within the advance payment contract;
(17) Provide for the receipt of contributions in lump sums
or installment payments;
(18) Establish other policies, procedures, and criteria to
implement and administer the provisions of this article; and
(19) Require that purchasers of advance payment contracts
verify, under oath, any requests for contract conversions,
substitutions, transfers, cancellations, refund requests or
contract changes of any nature.
(e) The board shall administer the fund in a manner that is
sufficiently actuarially sound to defray the obligations of the
program. The board shall annually evaluate or cause to be
evaluated the actuarial soundness of the fund. If the board
perceives a need for additional assets in order to preserve
actuarial soundness, the board may adjust the terms of subsequent
advance payment contracts to ensure such soundness.
(f) The board, acting with the approval of the board of
investments, shall establish a comprehensive investment plan for
the purposes of this section. The comprehensive investment plan
shall specify the investment policies to be utilized by the board
in its administration of the fund. The board may place assets of
the fund in savings accounts or use the same to purchase securities, evidence of indebtedness or other investment products
pursuant to the comprehensive investment plan and in such
proportions as may be designated or approved under that plan, but
subject to the limitations set forth in section nine, article six
of chapter twelve. The savings or investment products shall be
underwritten and offered in compliance with the applicable
federal and state laws, regulations and rules by persons who are
duly authorized by applicable federal and state authorities.
Within the comprehensive investment plan, the board may authorize
investment vehicles, or products incident thereto, as may be
available or offered by qualified companies or persons.
(g) The board may delegate responsibility for administration
of the comprehensive investment plan required in subsection (f)
of this section to a person the board determines to be qualified.
Such person shall be compensated by the board. Directly or
through such person, the board may contract with a private
corporation or institution to provide services as may be a part
of the comprehensive investment plan or as may be deemed
necessary or proper by the board or such person, including, but
limited to, providing consolidated billing, individual and
collective record keeping and accountings, and asset purchase, control and safekeeping.
(h) The board shall annually prepare, or cause to be
prepared a report setting forth in appropriate detail an
accounting of the fund and a description of the financial
condition of the program at the close of each fiscal year. Such
report shall be submitted to the president of the Senate, the
speaker of the House of Delegates, University of West Virginia
board of trustees and board of directors of the state college
system on or before the thirty-first day of March of each year.
In addition, the board shall make the report available to
purchasers of advance payment contracts. The board shall provide
to the University of West Virginia board of trustees and the
board of directors of the state college system by the thirty-
first day of March of each year complete advance payment contract
sales information including projected postsecondary enrollments
of qualified beneficiaries. The accounts of the fund shall be
subject to annual audits by the legislative auditor or his or her
designee.
(i) The board shall solicit answers to applicable ruling
requests from the Internal Revenue Service regarding the tax
status of fees paid pursuant to an advance payment contract to the purchaser or qualified beneficiary and from the securities
and exchange commission regarding the application of federal
securities laws to the trust. The board shall make the status of
the requests known before entering into an advance payment
contract.
(j) The board shall solicit proposals for the marketing of
the West Virginia prepaid postsecondary education expense program
pursuant to article three, chapter five-a of this code. The
entity designated pursuant to this subsection shall serve as a
centralized marketing agent for the program and shall be solely
responsible for the marketing of the program. Any materials
produced for the purpose of marketing the program shall be
submitted to the board for review. No such materials may be made
available to the public before the materials are approved by the
board. Any educational institution may distribute marketing
materials produced for the program; however, all such materials
shall have been approved by the board prior to distribution.
Neither the state nor the board are liable for misrepresentation
of the program by a marketing agent.
(k) The board may establish a direct-support organization
which is:
(1) A West Virginia corporation, not for profit,
incorporated under the provisions of article one, chapter thirty-
one of this code and approved by the secretary of state;
(2) Organized and operated exclusively to receive, hold,
invest and administer property and to make expenditures to or for
the benefit of the program;
(3) An organization which the board, after review, has
certified to be operating in a manner consistent with the goals
of the program and in the best interests of the state. Unless so
certified, the organization may not use the name of the program;
(4) Subject to an annual postaudit by an independent
certified public accountant in accordance with rules promulgated
by the board. The annual audit shall be submitted to the
insurance commissioner and the legislative auditor for review.
The insurance commissioner and legislative auditor may require
and receive from the organization or its independent auditor any
detail or supplemental data relative to the operation of the
organization. The identity of donors who desire to remain
anonymous shall be confidential and exempt from the provisions of
article one, chapter twenty-nine-b, and such anonymity shall be
maintained in the auditor's report. All records of the organization other than the auditor's report and the supplemental
data requested by the insurance commissioner or the legislative
auditor shall be confidential and exempt from the provisions of
article one, chapter twenty-nine-b.
The chairman of the board and the executive director shall
be directors of the direct-support organization and shall jointly
name three other individuals to serve as directors of the
organization.
(l) The board may endorse insurance coverage written
exclusively for the purpose of protecting advance payment
contracts, and the purchasers or beneficiaries thereof, which may
be issued in the form of a group life policy and which is exempt
from the provisions of article fourteen, chapter thirty-three of
this code.
§18B-18-6. Advance payment contracts; minimum inclusions.
(a) The board shall construct advance payment contracts for
registration and advance payment contracts for dormitory
residence in accordance with the provisions of this section.
Advance payment contracts constructed for the purposes of this
section shall be exempt from the provisions of the West Virginia
insurance code. The board may request assistance from the attorney general in the development of the advance payment
contracts. The contents of both such contracts shall include,
but not be limited to, the following:
(1) The amount of the payment or payments and the number of
payments required from a purchaser on behalf of a qualified
beneficiary;
(2) The terms and conditions under which purchasers shall
remit payments, including, but not limited to, the date or dates
upon which each payment shall be due;
(3) Provisions for late payment charges and for default;
(4) Provisions for penalty fees for withdrawals from the
fund;
(5) Except for an advance payment contract entered into
pursuant to subsection (k) of section five, the name and date of
birth of the qualified beneficiary on whose behalf the contract
is drawn and the terms and conditions under which another person
may be substituted as the qualified beneficiary;
(6) The name of any person who may terminate the contract.
The terms of the contract shall specify whether the contract may
be terminated by the purchaser, the qualified beneficiary, a
specific designated person or any combination of these persons;
(7) The terms and conditions under which a contract may be
terminated, the name of the person entitled to any refund due as
a result of termination of the contract pursuant to such terms
and conditions, and the amount of refund, if any, due to the
person so named;
(8) The time limitations, if any, within which the qualified
beneficiary must claim his benefits through the program; and
(9) Other terms and conditions deemed by the board to be
necessary or proper.
(b) In addition to the provisions of subsection (a) of this
section, an advance payment contract for registration shall
include, but not be limited to, the following:
(1) The number of semester credit hours contracted by the
purchaser;
(2) The state postsecondary system toward which the
contracted credit hours will be applied;
(3) The assumption of a contractual obligation by the board
to the qualified beneficiary to provide for a specified number of
semester credit hours of undergraduate instruction at a state
postsecondary institution, not to exceed the average number of
credit hours required for the conference of the degree that corresponds to the plan purchased on behalf of the qualified
beneficiary.
(c) In addition to the provisions of subsection (a) of this
section, an advance payment contract for dormitory residence
shall include, but not be limited to, the following:
(1) The number of semesters of dormitory residence
contracted by the purchaser;
(2) The assumption of a contractual obligation by the board
to the qualified beneficiary to provide for a specified number of
semesters of dormitory residence at a state university or
college, not to exceed the maximum number of semesters of full-
time enrollment required for the conference of a baccalaureate
degree.
(d) An advance payment contract may provide that contracts
which have not been terminated or the benefits exercised within
a specified period of time shall be considered terminated. Time
expended by a qualified beneficiary as an active duty member of
any of the armed services of the United States shall be added to
the period of time specified pursuant to this subsection. No
purchaser or qualified beneficiary whose advance payment contract
is terminated pursuant to this subsection is entitled to a refund. The board shall retain any moneys paid by the purchaser
for an advance payment contract that has been terminated in
accordance with this subsection. Such retained moneys must be
used by the board to further the purposes of this section.
(e) Limits on refunds are as follows:
(1) No refund provided pursuant to subdivision (7),
subsection (a) of this section may exceed the amount paid into
the fund by the purchaser. In the event that an advance payment
contract is converted from a university to a college registration
plan, the refund amount shall be reduced by the amount
transferred to a college on behalf of the qualified beneficiary.
However, refunds may exceed the amount paid into the fund in the
following circumstances:
(A) If the beneficiary is awarded a scholarship, the terms
of which cover the benefits included in the advance payment
contracts, moneys paid for the purchase of the advance payment
contracts shall be returned to the purchaser in semester
installments coinciding with the matriculation by the beneficiary
in amounts of either the original purchase price plus five
percent compounded interest, or the current rates at state
postsecondary institutions, whichever is less;
(B) In the event of the death or total disability of the
beneficiary, moneys paid for the purchase of advance payment
contracts shall be returned to the purchaser together with five
percent compounded interest, or the current rates at state
postsecondary institutions, whichever is less; or
(C) If an advance payment contract is converted from a
university plan to a college plan or a college plus university
plan, or is converted from a college plus university plan to a
college plan, the amount refunded shall be the value of the
original advance payment contract minus the value of the contract
after the conversion; and
(2) No refund may be authorized through an advance payment
contract for any school year partially attended but not
completed. For purposes of this section, a school year partially
attended but not completed means any one semester whereby the
student is still enrolled at the conclusion of the official drop-
add period, but withdraws before the end of such semester. If a
beneficiary does not complete a college plan or university plan
for reasons other than specified in subdivision (1) of this
subsection, the purchaser shall receive a refund of the amount
paid into the fund for the remaining unattended years of the advance payment contract pursuant to rules promulgated by the
board.
(f) Information that identifies the purchasers or
beneficiaries of any plan promulgated under this section and
their advance payment account activities is exempt from the
provisions of article one of chapter twenty-nine-b of this code.
However, the board may authorize the program's records
administrator to release such information to a college or
university in which a beneficiary may enroll or is enrolled.
Colleges and universities shall maintain such information as
exempt from the provisions of article one of chapter twenty-nine-
b of this code.
§18B-18-7. Independent college, university and dormitory
residence plans.
(a) At a minimum, the board shall make advance payment
contracts available for three independent plans to be known as
the college plan, the university plan and the dormitory residence
plan, respectively.
(b) Through the community college plan, the advance payment
contract shall provide prepaid registration fees for a specified
number of undergraduate semester credit hours not to exceed the average number of hours required for the conference of a
baccalaureate degree. The cost of participation in the college
plan shall be based primarily on the average current and
projected registration fees within the state college system and
the number of years expected to elapse between the purchase of
the plan on behalf of a qualified beneficiary and the exercise of
the benefits provided in the plan by such beneficiary. Qualified
beneficiaries shall bear the cost of any laboratory fees
associated with enrollment in specific courses. Each qualified
beneficiary shall be classified as a resident for tuition
purposes regardless of his actual legal residence.
(c) Through the university plan, the advance payment
contract shall provide prepaid registration fees for a specified
number of undergraduate semester credit hours not to exceed the
average number of hours required for the conference of a
baccalaureate degree. The cost of participation in the
university plan shall be based primarily on the current and
projected registration fees within the state university system
and the number of years expected to elapse between the purchase
of the plan on behalf of a qualified beneficiary and the exercise
of the benefits provided in the plan by such beneficiary. Qualified beneficiaries shall bear the cost of any laboratory
fees associated with enrollment in specific courses. In the
event that a qualified beneficiary fails to be admitted to a
state university or chooses to attend a college, the qualified
beneficiary may convert the average number of semester credit
hours required for the conference of a baccalaureate degree from
a university plan to a college plan and may retain the remaining
semester credit hours in the university plan or may request a
refund for prepaid credit hours in excess of the average number
of semester credit hours required for the conference of a
baccalaureate degree pursuant to subdivision (7), subsection (a)
of section six. Each qualified beneficiary shall be classified
as a resident for tuition purposes regardless of his actual legal
residence.
(d) Through the dormitory residence plan, the advance
payment contract shall provide prepaid housing fees for a maximum
of ten semesters of full-time undergraduate enrollment in a state
college or university. Dormitory residence plans are optional
and may be purchased only in conjunction with a college or
university plan. Dormitory residence plans shall be purchased in
increments of two semesters. The cost of participation in the dormitory residence plan shall be based primarily on the average
current and projected housing fees within the state college or
university system and the number of years expected to elapse
between the purchase of the plan on behalf of a qualified
beneficiary and the exercise of the benefits provided in the plan
by such beneficiary. Qualified beneficiaries shall bear the cost
of any additional elective charges such as laundry service or
long-distance telephone service. Each state college and
university may specify the residence halls eligible for inclusion
in the plan. In addition, any state college or university may
request immediate termination of a dormitory residence contract
based on a violation or multiple violations of rules of the
residence hall. Qualified beneficiaries shall have the highest
priority in the assignment of housing within university residence
halls. In the even that sufficient housing is not available for
all qualified beneficiaries, the board shall refund the purchaser
or qualified beneficiary an amount equal to the fees charged for
dormitory residence during that semester.
(e) A qualified beneficiary may apply a college plan,
university plan, or dormitory residence plan toward any eligible
independent college or university. An independent college or university which is located and chartered in West Virginia, is
not for profit, is accredited as required by section seven,
article four, chapter eighteen-b of this code is eligible for
such application. The board shall transfer or cause to have
transferred to the eligible independent college or university
designated by the qualified beneficiary an amount not to exceed
the redemption value of the advance payment contract within a
state postsecondary institution. In the event that the cost of
registration or housing fees at the independent college or
university is less than the corresponding fees at a state
postsecondary institution, the amount transferred may not exceed
the actual cost of registration or housing fees. No transfer
authorized pursuant to this subsection shall exceed the number of
semester credit hours or semesters of dormitory residence
contracted on behalf of a qualified beneficiary.
(f) A qualified beneficiary may apply the benefits of an
advance payment contract toward an eligible out-of-state college
or university. An out-of-state college or university, which is
not for profit, is accredited by a regional accrediting
association, and which confers baccalaureate degrees is eligible
for such application. The board shall transfer, or cause to have transferred, an amount not to exceed the redemption value of the
advance payment contract or the original purchase price plus five
percent compounded interest, whichever is less, after assessment
of a reasonable transfer fee. In the event that the cost of
registration or housing fees charged the qualified beneficiary at
the eligible out-of-state college or university is less than this
calculated amount, the amount transferred may not exceed the
actual cost of registration or housing fees. Any remaining
amount shall be transferred in subsequent semesters until the
transfer value is depleted. No transfer authorized pursuant to
this subsection may exceed the number of semester credit hours or
semesters of dormitory residence contracted on behalf of a
qualified beneficiary.
§18B-18-8. Solicitations for proposal.
(a) The board shall solicit proposals for the operation of
the West Virginia prepaid postsecondary education expense
program, through which the board shall contract for the services
of a records administrator, a trustee services firm and one or
more product providers.
(b) The records administrator shall be the entity designated
by the board to conduct the daily operations of the program on behalf of the board. The goals of the board in selecting a
records administrator shall be to provide all purchasers with the
most secure, well-diversified and beneficially administered
postsecondary education expense plan possible, to allow all
qualified firms interested in providing such services equal
consideration, and to provide such services to the state at no
cost and to the purchasers at the lowest cost possible.
Evaluations of proposals submitted pursuant to this subsection
include, but are not limited to, the following criteria:
(1) Fees and other costs charged to purchasers that affect
account values or operational costs related to the program;
(2) Past experience in records administration and current
ability to provide timely and accurate service in the areas of
records administration, audit and reconciliation, plan
communication, participant service and complaint resolution.
(3) Sufficient staff and computer capability for the scope
and level of service expected by the board; and
(4) Financial history and current financial strength and
capital adequacy to provide administrative services required by
the board.
(c) The trustee services firm shall be the entity designated by the board to select and supervise investment programs on
behalf of the board. The goals of the board in selecting a
trustee services firm shall be to obtain the highest standards of
professional trustee services, to allow all qualified firms
interested in providing such services equal consideration, and to
provide such services to the state at no cost and to the
purchasers at the lowest cost possible. The trustee services
firm shall agree to meet the obligations of the board to
qualified beneficiaries if moneys in the fund fail to offset the
obligations of the board as a result of imprudent selection or
supervision of investment programs by such firm. Evaluations of
proposals submitted pursuant to this subsection shall include,
but not be limited to, the following criteria:
(1) Adequacy of trustee services for supervision and
management of the program, including current operations and staff
organization and commitment of management to the proposal;
(2) Capability to execute program responsibilities within
time and regulatory constraints;
(3) Past experience in trustee services and current ability
to maintain regular and continuous interactions with the board,
records administrator and product provider;
(4) The minimum purchaser participation assumed within the
proposal and any additional requirements of purchasers;
(5) Adequacy of technical assistance and services proposed
for staff;
(6) Adequacy of a management system for evaluating and
improving overall trustee services to the program;
(7) Adequacy of facilities, equipment and electronic data
processing services; and
(8) Detailed projections of administrative costs, including
the amount and type of insurance coverage, and detailed
projections of total costs.
(d) The product providers shall be the entities designated
by the board to develop investment portfolios on behalf of the
board to achieve the purposes of this section. Product providers
shall be limited to authorized insurers as defined in chapter
thirty-three of this code, banks as defined in chapter thirty-
one-a of this code, authorized securities and exchange commission
investment advisers and investment companies as defined in the
Invest Company Act of 1940. All product providers shall have
their principal place of business and corporate charter located
and registered in the United States. In addition, each product provider shall agree to meet the obligations of the board to
qualified beneficiaries if moneys in the fund fail to offset the
obligations of the board as a result of imprudent investing by
the provider. Each authorized insurer shall evidence superior
performance overall on an acceptable level of surety in meeting
its obligations to its policyholders and other contractual
obligations. Only qualified public depositories approved by the
state insurance commissioner and treasurer shall be eligible for
board consideration. Each investment company shall provide
investment plans as specified within the request for proposals.
The goals of the board in selecting a product provider company
shall be to provide all purchasers with the most secure, well-
diversified and beneficially administered postsecondary education
expense plan possible, to allow all qualified firms interested in
providing such services equal consideration, and to provide such
services to the state at no cost and to the purchasers at the
lowest cost possible. Evaluations of proposals submitted
pursuant to this subsection shall include, but not be limited to,
the following criteria:
(1) Fees and other costs charged to purchasers that affect
account values or operational costs related to the program;
(2) Past and current investment performance, including
investment and interest rate history, guaranteed minimum rates of
interest, consistency of investment performance, and any terms
and conditions under which moneys are held;
(3) Past experience and ability to provide timely and
accurate service in the areas of records administration, benefit
payments, investment management and complaint resolution; and
(4) Financial history and current financial strength and
capital adequacy to provide products, including operating
procedures and other methods of protecting program assets.
§18B-18-9. Liability of the state.
The state shall agree to meet the obligations of the board
to qualified beneficiaries if moneys in the fund fail to offset
the obligations of the board. The Legislature shall appropriate
to the prepaid postsecondary education expense trust fund the
amount necessary to meet the obligations of the board to
qualified beneficiaries.
§18B-18-10. Fund assets.
The assets of the fund shall be maintained, invested and
expended solely for the purposes of this article and shall not be
loaned, transferred or otherwise used by the state for any purpose other than the purposes of this article. This section
does not prohibit the board from investing in, by purchase or
otherwise, bonds, notes or other obligations of the state or an
agency or instrumentality of the state. Unless otherwise
specified by the board, assets of the fund shall be expended in
the following order of priority:
(a) To make payments to state postsecondary institutions on
behalf of qualified beneficiaries;
(b) To make refunds upon termination of advance payment
contracts; and
(c) To pay the costs of program administration and
operations.
§18B-18-11. Exemption from creditors.
Moneys paid into or out of the fund by or on behalf of a
purchaser or qualified beneficiary of an advance payment contract
made under this section, which contract has not been terminated,
are exempt from all claims of creditors of the purchaser or the
beneficiary.
§18B-18-12. Payments through payroll deductions.
The state or any state agency, county, municipality or other
political subdivision may, by contract or collective bargaining agreement, agree with any employee to remit payments toward
advance payment contracts through payroll deductions made by the
appropriate officer or officers of the state, state agency,
county, municipality or political subdivision. The payments
shall be held and administered in accordance with this article.
§18B-18-13. Disclaimer of admission to a state postsecondary
institution.
Nothing in this section shall be construed as a promise or
guarantee that a qualified beneficiary will be admitted to a
state postsecondary institution or to a particular state
postsecondary institution, will be allowed to continue enrollment
at a state postsecondary institution after admission, or will be
graduated from a state postsecondary institution.
§18B-18-14. Discontinuance of program.
In the event that the state determines the program to be
financially infeasible, the state may discontinue the provision
of the program. Any qualified beneficiary who has been accepted
by and is enrolled or is within five years of enrollment in an
eligible independent college or university or state postsecondary
institution shall be entitled to exercise the complete benefits
for which he has contracted. All other contract holders shall receive a refund, pursuant to subdivision (7), subsection (a) of
section six, of the amount paid in and an additional amount in
the nature of interest at a rate that corresponds, at a minimum,
to the prevailing interest rates for savings accounts provided by
banks and savings and loan associations.
NOTE: The purpose of this bill is to create a Prepaid
Postsecondary Education Expense Fund to be administered by the
Prepaid Postsecondary Education Expense Board.
This article is new; therefore, strike-throughs and
underscoring have been omitted.