COMMITTEE SUBSTITUTE
FOR
H. B. 2159
(By Mr. Speaker, Mr. Kiss, and Delegates Michael,
Williams, Manuel, Spencer, Anderson and Clements)
(Originating in the Committee on Finance)
[April 3, 1997]
A BILL to repeal sections ten, eleven, twelve, thirteen, fourteen,
fifteen, sixteen and seventeen, article thirty, chapter
eighteen of the code of West Virginia, one thousand nine
hundred thirty-one, as amended; to amend and reenact section
twelve-a, article twenty-one, chapter eleven of said code; to
amend and reenact sections one, two, three, four, five, six,
seven, eight and nine, article thirty, chapter eighteen of
said code; and to amend and reenact section four, article ten,
chapter thirty-eight of said code, all relating to the
creation of a prepaid higher education tuition program;
repealing provisions which will no longer apply to the
tuition trust; providing an additional modification reducing
federal adjusted gross income; the West Virginia Education
Post-Secondary Prepaid Tuition Trust Act; providing a title,
legislative findings and definitions; board of trustees composition, proceedings, powers and oversight by the
Legislative oversight commission on education accountability;
creating the West Virginia Post-Secondary education prepaid
tuition trust fund; providing a state income tax deduction for
purchasers; requiring reports, accounts and annual audits;
liberal construction; expiration of article; and to exempt
from bankruptcy proceedings payments made to the post- secondary education tuition trust fund.
Be it enacted by the Legislature of West Virginia:
That sections ten, eleven, twelve, thirteen, fourteen,
fifteen, sixteen and seventeen, article thirty, chapter eighteen of
the code of West Virginia, one thousand nine hundred thirty-one, as
amended, be repealed; that section twelve-a, article twenty-one,
chapter eleven of said code be amended and reenacted; that sections
one, two, three, four, five, six, seven, eight and nine, article
thirty, chapter eighteen of said code be amended and reenacted; and
that section four, article ten, chapter thirty-eight of said code
be amended and reenacted, all to read as follows:
CHAPTER 11. TAXATION.
ARTICLE 21. PERSONAL INCOME TAX.
§11-21-12a. Additional modification reducing federal adjusted
gross income.
In addition to amounts authorized to be subtracted from
federal adjusted gross income pursuant to subsection (c) of section twelve of this article, any payment made under a prepaid tuition
prepayment contract or tuition trust account contract, or both, as
provided under section fourteen seven, article thirty, chapter
eighteen of this code, shall also be an authorized modification
reducing federal adjusted gross income.
CHAPTER 18. EDUCATION.
ARTICLE 30. WEST VIRGINIA HIGHER EDUCATION TUITION TRUST ACT.
§18-30-1. Title.
This article shall be known and may be cited as the "West
Virginia Higher Education Prepaid Tuition Trust Act."
§18-30-2. Legislative findings and purpose.
The Legislature hereby finds and determines that the
advancement and improvement of higher education in the state of
West Virginia is a proper governmental function and purpose of the
state. The Legislature also finds that the creation of a prepaid
tuition trust fund, to assist qualified students or their families
in financing a portion of the costs of attending an accredited
higher education institution or program in the state of West
Virginia will increase the number of qualified students who will
seek to attend such accredited higher education institutions and
programs, which will be of benefit to such accredited higher
education institutions and programs, and will therefore advance and
improve higher education in the state of West Virginia. It is
therefore the legislative intent of this article to establish a higher education prepaid tuition trust fund to assist qualified
students to pay in advance the tuition costs of attending
accredited higher education institutions and programs and thereby
to encourage such qualified students to attend accredited higher
education institutions and programs, in the state of West Virginia.
The Legislature finds and declares that prepaid tuition trust fund
contracts neither contain nor obligate any general revenue funds.
§18-30-3. Definitions.
For the purpose of this article, the following terms have the
meanings ascribed to them, unless the context clearly indicates
otherwise:
(a) "Accredited higher education institution or program" means
any accredited higher education institution or accredited higher
education program offered through an accredited provider.
(b) "Beneficiary" means any intended or unintended beneficiary
of the prepaid tuition contract between the purchaser and the
board, including any beneficiary designated by the purchaser, his
agent, or his estate in the event that the intended beneficiary is
unable or unwilling to benefit under the terms of the trust fund.
(c) "Board" means the board of trustees of the prepaid higher
education tuition trust fund as provided in section four of this
article.
(d) "Outside tuition fee" means the amount of tuition or fees,
or both, payable to an accredited higher education institution or program outside the state or independent state institutions or
programs upon the election by a beneficiary to attend such
institutions or programs. This fee shall generally be the amount
of the average public tuition costs or fees, or both, of state
institutions of higher learning as determined by the board of
trustees on an annual basis.
(e) "Prepaid tuition contract" means a contract entered into
by the board and a purchaser pursuant to this article.
(f) "Purchaser" means an individual, corporation or other
entity who makes or is obligated to make payments in accordance
with a prepaid tuition contract entered into pursuant to this
chapter.
(g) "Trust fund" means the prepaid higher education tuition
trust fund.
(h) "Trustee chairman" means the Treasurer of the State of
West Virginia who shall have fiduciary responsibility to oversee
the board's management of the trust fund's corpus, assets and
income for the economic benefit of the beneficiary.
(I) "Tuition" means the quarter, semester or term charges
imposed by an accredited higher education institution or program
and all mandatory fees required as a condition of enrollment by all
students.
§18-30-4. Appointment of board of trustees; terms; compensation;
proceedings generally.
(a) There hereby created a board of trustees of the prepaid
higher education tuition trust fund shall consist of nine members.
The state superintendent of schools, and the treasurer shall serve
as ex officio voting members of the board. The treasurer shall be
the trustee chairman of the board. Seven other members with
knowledge, skill and experience in an academic, business or
financial field, who shall be residents of the state shall be
appointed by the governor, by and with the advice and consent of
the Senate. Of the seven members appointed by the governor, at
least one shall be a representative of the state university system
and at least one shall be a representative of the state college
system. At least two shall be private citizens not employed by, or
an officer of, the state or any political subdivision thereof. At
least one shall represent the interest of private institutions of
higher education located in this state who shall be appointed from
one or more nominees of the West Virginia association of private
colleges. Appointed members shall serve a term of six years and
may be reappointed at the expiration of their terms but in no case
shall appointees serve more than twelve consecutive years. In the
event of a vacancy among appointed members, an appointment shall be
made to fill the unexpired term. Of the initial appointments, the
governor shall appoint one member to a one-year term, one to a two- year term, one to a three-year term, one to a four-year term, one
to a five-year term and one to a six-year term. Thereafter, all terms shall be for six years.
(b) Members of the board of trustees shall serve without
compensation, but for the first twelve months after the effective
date of this section members shall be reimbursed by the state
treasurer's office for expenses, including travel expenses,
actually incurred by a member in the official conduct of the
business of the board at the same rate as is paid the employees of
the state. Thereafter, the state treasurer may charge back to the
trust fund as administrative expenses all expenses, including
travel expenses, actually incurred and paid to board members for
the conduct of their official duties.
(c) The State Treasurer shall be the trustee chairman and
presiding officer of the board, and may appoint such other
employees as the board considers advisable or necessary. A
majority of the members of the board constitute a quorum for the
transaction of the business of the trust fund.
§18-30-5. Powers of the board.
In addition to the powers granted by any other provision of
this article, the board shall have the powers necessary or
convenient to carry out the purposes and provisions of this
article, the purposes and objectives of the trust fund including,
but not limited to, the following express powers:
(a) To adopt and amend bylaws;
(b) To propose legislative rules for promulgation in accordance with the provisions of article three-a, chapter twenty- nine-a of this code to effectuate the purposes of this article;
(c) To invest any funds of the trust fund with the West
Virginia state board of investments in accordance with applying the
provisions of article six, chapter twelve of this code. Any
investments made under this article shall be made with the care,
skill, prudence and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and
familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims. Fiduciaries
shall diversify plan investments to the extent permitted by law so
as to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so;
(d) To execute contracts and other necessary instruments;
(e) To impose reasonable limits on the number of prepaid
tuition contract purchasers participating in the trust fund at any
given period of time;
(f) To contract for necessary goods and services, to employ
necessary personnel, and to engage the services of private persons
for administrative and technical assistance in carrying out the
responsibilities of the trust fund;
(g) To solicit and accept gifts, including bequests or other
testamentary gifts made by will, trust or other disposition,
grants, loans and other aids from any source or to participate in any other way in any federal, state or local governmental programs
in carrying out the purposes of this article;
(h) To define the terms and conditions under which payments
may be withdrawn from the trust fund and impose reasonable charges
for such withdrawal: Provided, That payments made by employers on
behalf of beneficiaries selected by their employees are deemed
fully vested in the employees from time of receipt of such payments
by the board;
(I) To devise and offer to purchasers other educational
programs, such as the purchase of books and other educational
supplies, using the residuary trust assets in a purchaser's account
in lieu of the return of such funds to the purchaser if the
purchaser so agrees;
(j) To impose reasonable time limits on the use of the tuition
benefits provided by the program;
(k) To provide for the receipt of contributions to the trust
fund in lump sums or installment payments; and
(l) To establish other policies, procedures and criteria
necessary to implement and administer the provisions of this
article.
§18-30-6. West Virginia higher education tuition trust
created.
(a) There is hereby created within the accounts held by the
state treasurer the prepaid tuition trust fund account to be administered by the board until and unless the Legislature shall
determine otherwise, and titled the "Prepaid Higher Education
Tuition Trust Fund".
(b) The location of the trust fund shall be the state
treasurer's office, and the facilities of the state treasurer shall
be used and employed in the administration of the trust fund
including but without limitation thereto, the keeping of records,
the management of bank accounts and other investments, the transfer
of funds, and the safekeeping of securities evidencing investments.
(c) Payments received by the board from purchasers on behalf
of beneficiaries or from any other source, public or private, shall
be placed in the trust fund.
(d) The corpus, assets and income of the trust fund do not
constitute public funds of the state.
(e) The trust fund, through the trustee chairman, is
authorized to receive any gift or transfer of property, real or
personal of any nature, from any source as may be approved by the
board, or any terms and conditions as may be imposed by the board:
Provided, That all property received by the trust shall be
converted into cash within ninety days of receipt.
(f) The board shall cause an actuarial study to be
periodically performed to ensure that sufficient funds are being
deposited to the fund to meet the obligations of the trust fund.
Specifically, the board shall annually evaluate or cause to be evaluated, the actuarial soundness of the trust fund. If the board
finds that additional contributions are needed in order to preserve
the actuarial soundness of the fund, it may adjust the terms of
pre-existing and subsequent prepaid tuition contracts to ensure
such soundness: Provided, That any necessary adjustment to pre-
existing contracts may only be assessed on future payments and not
retroactively upon previous payments made by the purchaser or
donors to the trust fund. There shall be no obligation of state
general revenue funds to the trust fund for any purpose whatsoever.
(g) In order to fulfill the charitable and public purposes of
this article, neither the income nor the property of the trust fund
shall be subject to taxation by the state or any of its political
subdivisions.
(h) The board is hereby empowered to propose rules to provide
for the withdrawal and disbursement of contract funds on an
actuarially sound basis subject to oversight by the Legislative
oversight commission on education accountability as provided by
section eleven, article three-a, chapter twenty-nine of this code.
(I) There is hereby created a separate account within the
state treasurer's office to be known as the "Prepaid Higher
Education Tuition Trust Fund Administrative Account" for the
purposes of implementing and maintaining the trust fund accounts
pursuant to this article. There is hereby charged against the fees
collected and interest earned from the trust fund accounts, amounts as are reasonable and customary for the state treasurer to fund
the administrative costs of maintaining the trust fund accounts.
The charges shall be subject to review by the legislative oversight
commission on education accountability.
§18-30-7. Income tax deduction for purchasers.
As provided in section twelve-a, article twenty-one, chapter
eleven of this code, the purchaser may subtract for state income
tax purposes from federal adjusted gross income the total annual
amount of payments made to the trust fund under a prepaid tuition
contract.
§18-30-8. Report and account; annual audit.
(a) In addition to any other requirements of this article, the
board shall:
(1) Provide annually summary information on the financial
condition of the trust fund to all purchasers of prepaid tuition
contracts;
(2) Prepare, or cause to be prepared, an annual accounting and
actuarial report of the trust fund and transmit a copy of same to
the Governor, the President of the Senate, the Speaker of the House
of Delegates and the legislative oversight commission on education
accountability; and
(3) Make all necessary and appropriate arrangements with
accredited higher education institutions and programs in order to
fulfill its obligations under the prepaid tuition contracts which arrangements shall include the satisfaction by the trust fund of
current applicable tuition and fee charges on behalf of a
beneficiary to the accredited higher education institution or
program.
(b) All accounts of the board, including the trust fund
accounts, are subject to an annual external audit, by a nationally
recognized accounting firm in conjunction with the annual federal
audit.
§18-30-9. Expiration of article.
This article shall become void upon the first day of January,
two thousand two, if the trust has not entered into a prepaid
tuition contract with a purchaser before that date.
CHAPTER 38. LIENS.
ARTICLE 10. FEDERAL TAX LIENS; ORDERS AND DECREES IN BANKRUPTCY.
§38-10-4. Exemptions of property in bankruptcy proceedings.
Pursuant to the provisions of 11 U.S.C. 522(b)(1), this state
specifically does not authorize debtors who are domiciled in this
state to exempt the property specified under the provisions of 11
U.S.C. 522(d).
Any person who files a petition under the federal bankruptcy
law may exempt from property of the estate in a bankruptcy
proceeding the following property:
(a) The debtor's interest, not to exceed fifteen thousand
dollars in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a
cooperative that owns property that the debtor or a dependent of
the debtor uses as a residence or in a burial plot for the debtor
or a dependent of the debtor.
(b) The debtor's interest, not to exceed two thousand four
hundred dollars in value, in one motor vehicle.
(c) The debtor's interest, not to exceed four hundred dollars
in value in any particular item, in household furnishings,
household goods, wearing apparel, appliances, books, animals, crops
or musical instruments, that are held primarily for the personal,
family or household use of the debtor or a dependent of the debtor:
Provided, That the total amount of personal property exempted under
this subsection shall not exceed eight thousand dollars.
(d) The debtor's interest, not to exceed one thousand dollars
in value, in jewelry held primarily for the personal, family or
household use of the debtor or a dependent of the debtor.
(e) The debtor's interest, not to exceed in value eight
hundred dollars plus any unused amount of the exemption provided
under subsection (a) of this section in any property.
(f) The debtor's interest, not to exceed one thousand five
hundred dollars in value, in any implements, professional books or
tools of the trade of the debtor or the trade of a dependent of the
debtor.
(g) Any unmatured life insurance contract owned by the debtor, other than a credit life insurance contract.
(h) The debtor's interest, not to exceed in value eight
thousand dollars less any amount of property of the estate
transferred in the manner specified in 11 U.S.C. 542(d), in any
accrued dividend or interest under, or loan value of, any unmatured
life insurance contract owned by the debtor under which the insured
is the debtor or an individual of whom the debtor is a dependent.
(I) Professionally prescribed health aids for the debtor or a
dependent of the debtor.
(j) The debtor's right to receive:
(1) A social security benefit, unemployment compensation or a
local public assistance benefit;
(2) A veterans' benefit;
(3) A disability, illness or unemployment benefit;
(4) Alimony, support or separate maintenance, to the extent
reasonably necessary for the support of the debtor and any
dependent of the debtor;
(5) A payment under a stock bonus, pension, profit sharing,
annuity or similar plan or contract on account of illness,
disability, death, age or length of service, to the extent
reasonably necessary for the support of the debtor and any
dependent of the debtor, unless:
(A) Such plan or contract was established by or under the
auspices of an insider that employed the debtor at the time the debtor's rights under such plan or contract arose;
(B) Such payment is on account of age or length of service;
and
(C) Such plan or contract does not qualify under section
401(a), 403(a), 403(b), 408 or 409 of the Internal Revenue Code of
1954.
(k) The debtor's right to receive, or property that is
traceable to:
(1) An award under a crime victim's reparation law;
(2) A payment on account of the wrongful death of an
individual of whom the debtor was a dependent, to the extent
reasonably necessary for the support of the debtor and any
dependent of the debtor;
(3) A payment under a life insurance contract that insured the
life of an individual of whom the debtor was a dependent on the
date of such individual's death, to the extent reasonably necessary
for the support of the debtor and any dependent of the debtor;
(4) A payment, not to exceed fifteen thousand dollars on
account of personal bodily injury, not including pain and suffering
or compensation for actual pecuniary loss, of the debtor or an
individual of whom the debtor is a dependent; or
(5) A payment in compensation of loss of future earnings of
the debtor or an individual of whom the debtor is or was a
dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.
(6) Payments made to the prepaid higher education tuition
trust fund on behalf of any beneficiary.
This section shall not be construed to affect the
applicability of any provision of the federal bankruptcy law other
than 11 U.S.C. 552(d).