Bill Text: CA AB34 | 2017-2018 | Regular Session | Amended
Bill Title: Student financial aid: Children’s Savings Account Program.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Failed) 2018-02-01 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB34 Detail]
Download: California-2017-AB34-Amended.html
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Amended
IN
Assembly
April 20, 2017 |
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Amended
IN
Assembly
March 23, 2017 |
CALIFORNIA LEGISLATURE—
2017–2018 REGULAR SESSION
| Assembly Bill | No. 34 |
| Introduced by Assembly Member Nazarian (Coauthor: Assembly Member Cristina Garcia) |
December 05, 2016 |
An act to add Article 19.5 (commencing with Section 69996) to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code, relating to student financial aid, and making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 34, as amended, Nazarian.
Children’s Student financial aid: Children’s Savings Account Program.
Under existing law, the segments of postsecondary education in this state are the University of California, the California State University, the California Community Colleges, independent institutions of higher education, and private postsecondary educational institutions. The Golden State Scholarshare Trust Act establishes the Golden State Scholarshare Trust, under the administration of the Scholarshare Investment Board.
This bill would establish the Children’s Savings Account Program, under the administration of the board, for the purposes of expanding access to higher education through savings. The program would require the board to establish a 529 plan account under Section 529 of the Internal Revenue Code of 1986, as specified, for each California resident child born on or after January 1, 2018, who is a California resident at the time of
birth, except for the children whose parents or legal guardians have opted out, as specified. Upon appropriation by the Legislature, the bill would require the board to make an initial contribution to the account and provide certain incentives for contributions made by participants to the account, as specified. The bill would prescribe the powers and duties of the board to administer and implement the program. The bill would require the board to aggressively market the program to California residents, as specified.
This bill would establish the Children’s Savings Account Program Fund in the State Treasury. The bill would continuously appropriate the moneys in the fund to the board for the program. The bill would require the Director of Finance to determine, at the commencement of each fiscal year, whether there are sufficient funds to implement the program in that fiscal year, and to communicate this determination to the board in a timely manner each fiscal
year.
Digest Key
Vote: MAJORITY Appropriation: YES Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Article 19.5 (commencing with Section 69996) is added to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code, to read:Article 19.5. Children’s Savings Account Program
69996.
This article shall be known, and may be cited, as the Children’s Savings Account Program.69996.1.
The Children’s Savings Account Program is hereby established. The board shall administer the program for the purposes of expanding access to higher education through savings.69996.2.
For the purposes of this article, the following terms have the following meanings:(a) “Account” means a 529 plan account under Section 529 of the Internal Revenue Code that is established pursuant to this article.
(b) “Beneficiary” has the same meaning as “designated beneficiary,” as provided in paragraph (1) of subsection (e) of Section 529 of the Internal Revenue Code.
(c) “Board” means the Scholarshare Investment Board established pursuant to Section 69984.
(d) “Fund” means the Children’s
Savings Account Program Fund established pursuant to Section 69996.6.
(e) “Institution of higher education” has the same meaning as “eligible educational institution,” as provided in paragraph (5) of subsection (e) of Section 529 of the Internal Revenue Code.
(f) “Internal Revenue Code” means the Internal Revenue Code of 1986, as it is amended from time to time, if, as determined by the board, the amendment is consistent with the purposes of this article.
(g) “Low-income households” means households with a total annual adjusted gross income less than seventy-five thousand dollars ($75,000).
(h) “Participant” means a parent, legal guardian, or any other private
individual or entity who contributes moneys to an account on behalf of a beneficiary. A beneficiary may be a participant and may contribute to his or her account.
(i) “Program” means the Children’s Savings Account Program established pursuant to this article.
(j) “Qualified higher education expenses” means the expenses of attendance at an institution of higher education as provided in paragraph (3) of subsection (e) of Section 529 of the Internal Revenue Code.
(k) “Seed” means the initial contribution into an account.
69996.3.
(a) Each child born on or after January 1, 2018, who is a California resident at the time of birth, is eligible for the program.(b) No later than 90 days after a birth certificate is issued for a child described in subdivision (a), the State Department of Public Health shall provide the board with a copy of the child’s birth certificate. Information in the certificate is confidential and shall not be disclosed except as necessary for the program. After receiving the birth certificate from the department, the board shall open an account for the child through the program. A parent or legal guardian may
shall be given information about the program and an opportunity to opt out of the program at the time of the birth certificate application process for the child. program.
(c) Upon appropriation by the Legislature to the fund, the board shall establish each account created pursuant to this article in accordance with all of the following:
(1) The board shall make a seed deposit into the account of an amount determined by the board. The board shall provide an additional seed deposit into an account for each beneficiary in a low-income household.
(2) The board shall provide an annual match of contributions made to the account by a participant on a one-to-one dollar basis up to one hundred dollars ($100). ($100) per account.
(3) The board shall establish additional dollar incentives for accomplishments of the child, determined by the board, including, but not limited to, good school attendance.
(4) The board shall provide additional savings incentives, determined by the board, for beneficiaries in low-income households.
(d) All of the following requirements apply for an account established
pursuant to this article:
(1) Distributions from the account shall only be permitted for qualifying higher education expenses in compliance with Section 529 of the Internal Revenue Code.
(2) A beneficiary shall not be eligible for the incentives described in paragraphs (2) to (4), inclusive, of subdivision (c) during any period in which he or she is not a California resident.
(3) (A) A parent or legal guardian, residing in California, of a child who meets the criteria in subparagraph (B) may apply with the board to enroll his or her child in the program as a beneficiary. The enrollee shall be eligible for the match incentives described in paragraphs (2) to (4), inclusive, of subdivision (c), as applicable, but
is not eligible for a seed deposit.
(B) The child is a current California resident under 16 years of age who was either of the following:
(i) Born a California resident before January 1, 2018.
(ii) Not a California resident at the time of birth.
(4) If a beneficiary does not use any portion, or all, of the funds in his or her account for a qualified higher education expense for any reason, including death or disability of the beneficiary, all state, local, and federal contributions made to the account and any earnings from those funds shall be forfeited and deposited into the fund for the program.
(5) A participant shall retain ownership of all of his or her contributions made to an account up to the date of utilization for payment of qualified higher education expenses for the beneficiary, and all interest derived from the investment of the payments contributions shall be deemed to be held for the benefit of the beneficiary. Neither the contributions, including nor any interest derived, may be pledged as collateral for any loan.
(6) An account shall be closed when funds are fully withdrawn for qualified expenses, non-qualified expenses, or rollover of funds to another 529 plan. An account at zero balance following withdrawal of all funds shall be considered closed. If additional contributions are not made to the account within a year, the account shall be fully closed and removed from the system.
(6)
(7) Except as provided in paragraph (7), (8), if an account
is canceled before any payment of qualified higher education expenses for the beneficiary is made, each participant linked to the account shall retain ownership of all of his or her contributions made to the account and a reversionary right to receive interest on the contributions at the rate of interest at which the
contributions were invested. The participant shall be entitled to a refund of an amount equal to the then current market value of the amount of all of his or her contributions made to the account.
(7)
(8) If there has been a decrease in the value of funds in an account at the time it is canceled, each participant linked to the account shall not have ownership rights to any amount above the market value of the funds at the time of cancellation.
(8)
(9) If an account is canceled after any payment of qualified higher education expenses for the beneficiary is made, and a balance remains in the account, the balance shall be proportionally refunded pursuant to this section to each participant linked to the account based on the amount of his or her contributions made to the account.
(e) The board shall encourage parents and legal guardians, beneficiaries, and community entities, including nonprofit and health care organizations, to invest in accounts.
69996.4.
The board shall have the power and authority to do all of the following:(a) Sue and be sued.
(b) Make and enter into contracts necessary for the implementation and administration of the program.
(c) Cause moneys in the fund to be held and invested and reinvested.
(d) Enter into agreements with any institution of higher education or any federal or state agency or other entity as required for the effectuation of its rights and duties.
(e) Accept any grants, gifts, appropriation, appropriations, and other moneys from any unit of federal, state, or local government or any other person, firm, partnership, or corporation for deposit to the fund.
(f) Make payments to institutions of higher education on behalf of beneficiaries.
(g) Make provisions for the payment of costs of administration and operation of the program.
(h) Carry out the duties and obligations of the program pursuant to this article and have all other powers as may be necessary for the effectuation of the purposes,
objectives, and provisions of this article.
(i) Carry out studies and projections to advise participants regarding present and estimated future higher education expenses and the levels of financial participation in the program required to enable participants to achieve their education funding objectives.
(j) Contract for goods and services and engage personnel, including consultants, actuaries, managers, counsel, and auditors, as necessary for the purpose of rendering professional, managerial, and technical assistance and advice.
(k) Participate in any federal, state, or local governmental program for the benefit of the program.
(l) Procure insurance against
any loss in connection with the property, assets, or activities of the program.
(m) Administer the funds of the program.
(n) Adopt regulations for the implementation and administration of the program.
69996.5.
The board shall aggressively market the program to California residents. The board shall include in its marketing efforts information designed to educate California residents about the benefits of saving for higher education and information to help them decide the level of program participation and the combination of savings strategies that may be appropriate for them. The board shall also develop a mechanism to keep participants in the program motivated about their education funding objectives.69996.6.
(a) The Children’s Savings Account Program Fund is hereby established in the State Treasury. Notwithstanding Section 13340 of the Government Code, moneys in the fund shall be continuously appropriated, without regard to fiscal years, to the(b) Subject to available funding, the program shall be implemented
and enrollment of beneficiaries shall begin before January 1, 2019. The board may establish an implementation timeline for the program based on available funding. If the board does not secure adequate funds to implement the program before January 1, 2019, program implementation may be delayed while the board makes good faith efforts to secure necessary funding. The board may accept gifts, grants, awards, matching contributions, interest income, and appropriations from individuals, businesses, the state and local governments, state and local governmental entities, and third-party sources to implement the program on terms the board deems advisable.
(c) The Director of
Finance shall determine, at the commencement of each fiscal year, whether there are sufficient funds to implement the program in that fiscal year. The Director of Finance shall communicate this determination to the board in a timely manner each fiscal year.
