Bill Text: OR HB3018 | 2013 | Regular Session | Introduced

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Bill Title: Relating to Oregon 529 college savings plans.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Failed) 2013-07-08 - In committee upon adjournment. [HB3018 Detail]

Download: Oregon-2013-HB3018-Introduced.html

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     77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session

NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .

LC 2098

                         House Bill 3018

Sponsored by Representatives GREENLICK, WILLIAMSON;
  Representative GORSEK

                             SUMMARY

The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.

  Creates prepaid tuition contracts for Oregon residents under
Oregon 529 College Savings Network. Limits tuition changes in
accordance with projected rates adopted by Oregon 529 College
Savings Board.
  Requires state to purchase insurance to protect against fund
shortfalls. Allows use of prepaid tuition credits toward tuition
at out-of-state or private university. Authorizes establishment
of financing plans for purchase of prepaid tuition credits.
Limits age of tuition beneficiaries when program begins.

                        A BILL FOR AN ACT
Relating to Oregon 529 college savings plans; creating new
  provisions; and amending ORS 341.290, 348.841, 348.860 and
  351.063.
  Whereas it is in the interest of Oregon's economy to develop
and maintain a highly educated and productive workforce; and
  Whereas every Oregonian should have the opportunity to obtain a
college education; and
  Whereas encouraging and helping Oregon families save for the
future cost of college promotes the public good; and
  Whereas the cost of a college education continues to rise
annually; and
  Whereas a state 529 college savings plan offers tax advantages
and savings incentives to complement the shared responsibility
model of funding a college degree; and
  Whereas Oregon families should have a safe and secure option to
save for the future costs of college tuition; and
  Whereas this Act will provide Oregon families with the peace of
mind of a guaranteed savings option for the future costs of
college; now, therefore,
Be It Enacted by the People of the State of Oregon:
  SECTION 1.  { + Sections 2 to 5 of this 2013 Act are added to
and made a part of ORS 348.841 to 348.873. + }
  SECTION 2.  { + (1) The Oregon 529 College Savings Board shall
establish a prepaid tuition plan for designated beneficiaries who
are Oregon residents. The plan shall allow persons to enter into
contracts for purchase of prepaid tuition credits redeemable for
individual credit units at any higher education institution.
  (2) The board shall set the price for prepaid tuition credits
based on factors including, but not limited to:
  (a) The uniform projected change in tuition rates adopted
pursuant to section 3 (2) and (4) of this 2013 Act.
  (b) The cost of tuition at the public universities listed in
ORS 352.002 and the community colleges.
  (c) The projected rate of return established by the board for
funds deposited into the Oregon 529 College Savings Network Fund.
  (3) If the designated beneficiary of a prepaid tuition contract
enrolls in a higher education institution that is not a public
university listed in ORS 352.002 or a community college, the
board shall adopt rules allowing reimbursement to the account
holder of an amount to be determined by the board.
  (4) The board shall contract for insurance guaranteeing the
projected rate of return for funds invested by the account holder
into the Oregon 529 College Savings Network Fund. The board may
include the costs of insurance within administrative costs and
expenses, as authorized by ORS 348.856. The board is not subject
to the provisions of ORS chapters 279A and 279B in awarding
contracts under this subsection.
  (5) The board shall include in all prepaid tuition contracts a
provision allowing the board to cancel a contract if the
insurance required under subsection (4) of this section cannot be
obtained or if the board determines that the purchase price is
excessive.
  (6) The board shall establish a process for refunds from an
account if the designated beneficiary does not attend a higher
education institution, or if the designated beneficiary does not
use all of the beneficiary's prepaid tuition credits.
  (7) The board may establish a tuition financing plan for
account owners that allows for installment payments for prepaid
tuition credits.
  (8) The board may establish a program whereby a public
university listed in ORS 352.002 or a community college may offer
a prepaid tuition plan through the Oregon 529 College Savings
Network. + }
  SECTION 3.  { + (1) Prior to May 1 of each year, each public
university listed in ORS 352.002 and each community college
district shall submit to the Oregon 529 College Savings Board its
projected change in tuition rates for prepaid tuition contracts
entered into during the six months beginning July 1 of that year.
  (2) Upon receipt of the information under subsection (1) of
this section, the board shall adopt a uniform projected change in
tuition rates for tuition credits purchased during the six months
beginning July 1 of that year.
  (3) Prior to November 1 of each year, each public university
listed in ORS 352.002 and each community college district shall
submit to the Oregon 529 College Savings Board its projected
change in tuition rates for prepaid tuition contracts entered
into during the first six months of the following calendar year.
  (4) After receipt of the information submitted under subsection
(3) of this section, the board shall adopt a uniform projected
change in tuition rates for tuition credits purchased during the
first six months of the following calendar year.
  (5) Public universities listed in ORS 352.002 and community
college districts shall accept tuition for a designated
beneficiary at the cost allowed by the uniform projected change
in tuition rates adopted by the board for the six-month period
during which the account owner purchases the prepaid tuition
credit.
  (6) All earnings on funds deposited into the Oregon 529 College
Savings Network Fund under the terms of a prepaid tuition
contract in excess of the amount required to pay the tuition
specified in the prepaid tuition contract shall be distributed as
determined by the board. + }
  SECTION 4.  { + (1) The Oregon 529 College Savings Board may
not enter into prepaid tuition contracts under sections 2 and 3
of this 2013 Act until the board has entered into an insurance
contract as required by section 2 (4) of this 2013 Act at a price
that the board determines will maintain the affordability of
prepaid tuition contracts to a large number of Oregon residents.
  (2) If the Oregon 529 College Savings Board determines at any
time that the insurance required by section 2 (4) of this 2013
Act cannot be purchased, or if the board determines that the
purchase price is excessive, the board shall close the program to
new contracts, may cancel existing contracts and may take any
other action necessary to ensure the continued solvency of the
Oregon 529 College Savings Network Fund. + }
  SECTION 5.  { + Individuals who are 13 years of age or older
prior to the date on which prepaid tuition contracts are first
made available by the Oregon 529 College Savings Network are not
eligible to be designated as beneficiaries on a prepaid tuition
contract. + }
  SECTION 6. ORS 348.841, as amended by section 25, chapter 31,
Oregon Laws 2012, is amended to read:
  348.841. As used in ORS 348.841 to 348.873:
  (1) 'Account' means an individual account established in
accordance with ORS 348.841 to 348.873.
  (2) 'Account owner' means the person who has the right to
withdraw funds from the account. The account owner may also be
the designated beneficiary of the account.
  (3) 'Board' means the Oregon 529 College Savings Board
established under ORS 348.849.
   { +  (4) 'Community college' and 'community college district '
have the meanings given those terms in ORS 341.005. + }
    { - (4) - }  { +  (5) + } 'Designated beneficiary' means,
except as provided in ORS 348.867, the individual designated at
the time the account is opened as having the right to receive a
qualified withdrawal for the payment of qualified higher
education expenses, or if the designated beneficiary is replaced
in accordance with ORS 348.867, the replacement.
    { - (5) - }  { +  (6) + } 'Financial institution' means a
bank, a commercial bank, a national bank, a savings bank, a
savings and loan, a thrift institution, a credit union, an
insurance company, a trust company, a mutual fund, an investment
firm or other similar entity authorized to do business in this
state.
    { - (6) - }  { +  (7) + } 'Higher education institution'
means an eligible education institution as defined in section
529(e)(5) of the Internal Revenue Code.
    { - (7) - }  { +  (8) + } 'Internal Revenue Code' means the
federal Internal Revenue Code as amended and in effect on
December 31, 2011.
    { - (8) - }  { +  (9) + } 'Member of the family' shall have
the same meaning as contained in section 529(e) of the Internal
Revenue Code.
    { - (9) - }  { +  (10) + } 'Network' means the Oregon 529
College Savings Network established under ORS 348.841 to 348.873.
    { - (10) - }  { +  (11) + } 'Nonqualified withdrawal' means a
withdrawal from an account that is not a qualified withdrawal.
   { +  (12) 'Prepaid tuition contract' means an agreement
entered into under sections 2 and 3 of this 2013 Act to provide
for the payment of higher education of a designated
beneficiary. + }
    { - (11) - }  { +  (13) + } 'Qualified higher education
expenses' means tuition and other permitted expenses as set forth
in section 529(e) of the Internal Revenue Code for the enrollment
or attendance of a designated beneficiary at a higher education
institution.
    { - (12) - }  { +  (14) + } 'Qualified withdrawal' means a
withdrawal made as prescribed under ORS 348.870 and made:
  (a) From an account to pay the qualified higher education
expenses of the designated beneficiary;

  (b) As the result of the death or disability of the designated
beneficiary;
  (c) As the result of a scholarship, allowance or payment
described in section 135(d)(1)(A), (B) or (C) of the Internal
Revenue Code that is received by the designated beneficiary, but
only to the extent of the amount of the scholarship, allowance or
payment; or
  (d) As a rollover or change in the designated beneficiary
described in ORS 348.867.
  SECTION 7. ORS 348.860 is amended to read:
  348.860. (1) Except as permitted in section 529 of the Internal
Revenue Code,   { - no person other than - }  { +  only + } the
Oregon 529 College Savings Board or a financial institution
in which Oregon 529 College Savings Network funds have been
invested   { - shall have the right to - }  { +  may + } direct
the investment of any contributions to or earnings from the
network.
  (2)  { + Except for a prepaid tuition contract under section 2
of this 2013 Act, + } the network, the board, each board member
and the State of Oregon may not insure any account or guarantee
any rate of return or any interest rate on any contribution.
   { +  (3) + } The network, the board, each board member and the
State of Oregon   { - may not be - }  { +  are not + } liable for
any loss incurred by any person as a result of participating in
the network.
    { - (3) - }  { +  (4) + } The board, in the exercise of its
sole discretion and without liability, may remove the network's
funds from any financial institution and reinvest the funds in a
similar or different investment alternative at another financial
institution pursuant to a contract, agreement or arrangement
entered into under ORS 348.853 (4).
  SECTION 8. ORS 341.290 is amended to read:
  341.290. The board of education of a community college district
shall be responsible for the general supervision and control of
any and all community colleges operated by the district.
Consistent with any applicable rules of the State Board of
Education, the board may:
  (1) Subject to ORS chapters 238 and 238A, employ administrative
officers, professional personnel and other employees, define
their duties, terms and conditions of employment and prescribe
compensation therefor, pursuant to ORS 243.650 to 243.782.
  (2) Enact rules for the government of the community college,
including professional personnel and other employees thereof and
students therein.
  (3) Prescribe the educational program.
  (4) Control use of and access to the grounds, buildings, books,
equipment and other property of the district.
  (5) Acquire, receive, hold, control, convey, sell, manage,
operate, lease, lease-purchase, lend, invest, improve and develop
any and all property of whatever nature given to or appropriated
for the use, support or benefit of any activity under the control
of the board, according to the terms and conditions of such gift
or appropriation.
  (6) Purchase real property upon a contractual basis when the
period of time allowed for payment under the contract does not
exceed 30 years.
  (7)  { + Subject to limitations for prepaid tuition contracts
under section 3 of this 2013 Act, + } fix standards of admission
to the community college, prescribe and collect tuition for
admission to the community college, including fixing different
tuition rates for students who reside in the district, students
who do not reside in the district but are residents of the state
and students who do not reside in the state.
  (8) Prescribe and collect fees and expend funds so raised for
special programs and services for the students and for programs
for the cultural and physical development of the students.
  (9) Provide and disseminate to the public information relating
to the program, operation and finances of the community college.
  (10) Establish or contract for advisory and consultant
services.
  (11) Take, hold and dispose of mortgages on real and personal
property acquired by way of gift or arising out of transactions
entered into in accordance with the powers, duties and authority
of the board and institute, maintain and participate in suits and
actions and other judicial proceedings in the name of the
district for the foreclosure of such mortgages.
  (12) Maintain programs, services and facilities, and, in
connection therewith, cooperate and enter into agreements with
any person or public or private agency.
  (13) Provide student services including health, guidance,
counseling and placement services, and contract therefor.
  (14) Join appropriate associations and pay any required dues
therefor from resources of the district.
  (15) Apply for federal funds and accept and enter into any
contracts or agreements for the receipt of such funds from the
federal government or its agencies for educational purposes.
  (16) Exercise any other power, duty or responsibility necessary
to carry out the functions under this section or required by law.
  (17) Prescribe rules for the use and access to public records
of the district that are consistent with ORS 192.420, and
education records of students under applicable state and federal
law and rules of the State Board of Education. Whenever a student
has attained 18 years of age or is attending an institution of
post-secondary education, the permission or consent required of
and the rights accorded to a parent of the student regarding
education records shall thereafter be required of and accorded to
only the student. However, faculty records relating to matters
such as conduct, personal and academic evaluations, disciplinary
actions, if any, and other personal matters shall not be made
available to public inspection for any purpose except with the
consent of the person who is the subject of the record or upon
order of a court of competent jurisdiction.
  (18) Enter into contracts for the receipt of cash or property,
or both, and establish charitable gift annuities pursuant to ORS
731.038; and, commit, appropriate, authorize and budget for the
payment of or other disposition of general funds to pay, in whole
or in part, sums due under an agreement for a charitable gift
annuity, and to provide the necessary funding for reserves or
other trust funds pursuant to ORS 731.038.
  (19) Encourage gifts to the district by faithfully devoting the
proceeds of such gifts to the district purposes for which
intended.
  (20) Build, furnish, equip, repair, lease, purchase and raze
facilities; and locate, buy and acquire lands for all district
purposes. Financing may be by any prudent method including but
not limited to loans, contract purchase or lease. Leases
authorized by this section include lease-purchase agreements
under which the district may acquire ownership of the leased
property at a nominal price. Such financing agreements may be for
a term of up to 30 years except for lease arrangements which may
be for a term of up to 50 years.
  (21) Participate in an educational consortium with public and
private institutions that offer upper division and graduate
instruction. Community colleges engaged in such consortiums may
expend money, provide facilities and assign staff to assist those
institutions offering upper division and graduate instruction.
  (22) Enter into contracts of insurance or medical and hospital
service contracts or may operate a self-insurance program as
provided in ORS 341.312.
  SECTION 9. ORS 351.063 is amended to read:
  351.063. (1) The State Board of Higher Education shall set
enrollment fees for each public university listed in ORS 352.002.
Enrollment fees include tuition for education and services and
any other charges found by the State Board of Higher Education to
be necessary to carry out the educational program of the Oregon
University System. { +  The cost of tuition is subject to
limitations for prepaid tuition contracts under section 3 of this
2013 Act. + }
  (2) The State Board of Higher Education shall, by rule,
establish a process under which each public university may
develop and submit proposed enrollment fees for board
consideration. The process must provide for participation of
enrolled students and the recognized student government of the
public university.
  (3) Each public university listed in ORS 352.002 is authorized
to offer fee remissions to its students, including remissions
offered on the basis of need, from any authorized source of
revenue. Moneys appropriated from the General Fund may not be
used to fund fee remissions to students of the public university.
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