Text: HF00458 Text: HF00460 Text: HF00400 - HF00499 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN
1 1 Section 1. NEW SECTION. 261D.1 LEGISLATIVE FINDINGS.
1 2 The general assembly finds and declares that educational
1 3 opportunity at the postsecondary level is a critical state
1 4 interest. It further recognizes that educational opportunity
1 5 is best ensured through the provision of postsecondary
1 6 institutions that are geographically and financially
1 7 accessible. Accordingly, it is the intent of the legislature
1 8 that a program be established through which many of the costs
1 9 associated with postsecondary attendance may be paid in
1 10 advance and fixed at a guaranteed level for the duration of
1 11 undergraduate enrollment. It is also the intent of the
1 12 legislature to provide a program that fosters timely financial
1 13 planning for postsecondary attendance and to encourage
1 14 employer participation in such planning through program
1 15 contributions on behalf of employees and the dependents of
1 16 employees.
1 17 Sec. 2. NEW SECTION. 261D.2 DEFINITIONS.
1 18 As used in this section, unless the context otherwise
1 19 requires:
1 20 1. "Advance payment contract" means a contract entered
1 21 into by the board and a purchaser pursuant to this section.
1 22 2. "Board" means the prepaid postsecondary tuition board.
1 23 3. "Fund" means the prepaid postsecondary tuition trust
1 24 fund.
1 25 4. "Purchaser" means a person who makes or is obligated to
1 26 make advance tuition or dormitory residence payments in
1 27 accordance with an advance payment contract.
1 28 5. "Program" means the Iowa prepaid postsecondary tuition
1 29 program.
1 30 6. "Qualified beneficiary" means one of the following:
1 31 a. A resident of this state at the time a purchaser enters
1 32 into an advance payment contract on behalf of the resident.
1 33 b. A nonresident who is the child of a noncustodial parent
1 34 who is a resident of this state at the time the parent enters
1 35 into an advance payment contract on behalf of the child.
2 1 c. For purposes of advance payment contracts entered into
2 2 pursuant to section 261D.6, subsection 8, a graduate of an
2 3 accredited high school in this state who is a resident of this
2 4 state at the time the graduate is designated to receive the
2 5 benefits of the advance payment contract.
2 6 7. "State postsecondary institution" means any community
2 7 college as defined in section 260C.2 or state university under
2 8 the control of the state board of regents listed in section
2 9 262.7.
2 10 8. "Tuition" means the total of all fees and charges
2 11 required for full-time undergraduate enrollment and attendance
2 12 at a state postsecondary institution.
2 13 Sec. 3. NEW SECTION. 261D.3 IOWA PREPAID POSTSECONDARY
2 14 TUITION PROGRAM.
2 15 There is created an Iowa prepaid postsecondary tuition
2 16 program to provide a means through which the cost of tuition
2 17 and dormitory residence may be paid in advance of enrollment
2 18 in a state postsecondary institution at a rate lower than the
2 19 projected corresponding cost at the time of actual enrollment.
2 20 Such payments shall be combined and invested in a manner that
2 21 yields, at a minimum, sufficient interest to generate the
2 22 difference between the prepaid amount and the cost of the
2 23 tuition and dormitory residence at the time of actual
2 24 enrollment. Students who enroll in a state postsecondary
2 25 institution pursuant to this section shall not be charged fees
2 26 in excess of the terms delineated in the advance payment
2 27 contract.
2 28 Sec. 4. NEW SECTION. 261D.4 PREPAID POSTSECONDARY
2 29 TUITION TRUST FUND.
2 30 1. There is created within the office of the treasurer of
2 31 state the prepaid postsecondary tuition trust fund under the
2 32 control of the prepaid postsecondary tuition board. The fund
2 33 shall consist of state appropriations, moneys acquired from
2 34 other governmental or private sources, and moneys remitted in
2 35 accordance with advance payment contracts. All funds
3 1 deposited into the trust fund may be invested pursuant section
3 2 12B.10, however, such investment shall not be mandatory.
3 3 Dividends, interest, and gains accruing to the trust fund
3 4 shall increase the total funds available for the program.
3 5 Notwithstanding the provisions of chapter 556, funds
3 6 associated with contracts terminated pursuant to section
3 7 261D.7, subsection 4, and canceled contracts for which no
3 8 refunds have been claimed shall increase the total funds
3 9 available for the program. However, the treasurer of state
3 10 shall establish procedures for notifying purchasers who
3 11 subsequently cancel their contracts of any unclaimed refund
3 12 and shall establish a time period after which a refund shall
3 13 not be claimed by a purchaser who canceled a contract. Any
3 14 balance contained within the fund at the end of a fiscal year
3 15 shall remain in the fund and shall be available for carrying
3 16 out the purposes of the program. In the event that dividends,
3 17 interest, and gains exceed the amount necessary for program
3 18 administration and disbursements, the treasurer of state may
3 19 designate an additional percentage of the fund to serve as a
3 20 contingency fund. Any funds of a direct-support organization
3 21 created pursuant to section 261D.6, subsection 8, shall be
3 22 exempt from the provisions of this subsection.
3 23 2. The state agrees to meet the obligations of the board
3 24 to qualified beneficiaries if moneys in the fund fail to
3 25 offset the obligations of the board. There is appropriated
3 26 annually from the general fund of the state to the prepaid
3 27 postsecondary tuition trust fund from funds not otherwise
3 28 appropriated an amount sufficient to meet the obligations of
3 29 the board to qualified beneficiaries.
3 30 3. The assets of the fund shall be maintained, invested,
3 31 and expended solely for the purposes of this chapter and shall
3 32 not be loaned, transferred, or otherwise used by the state for
3 33 any purpose other than the purposes of this chapter. This
3 34 subsection shall not be construed to prohibit the board from
3 35 investing in, by purchase or otherwise, bonds, notes, or other
4 1 obligations of the state or an agency or instrumentality of
4 2 the state. Unless otherwise specified by the board, assets of
4 3 the fund shall be expended in the following order of priority:
4 4 a. To make payments to state postsecondary institutions on
4 5 behalf of qualified beneficiaries.
4 6 b. To make refunds upon termination of advance payment
4 7 contracts.
4 8 c. To pay the costs of program administration and
4 9 operations.
4 10 4. Moneys paid into or out of the fund by or on behalf of
4 11 a purchaser or qualified beneficiary of an advance payment
4 12 contract made under this section, which contract has not been
4 13 terminated, are exempt, as provided by section 261D.15, from
4 14 all claims of creditors of the purchaser or the beneficiary.
4 15 Sec. 5. NEW SECTION. 261D.5 IOWA PREPAID POSTSECONDARY
4 16 TUITION BOARD.
4 17 1. The Iowa prepaid postsecondary tuition program shall be
4 18 administered by the Iowa prepaid postsecondary tuition board
4 19 as an agency of the state. The board is created as a public
4 20 body corporate with the authority to exercise all the powers
4 21 conferred in this chapter. The department of personnel shall
4 22 provide administrative services to the board. Investments
4 23 shall be administered through the office of the treasurer of
4 24 state at the direction of the board and in accordance with
4 25 chapter 540A.
4 26 2. The board shall consist of seven members to be composed
4 27 of the commissioner of insurance, the treasurer of state, the
4 28 auditor of state, the executive director of the state board of
4 29 regents, the director of the department of education, and two
4 30 members appointed by the governor and subject to confirmation
4 31 by the senate. Each member appointed by the governor shall
4 32 possess knowledge, skill, and experience in the areas of
4 33 accounting, actuary, risk management, or investment
4 34 management. Each member of the board not appointed by the
4 35 governor may name a designee to serve on the board on behalf
5 1 of the member; however, any designee so named shall meet the
5 2 qualifications required of gubernatorial appointees to the
5 3 board. Members appointed by the governor shall serve terms of
5 4 three years. Appointments shall comply with sections 69.16
5 5 and 69.16A. A vacancy on the board shall be filled in the
5 6 same manner as the original appointment for the remainder of
5 7 the term. Any member shall be eligible for reappointment and
5 8 shall serve until a successor qualifies. Members shall be
5 9 reimbursed for actual and necessary expenses incurred in
5 10 performance of their duties from moneys in the fund. Members
5 11 may also be eligible to receive compensation as provided in
5 12 section 7E.6.
5 13 3. The governor shall appoint a member of the board to
5 14 serve as the initial chairperson of the board. Thereafter,
5 15 the board shall elect a chair annually. The board shall
5 16 annually elect a board member to serve as vice chairperson and
5 17 shall designate a secretary-treasurer who need not be a member
5 18 of the board. The secretary-treasurer shall keep a record of
5 19 the proceedings of the board and shall be the custodian of all
5 20 printed material filed with or by the board and of its
5 21 official seal. Notwithstanding the existence of vacancies on
5 22 the board, a majority of the members shall constitute a
5 23 quorum. The board shall take no official action in the
5 24 absence of a quorum. The board shall meet, at a minimum, on a
5 25 quarterly basis at the call of the chair.
5 26 4. The board shall appoint an executive director to serve
5 27 as the chief administrative and operational officer of the
5 28 board and to perform other duties assigned to the executive
5 29 director by the board.
5 30 Sec. 6. NEW SECTION. 261D.6 POWERS AND DUTIES OF THE
5 31 BOARD.
5 32 1. The Iowa prepaid postsecondary tuition board shall have
5 33 the powers necessary to carry out the provisions of this
5 34 chapter, including but not limited to the power to do the
5 35 following:
6 1 a. Adopt an official seal and rules.
6 2 b. Sue and be sued.
6 3 c. Make and execute contracts and other necessary
6 4 instruments.
6 5 d. Establish agreements or other transactions with
6 6 federal, state, and local agencies, including state
6 7 universities and community colleges.
6 8 e. Invest funds not required for immediate disbursement in
6 9 accordance with this chapter and chapter 540A.
6 10 f. Appear in its own behalf before boards, commissions, or
6 11 other governmental agencies.
6 12 g. Hold, buy, and sell any instruments, obligations,
6 13 securities, and property determined appropriate by the board.
6 14 h. Require a reasonable length of state residence for
6 15 qualified beneficiaries.
6 16 i. Establish criteria for restricting the number of
6 17 participants in the community college plan, university plan,
6 18 and dormitory residence plan, respectively. The board may
6 19 restrict plan participation as necessary in accordance with
6 20 the criteria developed. However, any person denied
6 21 participation solely on the basis of such restriction shall be
6 22 granted priority for participation during the succeeding year.
6 23 j. Segregate contributions and payments to the fund into
6 24 various accounts and funds.
6 25 k. Contract for necessary goods and services, employ
6 26 necessary personnel, and engage the services of private
6 27 consultants, actuaries, managers, legal counsel, and auditors
6 28 for administrative or technical assistance.
6 29 l. Solicit and accept gifts, grants, loans, and other aids
6 30 from any source or participate in any other way in any
6 31 government program to carry out the purposes of this chapter.
6 32 m. Require and collect administrative fees and charges in
6 33 connection with any transaction and impose reasonable
6 34 penalties, including default, for delinquent payments or for
6 35 entering into an advance payment contract on a fraudulent
7 1 basis.
7 2 n. Procure insurance against any loss in connection with
7 3 the property, assets, and activities of the fund or the board.
7 4 o. Impose reasonable time limits on use of the tuition and
7 5 dormitory benefits provided by the program. However, any such
7 6 limitation shall be specified within the advance payment
7 7 contract.
7 8 p. Delineate the terms and conditions under which payments
7 9 may be withdrawn from the fund and impose reasonable fees and
7 10 charges for such withdrawal. Such terms and conditions shall
7 11 be specified within the advance payment contract.
7 12 q. Provide for the receipt of contributions in lump sums
7 13 or installment payments.
7 14 r. Establish other policies, procedures, and criteria to
7 15 implement and administer the provisions of this chapter.
7 16 s. Require that purchasers of advance payment contracts
7 17 verify, under oath, any requests for contract conversions,
7 18 substitutions, transfers, cancellations, refund requests, or
7 19 contract changes of any nature.
7 20 2. The board shall administer the fund in a manner that is
7 21 sufficiently actuarially sound to defray the obligations of
7 22 the program. The board shall annually evaluate or cause to be
7 23 evaluated the actuarial soundness of the fund. If the board
7 24 perceives a need for additional assets in order to preserve
7 25 actuarial soundness, the board may adjust the terms of
7 26 subsequent advance payment contracts to ensure such soundness.
7 27 3. The board, acting with the approval and assistance of
7 28 the office of the treasurer of state, shall establish a
7 29 comprehensive investment plan for the purposes of this
7 30 section. The comprehensive investment plan shall specify the
7 31 investment policies to be utilized by the board in its
7 32 administration of the fund. The board may place assets of the
7 33 fund in savings accounts or use the same to purchase fixed or
7 34 variable life insurance or annuity contracts, securities,
7 35 evidence of indebtedness, or other investment products
8 1 pursuant to the comprehensive investment plan and in such
8 2 proportions as may be designated or approved under that plan.
8 3 Such insurance, annuity, savings, or investment products shall
8 4 be underwritten and offered in compliance with the applicable
8 5 federal and state laws, regulations, and rules by persons who
8 6 are duly authorized by applicable federal and state
8 7 authorities. Within the comprehensive investment plan, the
8 8 board may authorize investment vehicles, or products incident
8 9 thereto, as may be available or offered by qualified companies
8 10 or persons.
8 11 4. The board may delegate responsibility for
8 12 administration of the comprehensive investment plan required
8 13 in subsection 3 to a person the board determines to be
8 14 qualified. The person shall be compensated by the board.
8 15 Directly or through the person, the board may contract with a
8 16 private corporation or institution to provide such services as
8 17 may be a part of the comprehensive investment plan or as may
8 18 be deemed necessary by the board or the person, including, but
8 19 not limited to, providing consolidated billing, individual and
8 20 collective recordkeeping and accountings, and asset purchase,
8 21 control, and safekeeping.
8 22 5. The board shall annually prepare or cause to be
8 23 prepared a report setting forth in appropriate detail an
8 24 accounting of the fund and a description of the financial
8 25 condition of the program at the close of each fiscal year.
8 26 The report shall be submitted to the general assembly on or
8 27 before March 31 annually. In addition, the board shall make
8 28 the report available to purchasers of advance payment
8 29 contracts. The board shall provide to the state board of
8 30 regents, the Iowa association of community college presidents,
8 31 and the director of the department of education, by March 31
8 32 annually, complete advance payment contract sales information
8 33 including projected postsecondary enrollments of qualified
8 34 beneficiaries. The accounts of the fund shall be subject to
8 35 annual audits by the auditor of state.
9 1 6. The board shall solicit answers to applicable ruling
9 2 requests from the federal Internal Revenue Service regarding
9 3 the tax status of fees paid pursuant to an advance payment
9 4 contract to the purchaser or qualified beneficiary and from
9 5 the United States securities and exchange commission regarding
9 6 the application of federal securities laws to the trust. The
9 7 board shall make the status of such requests known before
9 8 entering into an advance payment contract.
9 9 7. The board shall issue requests for proposals for the
9 10 marketing of the Iowa prepaid postsecondary tuition program.
9 11 The entity designated pursuant to this subsection shall serve
9 12 as a centralized marketing agent for the program and shall be
9 13 solely responsible for the marketing of the program. Any
9 14 materials produced for the purpose of marketing the program
9 15 shall be submitted to the board for review. Any educational
9 16 institution may distribute marketing materials produced for
9 17 the program. However, all such materials shall have been
9 18 approved by the board prior to distribution. Neither the
9 19 state nor the board shall be liable for misrepresentation of
9 20 the program by a marketing agent.
9 21 8. The board may establish a direct-support organization
9 22 that meets the following requirements:
9 23 a. Is a nonprofit Iowa corporation, incorporated under the
9 24 provisions of chapter 504A.
9 25 b. Is organized and operated exclusively to receive, hold,
9 26 invest, and administer property and to make expenditures to or
9 27 for the benefit of the program.
9 28 c. Is an organization that the board, after review, has
9 29 certified to be operating in a manner consistent with the
9 30 goals of the program and in the best interests of the state.
9 31 Unless so certified, the organization shall not use the name
9 32 of the program.
9 33 d. Is subject to an annual audit by an independent
9 34 certified public accountant in accordance with rules
9 35 promulgated by the board. The annual audit shall be submitted
10 1 to the division of insurance of the department of commerce and
10 2 the auditor of state for review. The division of insurance
10 3 and auditor of state shall have the authority to require and
10 4 receive from the organization or its independent auditor any
10 5 detail or supplemental data relative to the operation of the
10 6 organization. The identities of donors who desire to remain
10 7 anonymous shall be confidential and exempt from the provisions
10 8 of chapter 22, and such anonymity shall be maintained in the
10 9 auditor's report. Information received by the organization
10 10 that is otherwise confidential or exempt by law shall retain
10 11 that status. Any sensitive, personal information regarding
10 12 contract beneficiaries, including their identities, is exempt
10 13 from the provisions of chapter 22. The chairperson of the
10 14 board and the executive director shall be directors of the
10 15 direct-support organization and shall jointly name three other
10 16 individuals to serve as directors of the organization.
10 17 9. The board may endorse insurance coverage written
10 18 exclusively for the purpose of protecting advance payment
10 19 contracts, and their purchasers or beneficiaries, which may be
10 20 issued in the form of a group life policy and which is exempt
10 21 from the provisions of chapter 509.
10 22 10. The board shall adopt rules under chapter 17A for the
10 23 administration of the Iowa prepaid postsecondary tuition
10 24 program. In carrying out the provisions of this chapter, the
10 25 board shall provide that the program is defined and provided
10 26 for by rule as necessary to assure that the program is exempt
10 27 from federal taxation as a qualified state tuition program
10 28 under Internal Revenue Code } 529.
10 29 Sec. 7. NEW SECTION. 261D.7 ADVANCE PAYMENT CONTRACTS –
10 30 TUITION AND DORMITORY RESIDENCE.
10 31 1. The prepaid postsecondary tuition board shall construct
10 32 advance payment contracts for tuition and advance payment
10 33 contracts for dormitory residence in accordance with the
10 34 provisions of this section and section 261D.9. The contents
10 35 of both such contracts shall include, but not be limited to,
11 1 the following:
11 2 a. The amount of the payment or payments and the number of
11 3 payments required from a purchaser on behalf of a qualified
11 4 beneficiary.
11 5 b. The terms and conditions under which purchasers shall
11 6 remit payments, including, but not limited to, the date or
11 7 dates upon which each payment shall be due.
11 8 c. Provisions for late payment charges and for default.
11 9 d. Provisions for penalty fees for withdrawals from the
11 10 fund.
11 11 e. Except for an advance payment contract entered into
11 12 pursuant to section 261D.6, subsection 8, the name and date of
11 13 birth of the qualified beneficiary on whose behalf the
11 14 contract is drawn and the terms and conditions under which
11 15 another person may be substituted as the qualified
11 16 beneficiary.
11 17 f. The name of any person who may terminate the contract.
11 18 The terms of the contract shall specify whether the contract
11 19 may be terminated by the purchaser, the qualified beneficiary,
11 20 a specific designated person, or any combination of these
11 21 persons.
11 22 g. The terms and conditions under which a contract may be
11 23 terminated, the name of the person entitled to any refund due
11 24 as a result of termination of the contract pursuant to such
11 25 terms and conditions, and the amount of refund, if any, due to
11 26 the person so named.
11 27 h. The time limitations, if any, within which the
11 28 qualified beneficiary must claim any benefits through the
11 29 program.
11 30 i. Other terms and conditions deemed by the board to be
11 31 necessary or proper.
11 32 2. In addition to the provisions of subsection 1, an
11 33 advance payment contract for tuition shall include, but not be
11 34 limited to, the following:
11 35 a. The number of semester credit hours contracted by the
12 1 purchaser.
12 2 b. The type of plan the contracted credit hours will be
12 3 applied toward, as provided in section 261D.9.
12 4 c. The assumption of a contractual obligation by the board
12 5 to the qualified beneficiary to provide for a specified number
12 6 of semester credit hours of undergraduate instruction at a
12 7 state postsecondary institution, not to exceed the average
12 8 number of credit hours required for the granting of the degree
12 9 that corresponds to the plan purchased on behalf of the
12 10 qualified beneficiary.
12 11 3. In addition to the provisions of subsection 1, an
12 12 advance payment contract for dormitory residence shall
12 13 include, but not be limited to, the following:
12 14 a. The number of semesters of dormitory residence
12 15 contracted by the purchaser.
12 16 b. The assumption of a contractual obligation by the board
12 17 to the qualified beneficiary to provide for a specified number
12 18 of semesters of dormitory residence at a state university, not
12 19 to exceed the maximum number of semesters of full-time
12 20 enrollment required for the conference of a baccalaureate
12 21 degree.
12 22 4. An advance payment contract may provide that contracts
12 23 which have not been terminated or the benefits exercised
12 24 within a specified period of time shall be considered
12 25 terminated. Time expended by a qualified beneficiary as an
12 26 active duty member of any of the armed services of the United
12 27 States shall be added to the period of time specified pursuant
12 28 to this paragraph. A purchaser or qualified beneficiary whose
12 29 advance payment contract is terminated pursuant to this
12 30 subsection is not entitled to a refund. The board shall
12 31 retain any moneys paid by the purchaser for an advance payment
12 32 contract that has been terminated in accordance with this
12 33 subsection. Moneys retained by the board in accordance with
12 34 this paragraph are exempt from chapter 556, and must be used
12 35 by the board to further the purposes of this chapter.
13 1 5. Information that identifies the purchasers or
13 2 beneficiaries of any plan adopted under this section and their
13 3 advance payment account activities is exempt from the
13 4 provisions of chapter 22. However, the board may authorize
13 5 the program's records administrator to release such
13 6 information to a community college, college, or university in
13 7 which a beneficiary may enroll or is enrolled in accordance
13 8 with section 261D.9. Community colleges, colleges, and
13 9 universities shall maintain such information as exempt from
13 10 the provisions of chapter 22.
13 11 Sec. 8. NEW SECTION. 261D.8 CONTRACT REFUNDS.
13 12 1. A refund provided pursuant to section 261D.7,
13 13 subsection 1, paragraph "g", shall not exceed the amount paid
13 14 into the fund by the purchaser. In the event that an advance
13 15 payment contract is converted from a university to a community
13 16 college tuition plan, the refund amount shall be reduced by
13 17 the amount transferred to a community college on behalf of the
13 18 qualified beneficiary. However, refunds may exceed the amount
13 19 paid into the fund in the following circumstances:
13 20 a. If the beneficiary is awarded a scholarship, the terms
13 21 of which cover the benefits included in the advance payment
13 22 contracts, moneys paid for the purchase of the advance payment
13 23 contracts shall be returned to the purchaser in semester
13 24 installments coinciding with the matriculation by the
13 25 beneficiary in amounts of either the original purchase price
13 26 plus five percent compounded interest, or the current rates at
13 27 state postsecondary institutions, whichever is less.
13 28 b. In the event of the death or total disability of the
13 29 beneficiary, moneys paid for the purchase of advance payment
13 30 contracts shall be returned to the purchaser together with
13 31 five percent compounded interest, or the current rates at
13 32 state postsecondary institutions, whichever is less.
13 33 c. If an advance payment contract is converted from a
13 34 university plan to a community college plan, the amount
13 35 refunded shall be the value of the original advance payment
14 1 contract minus the value of the contract after the conversion.
14 2 2. A refund shall not be authorized through an advance
14 3 payment contract for any school year partially attended but
14 4 not completed. For purposes of this section, a school year
14 5 partially attended but not completed shall mean any one
14 6 semester when the student is still enrolled at the conclusion
14 7 of the official drop-add period, but withdraws before the end
14 8 of the semester. If a beneficiary does not complete a
14 9 community college plan or university plan for reasons other
14 10 than specified in subsection 1, the purchaser shall receive a
14 11 refund of the amount paid into the fund for the remaining
14 12 unattended years of the advance payment contract pursuant to
14 13 rules promulgated by the board.
14 14 Sec. 9. NEW SECTION. 261D.9 COMMUNITY COLLEGE,
14 15 UNIVERSITY, AND DORMITORY RESIDENCE PLANS – CONTRACTS.
14 16 1. At a minimum, the board shall make advance payment
14 17 contracts available for three independent plans to be known as
14 18 the community college plan, the university plan, and the
14 19 dormitory residence plan. The plans shall be established as
14 20 follows:
14 21 a. The community college plan contract shall provide
14 22 prepaid tuition for a specified number of undergraduate
14 23 semester credit hours not to exceed the average number of
14 24 hours required for the granting of an associate degree.
14 25 However, nothing in this paragraph shall be construed to
14 26 prevent a qualified beneficiary from using plan benefits for
14 27 tuition costs for a vocational-technical program at a
14 28 community college. The cost of participation in the community
14 29 college plan shall be based primarily on the average current
14 30 and projected tuition within the community college system and
14 31 the number of years expected to elapse between the purchase of
14 32 the plan on behalf of a qualified beneficiary and the exercise
14 33 of the benefits provided in the plan by such beneficiary.
14 34 Qualified beneficiaries shall bear the cost of any laboratory
14 35 fees associated with enrollment in specific courses. Each
15 1 qualified beneficiary shall be classified as a resident for
15 2 tuition purposes regardless of actual legal residence.
15 3 b. The university plan contract shall provide prepaid
15 4 tuition for a specified number of undergraduate semester
15 5 credit hours not to exceed the average number of hours
15 6 required for the granting of a baccalaureate degree. The cost
15 7 of participation in the university plan shall be based
15 8 primarily on the current and projected tuition within the
15 9 state university under the control of the state board of
15 10 regents and the number of years expected to elapse between the
15 11 purchase of the plan on behalf of a qualified beneficiary and
15 12 the exercise of the benefits provided in the plan by such
15 13 beneficiary. Qualified beneficiaries shall bear the cost of
15 14 any laboratory fees associated with enrollment in specific
15 15 courses. In the event that a qualified beneficiary fails to
15 16 be admitted to a state university or chooses to attend a
15 17 community college, the qualified beneficiary may convert the
15 18 average number of semester credit hours required for the
15 19 granting of an associate degree from a university plan to a
15 20 community college plan and may retain the remaining semester
15 21 credit hours in the university plan or may request a refund
15 22 for prepaid credit hours in excess of the average number of
15 23 semester credit hours required for the granting of an
15 24 associate degree pursuant to paragraph "a". Each qualified
15 25 beneficiary shall be classified as a resident for tuition
15 26 purposes regardless of actual legal residence.
15 27 c. The dormitory residence advance payment plan contract
15 28 shall provide prepaid housing fees in a dormitory of the state
15 29 university for a maximum of ten semesters of full-time
15 30 undergraduate enrollment in a state university. Dormitory
15 31 residence plans are optional and may be purchased only in
15 32 conjunction with a university plan. Dormitory residence plans
15 33 shall be purchased in increments of two semesters. The cost
15 34 of participation in the dormitory residence plan shall be
15 35 based primarily on the average current and projected housing
16 1 fees within the state university and the number of years
16 2 expected to elapse between the purchase of the plan on behalf
16 3 of a qualified beneficiary and the exercise of the benefits
16 4 provided in the plan by such beneficiary. Qualified
16 5 beneficiaries shall bear the cost of any additional elective
16 6 charges such as laundry service or long-distance telephone
16 7 service. Each state university may specify the residence
16 8 halls or other university-held residences eligible for
16 9 inclusion in the plan. In addition, a state university may
16 10 request immediate termination of a dormitory residence
16 11 contract based on a violation or multiple violations of rules
16 12 of the residence hall or other university-held residences.
16 13 Qualified beneficiaries shall have the highest priority in the
16 14 assignment of housing within university residence halls. In
16 15 the event that sufficient housing is not available for all
16 16 qualified beneficiaries, the board shall refund the purchaser
16 17 or qualified beneficiary an amount equal to the fees charged
16 18 for dormitory residence during that semester. If a qualified
16 19 beneficiary fails to be admitted to a state university or
16 20 chooses to attend a community college that operates one or
16 21 more dormitories or residency opportunities, or has one or
16 22 more dormitories or residency opportunities operated by the
16 23 community college direct-support organization, the qualified
16 24 beneficiary may transfer or cause to have transferred to the
16 25 community college, or community college direct-support
16 26 organization, the fees associated with dormitory residence.
16 27 Dormitory fees transferred to the community college or
16 28 community college direct-support organization shall not exceed
16 29 the maximum fees charged for state university dormitory
16 30 residence for the purposes of this section, or the fees
16 31 charged for community college or community college direct-
16 32 support organization dormitories or residency opportunities,
16 33 whichever is less.
16 34 2. A qualified beneficiary may apply a community college
16 35 plan, university plan, or dormitory residence plan toward an
17 1 accredited private postsecondary institution as defined in
17 2 section 261.9, subsection 1, or a postsecondary school that
17 3 meets the requirements of section 261B.3A, if the school also
17 4 meets the definition of an eligible educational institution as
17 5 provided in federal Internal Revenue Code } 135(c). The board
17 6 shall transfer or cause to have transferred to the accredited
17 7 private postsecondary institution or postsecondary school
17 8 designated by the qualified beneficiary an amount not to
17 9 exceed the redemption value of the advance payment contract.
17 10 In the event that the cost of tuition or dormitory residence
17 11 fees at the accredited private postsecondary institution or
17 12 postsecondary school is less than the corresponding tuition or
17 13 fees at a state postsecondary institution, the amount
17 14 transferred shall not exceed the actual cost of tuition or
17 15 dormitory residence fees. A transfer authorized pursuant to
17 16 this subsection shall not exceed the number of semester credit
17 17 hours or semesters of dormitory residence contracted on behalf
17 18 of a qualified beneficiary.
17 19 3. A qualified beneficiary may apply the benefits of an
17 20 advance payment contract toward an eligible out-of-state
17 21 college or university. An out-of-state college or university
17 22 which is not for profit, is accredited by a regional
17 23 accrediting association, and which confers baccalaureate
17 24 degrees shall be eligible for such application. The board
17 25 shall transfer, or cause to have transferred, an amount not to
17 26 exceed the redemption value of the advance payment contract or
17 27 the original purchase price plus five percent compounded
17 28 interest, whichever is less, after assessment of a reasonable
17 29 transfer fee. In the event that the cost of tuition or
17 30 dormitory residence fees charged the qualified beneficiary at
17 31 the eligible out-of-state college or university is less than
17 32 this calculated amount, the amount transferred shall not
17 33 exceed the actual cost of tuition or dormitory residence fees.
17 34 Any remaining amount shall be transferred in subsequent
17 35 semesters until the transfer value is depleted. A transfer
18 1 authorized pursuant to this subsection shall not exceed the
18 2 number of semester credit hours or semesters of dormitory
18 3 residence contracted on behalf of a qualified beneficiary.
18 4 Sec. 10. NEW SECTION. 261D.10 PROGRAM OPERATION
18 5 SERVICES.
18 6 1. The board shall issue requests for proposals for the
18 7 operation of the Iowa prepaid postsecondary tuition program,
18 8 through which the board shall contract for the services of a
18 9 records administrator, a trustee services firm, and one or
18 10 more product providers.
18 11 2. The records administrator selected in accordance with
18 12 this section shall be the entity designated by the board to
18 13 conduct the daily operations of the program on behalf of the
18 14 board. The goals of the board in selecting a records
18 15 administrator shall be to provide all purchasers with the most
18 16 secure, well-diversified, and beneficially administered
18 17 postsecondary tuition plan possible, to allow all qualified
18 18 firms interested in providing such services equal
18 19 consideration, and to provide such services to the state at no
18 20 cost and to the purchasers at the lowest cost possible.
18 21 Evaluations of proposals submitted pursuant to this section
18 22 shall include, but are not limited to, the following criteria:
18 23 a. Fees and other costs charged to purchasers that affect
18 24 account values or operational costs related to the program.
18 25 b. Past experience in records administration and current
18 26 ability to provide timely and accurate service in the areas of
18 27 records administration, audit and reconciliation, plan
18 28 communication, participant service, and complaint resolution.
18 29 c. Sufficient staff and computer capability for the scope
18 30 and level of service expected by the board.
18 31 d. Financial history and current financial strength and
18 32 capital adequacy to provide administrative services required
18 33 by the board.
18 34 3. The trustee services firm selected in accordance with
18 35 this section shall be the entity designated by the board to
19 1 select and supervise investment programs on behalf of the
19 2 board. The goals of the board in selecting a trustee services
19 3 firm shall be to obtain the highest standards of professional
19 4 trustee services, to allow all qualified firms interested in
19 5 providing such services equal consideration, and to provide
19 6 such services to the state at no cost and to the purchasers at
19 7 the lowest cost possible. The trustee services firm shall
19 8 agree to meet the obligations of the board to qualified
19 9 beneficiaries if moneys in the prepaid postsecondary tuition
19 10 trust fund fail to offset the obligations of the board as a
19 11 result of imprudent selection or supervision of investment
19 12 programs by such firm. Evaluations of proposals submitted
19 13 pursuant to this paragraph shall include, but are not limited
19 14 to, the following criteria:
19 15 a. Adequacy of trustee services for supervision and
19 16 management of the program, including current operations and
19 17 staff organization and commitment of management to the
19 18 proposal.
19 19 b. Capability to execute program responsibilities within
19 20 time and regulatory constraints.
19 21 c. Past experience in trustee services and current ability
19 22 to maintain regular and continuous interactions with the
19 23 board, records administrator, and product provider.
19 24 d. The minimum purchaser participation assumed within the
19 25 proposal and any additional requirements of purchasers.
19 26 e. Adequacy of technical assistance and services proposed
19 27 for staff.
19 28 f. Adequacy of a management system for evaluating and
19 29 improving overall trustee services to the program.
19 30 g. Adequacy of facilities, equipment, and electronic data
19 31 processing services.
19 32 h. Detailed projections of administrative costs, including
19 33 the amount and type of insurance coverage, and detailed
19 34 projections of total costs.
19 35 4. a. The product providers selected in accordance with
20 1 this section shall be the entities designated by the board to
20 2 develop investment portfolios on behalf of the board to
20 3 achieve the purposes of this section. Product providers shall
20 4 be limited to authorized insurers, banks as defined in chapter
20 5 524.103, associations organized under chapter 534, authorized
20 6 securities and exchange commission investment advisers, and
20 7 investment companies as defined in the federal Investment
20 8 Company Act of 1940, 15 U.S.C. } 80(a), and operated in
20 9 accordance with 17 C.F.R. } 270.2a-7. All product providers
20 10 shall have their principal place of business and corporate
20 11 charter located and registered in the United States. In
20 12 addition, each product provider shall agree to meet the
20 13 obligations of the board to qualified beneficiaries if moneys
20 14 in the fund fail to offset the obligations of the board as a
20 15 result of imprudent investing by such provider. Each
20 16 authorized insurer shall evidence superior performance overall
20 17 on an acceptable level of surety in meeting its obligations to
20 18 its policyholders and other contractual obligations. Only
20 19 qualified public depositories approved by the state
20 20 commissioner of insurance and treasurer of state shall be
20 21 eligible for board consideration. Each investment company
20 22 shall provide investment plans as specified within the request
20 23 for proposals.
20 24 b. The goals of the board in selecting a product provider
20 25 company shall be to provide all purchasers with the most
20 26 secure, well-diversified, and beneficially administered
20 27 program possible, to allow all qualified firms interested in
20 28 providing such services equal consideration, and to provide
20 29 such services to the state at no cost and to the purchasers at
20 30 the lowest cost possible. Evaluations of proposals submitted
20 31 pursuant to this subsection shall include, but not be limited
20 32 to, the following criteria:
20 33 (1) Fees and other costs charged to purchasers that affect
20 34 account values or operational costs related to the program.
20 35 (2) Past and current investment performance, including
21 1 investment and interest rate history, guaranteed minimum rates
21 2 of interest, consistency of investment performance, and any
21 3 terms and conditions under which moneys are held.
21 4 (3) Past experience and ability to provide timely and
21 5 accurate service in the areas of records administration,
21 6 benefit payments, investment management, and complaint
21 7 resolution.
21 8 (4) Financial history and current financial strength and
21 9 capital adequacy to provide products, including operating
21 10 procedures and other methods of protecting program assets.
21 11 Sec. 11. NEW SECTION. 261D.11 PAYROLL DEDUCTIONS.
21 12 Any state agency, county, city, or other political
21 13 subdivision may, by contract or collective bargaining
21 14 agreement, agree with any employee to remit payments toward
21 15 advance payment contracts through payroll deductions made by
21 16 the appropriate officer or officers of a state agency, county,
21 17 city, or other political subdivision. Such payments shall be
21 18 held and administered in accordance with this chapter.
21 19 Sec. 12. NEW SECTION. 261D.12 ADMISSION OBLIGATION NOT
21 20 IMPLIED.
21 21 Nothing in this chapter shall be construed as a promise or
21 22 guarantee that a qualified beneficiary will be admitted to a
21 23 state postsecondary institution or to a particular state
21 24 postsecondary institution, will be allowed to continue
21 25 enrollment at a state postsecondary institution after
21 26 admission, or will be graduated from a state postsecondary
21 27 institution.
21 28 Sec. 13. NEW SECTION. 261D.13 PROGRAM DISCONTINUATION.
21 29 In the event that the board determines the program to be
21 30 financially infeasible, the board may discontinue the
21 31 provision of the program. Any qualified beneficiary who has
21 32 been accepted by and is enrolled or is within five years of
21 33 enrollment in a state postsecondary institution or an eligible
21 34 independent college or university or shall be entitled to
21 35 exercise the complete benefits for which contracted. All
22 1 other contract holders shall receive a refund, pursuant to
22 2 section 261D.8, of the amount paid in and an additional amount
22 3 in the nature of interest at a rate that corresponds, at a
22 4 minimum, to the prevailing interest rates for savings accounts
22 5 provided by banks and savings and loan associations.
22 6 Sec. 14. NEW SECTION. 261D.14 IOWA PREPAID TUITION
22 7 SCHOLARSHIP PROGRAM.
22 8 1. The Iowa prepaid tuition scholarship program is
22 9 established to provide economically disadvantaged youth with
22 10 prepaid postsecondary tuition scholarships. The direct-
22 11 support organization established pursuant to section 261D.6,
22 12 subsection 8, shall administer the program with the assistance
22 13 and cooperation of the state board of education and the
22 14 college student aid commission to achieve the following
22 15 objectives:
22 16 a. Provide an incentive for economically disadvantaged
22 17 youth to improve school attendance and academic performance in
22 18 order to graduate and pursue a postsecondary education.
22 19 b. Obtain the commitment and involvement of private sector
22 20 entities by virtue of funding provided on a one-to-one
22 21 matching basis by the private sector and the state.
22 22 c. Purchase prepaid tuition scholarships for students who
22 23 are certified by the state board of education to the direct-
22 24 support organization to meet minimum economic and school
22 25 requirements and who remain drug free and crime free.
22 26 2. For the purpose of this section, "drug free" means not
22 27 being convicted of, or adjudicated delinquent for, any
22 28 violation of chapter 124 or 126 after being designated a
22 29 recipient of an Iowa prepaid tuition scholarship.
22 30 3. For the purpose of this section, "crime free" means not
22 31 being convicted of, or adjudicated delinquent for, any felony
22 32 or aggravated misdemeanor as defined in chapter 701 after
22 33 being designated a recipient of an Iowa prepaid tuition
22 34 scholarship.
22 35 4. There is appropriated from the general fund of the
23 1 state to the college student aid commission for each fiscal
23 2 year an amount sufficient to meet the funding match as
23 3 provided in subsection 1, paragraph "b".
23 4 Sec. 15. NEW SECTION. 261D.15 EXEMPTION OF MONEYS IN THE
23 5 PREPAID POSTSECONDARY TUITION TRUST FUND FROM LEGAL PROCESS.
23 6 Moneys paid into or out of the fund to purchase an advance
23 7 payment contract by or on behalf of a purchaser or qualified
23 8 beneficiary pursuant to this chapter, are not liable to
23 9 attachment, garnishment, or legal process in the state in
23 10 favor of any creditor of the purchaser or beneficiary of such
23 11 advance payment contract, unless the contract has been
23 12 terminated in accordance with this chapter.
23 13 Sec. 16. INITIAL APPOINTMENTS -- MEETING. Notwithstanding
23 14 section 261D.5, subsection 2, in making the initial
23 15 appointments to the Iowa prepaid postsecondary tuition board,
23 16 the governor shall appoint one member to serve for one year,
23 17 one member to serve for two years, and one member to serve for
23 18 three years. The treasurer of state shall convene the initial
23 19 meeting not later than September 1, 1997. The board shall
23 20 elect from its membership a chairperson, vice chairperson, and
23 21 secretary-treasurer, and shall adopt rules to govern its
23 22 proceedings.
23 23 EXPLANATION
23 24 This bill provides for a program by which individuals may
23 25 purchase for a beneficiary a contract to prepay postsecondary
23 26 tuition and dormitory costs. Payments made under a contract
23 27 shall be combined and invested in a manner that yields, at a
23 28 minimum, sufficient interest to generate the difference
23 29 between the prepaid amount and the cost of tuition and
23 30 dormitory residence at the time of actual enrollment.
23 31 Students who enroll in a state postsecondary institution
23 32 pursuant to this section shall not be charged fees in excess
23 33 of the terms of the advance payment contract.
23 34 The bill creates the prepaid postsecondary tuition board to
23 35 administer the program and outlines the duties and powers of
24 1 the board. A prepaid postsecondary tuition trust fund is
24 2 established within the office of the treasurer of state under
24 3 the control of the prepaid postsecondary tuition board. If
24 4 the moneys in the fund fail to offset the obligations of the
24 5 board, the bill obligates the state to meet the obligations of
24 6 the board to qualified beneficiaries by appropriating to the
24 7 trust fund the amount necessary to meet the obligations.
24 8 Under the bill, a qualified beneficiary is defined to be
24 9 one of the following: a resident of this state at the time a
24 10 purchaser enters into an advance payment contract on behalf of
24 11 the resident, a nonresident who is the child of a noncustodial
24 12 parent who is a resident of this state at the time the parent
24 13 enters into an advance payment contract on behalf of the
24 14 child, or a graduate of an accredited high school in this
24 15 state who is a resident of this state at the time the child is
24 16 designated to receive the benefits of the advance payment
24 17 contract.
24 18 The program is to be administered by the Iowa prepaid
24 19 postsecondary tuition board as an agency of the state. The
24 20 board is created as a public body corporate. The department
24 21 of personnel shall provide administrative services to the
24 22 board. Investments are administered through the office of the
24 23 treasurer of state at the direction of the board.
24 24 The board, as created by the bill, shall consist of seven
24 25 members: the commissioner of insurance, the treasurer of
24 26 state, the auditor of state, the executive director of the
24 27 state board of regents, the executive director of the
24 28 department of education, and two members appointed by the
24 29 governor and subject to confirmation by the senate. Members
24 30 appointed by the governor shall serve terms of three years
24 31 except that, in making the initial appointments, the governor
24 32 shall appoint one member to serve for one year, one member to
24 33 serve for two years, and one member to serve for three years.
24 34 The board is directed to appoint an executive director to
24 35 serve as the chief administrative and operational officer of
25 1 the board.
25 2 Under the bill, the Iowa prepaid postsecondary tuition
25 3 board shall hold, buy, and sell any instruments, obligations,
25 4 securities, and property it deems appropriate. The board may
25 5 require and collect administrative fees and charges, impose
25 6 reasonable penalties for delinquent payments, and impose
25 7 reasonable time limits on use of the tuition benefits.
25 8 The board is directed to administer the fund in an
25 9 actuarially sound manner to defray the obligations of the
25 10 program, and to annually evaluate soundness of the fund.
25 11 The board, acting with the approval and assistance of the
25 12 office of the treasurer of state, shall establish a
25 13 comprehensive investment plan, and may place fund assets in
25 14 savings accounts or use them to purchase fixed or variable
25 15 life insurance or annuity contracts, securities, evidence of
25 16 indebtedness, or other investment products.
25 17 The board is also directed to annually prepare a report
25 18 setting forth an accounting of the fund and a description of
25 19 the financial condition of the program.
25 20 The board may establish a nonprofit, direct-support
25 21 organization to organize and operate to receive, hold, invest,
25 22 and administer property and to make expenditures to or for the
25 23 benefit of the program.
25 24 The bill contains a provision for marketing the plan.
25 25 Under the bill, the board is to construct advance payment
25 26 contracts for tuition and advance payment contracts for
25 27 dormitory residence and the bill sets forth the requirements
25 28 for each contract. The board is also to develop and implement
25 29 three independent plans: the community college plan, the
25 30 university plan, and the dormitory residence plan, which may
25 31 be contracted for only if also under the university plan.
25 32 The bill also provides for program refunds and the
25 33 conditions under which a refund may be made.
25 34 The board shall issue requests for proposals for the
25 35 operation of the program, through which the board shall
26 1 contract for the services of a records administrator, a
26 2 trustee services firm, and one or more product providers.
26 3 A purchaser may arrange with the state or any state agency,
26 4 county, city, or other political subdivision, through a
26 5 contract or collective bargaining agreement, for payroll
26 6 deductions to make contract payments under the bill.
26 7 In the event that the state determines the program to be
26 8 financially infeasible, the bill provides that the board may
26 9 discontinue the program. A program beneficiary who has been
26 10 accepted by and is enrolled or is within five years of
26 11 enrollment in a postsecondary institution would be entitled to
26 12 exercise the complete benefits for which he or she has
26 13 contracted. All other contract holders would receive a refund
26 14 of the amount paid in and an additional amount in the nature
26 15 of the prevailing interest rates for savings accounts provided
26 16 by banks and savings and loan associations.
26 17 The bill also creates an Iowa prepaid tuition scholarship
26 18 program to provide economically disadvantaged youths with
26 19 prepaid postsecondary tuition scholarships. The direct-
26 20 support organization established under the bill administers
26 21 the program with the assistance and cooperation of the state
26 22 board of education and the college student aid commission.
26 23 LSB 1749HH 77
26 24 kh/cf/24.1
Text: HF00458 Text: HF00460 Text: HF00400 - HF00499 Text: HF Index Bills and Amendments: General Index Bill History: General Index
Iowa General Assembly
Search: House Bills and Amendments (77th General Assembly)
© 1997 Cornell College and League of Women Voters of Iowa
Comments about this site or page? webmaster@legis.iowa.gov. Please remember that the person listed above does not vote on bills. Direct all comments concerning legislation to State Legislators.
Last update: Fri Mar 14 03:41:13 CST 1997
URL: /DOCS/GA/77GA/Legislation/HF/00400/HF00459/970305.html
jhf