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PRIOR PRINTER'S NO. 3305
PRINTER'S NO. 3485
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
2248
Session of
2018
INTRODUCED BY MILNE, O'NEILL, PEIFER, C. QUINN, MILLARD, MURT,
SCHLOSSBERG, A. DAVIS, DRISCOLL, PICKETT, ROE, SCHLEGEL
CULVER, PASHINSKI, HENNESSEY, BARBIN, CONKLIN, WATSON AND
DALEY, APRIL 10, 2018
AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES,
AS AMENDED, MAY 2, 2018
AN ACT
Amending the act of April 3, 1992 (P.L.28, No.11), entitled "An
act providing for the establishment of two programs for
postsecondary educational savings, a guaranteed savings
program and an investment program; establishing the Tuition
Account Programs Bureau within the Treasury Department and
providing duties for the Treasury Department; establishing
tuition account funds; providing for Tuition Account Program
Contracts; providing for the establishment of scholarship
programs; and further providing for duties of the
Pennsylvania Higher Education Assistance Agency," in tuition
account program, further providing for tuition account
programs and funds and establishing the Keystone Scholars
Grant Program and the Keystone Scholars Grant Program
Account; and making editorial changes.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The heading of Chapter 3 of the act of April 3,
1992 (P.L.28, No.11), known as the Tuition Account Programs and
College Savings Bond Act, is amended and the chapter is amended
by adding a subchapter heading to read:
CHAPTER 3
[TUITION ACCOUNT PROGRAM]
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POSTSECONDARY EDUCATIONAL SAVINGS PROGRAMS
SUBCHAPTER A
PRELIMINARY PROVISIONS
Section 2. The definition of "beneficiary" in section 302 of
the act is amended to read:
Section 302. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Beneficiary." A person who meets the eligibility criteria
established [by this chapter] under this subchapter and by the
department and on whose behalf an account owner enters into a
Tuition Account Program Contract.
* * *
Section 3. Chapter 3 of the act is amended by adding a
subchapter heading after section 302 to read:
SUBCHAPTER B
TUITION ACCOUNT PROGRAMS
Section 4. Sections 305 introductory paragraph, 306(a) and
(b)(1), (2.1) and (3), 307, 309.2(b) introductory paragraph,
314(a) and (c) introductory paragraph and 317 of the act are
amended to read:
Section 305. Powers of department.
In addition to the powers granted by other provisions of this
[chapter] subchapter, the department shall have the powers
necessary or convenient to carry out this [chapter] subchapter,
including, but not limited to, the power to:
* * *
Section 306. Tuition account programs; funds.
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(a) Establishment.--There are established in the State
Treasury two special funds to be known as the Tuition Account
Guaranteed Savings Program Fund and the Tuition Account
Investment Program Fund. The money in these funds shall be
invested in accordance with this [chapter] subchapter. All money
in each of the funds is hereby appropriated to the department on
a continuing basis to carry out the provisions of this [chapter]
subchapter.
(b) Administration.--
(1) The assets of each of the funds shall be preserved,
invested and expended solely pursuant to and for the purposes
set forth in this [chapter] subchapter.
* * *
(2.1) (i) Annually, after the department's fiscal year
has ended, the department shall determine whether the
Tuition Account Guaranteed Savings Program Fund has been
actuarially certified as being sufficient to defray its
obligations and whether the actuarial soundness of the
Tuition Account Guaranteed Savings Program Fund, as
actuarially evaluated, can be maintained with fewer
assets and, if so, the dollar value of any excess surplus
assets. In making the determination, the department shall
consider the projected costs and expenses of the Tuition
Account Guaranteed Savings Program, including the Tuition
Account Guaranteed Savings Program Fund and the Keystone
Scholars Grant Program Account, as well as any material
subsequent events occurring between the end of the fiscal
year and the date on which the determination is made.
(ii) [If] Except as provided under Subchapter C, if
the department determines that there are assets in excess
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of those needed to maintain actuarial soundness of the
Tuition Account Guaranteed Savings Program Fund and the
assets actuarially certified as sufficient to defray the
costs of the Tuition Account Guaranteed Savings Program,
the department may, but shall not be obligated to,
distribute the dollar value of any excess surplus assets
by making additional contributions, which will be
converted to the equivalent of tuition credits pursuant
to section 309(c), into accounts established pursuant to
Tuition Account Guaranteed Savings Program Contracts that
have not been terminated as of the date of determination.
(iii) Any distribution of any excess surplus assets
of the fund shall be made on an equitable basis as
determined by the department.
(3) The department, in conjunction with the board, shall
make an annual report to the Governor and the General
Assembly showing the condition of each of the funds. This
report shall contain the findings and recommendations of the
department and the board and the recommendations of any
private consultant under contract or volunteering services to
the department or board. The report shall detail actions
taken or needed to modify the Tuition Account Guaranteed
Savings Program to insure the fiscal sufficiency of the
Tuition Account Guaranteed Savings Program Fund to meet its
obligations under this [chapter] subchapter. With regard to
the Tuition Account Guaranteed Savings Program Fund, the
report shall address the relationship between existing and
projected net investment returns and existing and projected
tuition levels and address the advisability or necessity of
modifying the authorized investment of fund assets, the
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tuition credit price, the amount of administrative fee or
charges or the amount of refunds offered upon termination of
a Tuition Account Guaranteed Savings Program Contract.
Further, consistent with the goal of providing for the
maintenance of the fiscal sufficiency of the fund, the report
regarding each of the funds shall detail those actions taken
or needed to modify the programs so that the funds, account
owners and beneficiaries will receive favorable treatment for
purposes of Federal taxation.
* * *
Section 307. Investment policies and guidelines.
(a) General rule.--The policies governing the investment of
the Tuition Account Guaranteed Savings Program Fund shall be
directed to obtaining sufficient income to meet the fund's
obligations under this [chapter] subchapter, maintaining
necessary reserves and covering operating expenses. The policies
governing the investment of the Tuition Account Investment
Program Fund shall be directed to providing for an appropriate
balance of risk, liquidity and return commensurate with the
management of a prudent investor. With regard to each of the
funds, the department, its investment managers, program managers
and trustees shall have the authority to invest and reinvest the
funds in all lawful investments.
(b) Investment manager and trustee.--The department may
contract with one or more persons or other legal entities to
serve as investment managers, program managers and trustees to
the department on behalf of either or both of the tuition
account programs. If the department contracts with investment
managers, program managers or trustees in order to fulfill the
objectives of the tuition account programs, the investment
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managers, program managers and trustees shall work with the
department to create an investment program or programs, to
develop investment portfolios and to supervise investments and
the investment programs selected. If the department contracts
with investment managers, program managers and trustees, the
department may require that the investment managers, program
managers and trustees agree, based on actuarial projections of
program costs and expenses supplied by the department, to meet
any obligations of the Tuition Account Guaranteed Savings
Program Fund if, as a result of the imprudent selection or
supervision of investments or the investment program by the
investment managers, program managers or trustees, the Tuition
Account Guaranteed Savings Program Fund is not fiscally
sufficient to meet the fund's obligations under this [chapter]
subchapter. The department, through contract, may also impose
liability on investment managers, program managers and trustees
for losses incurred by the Tuition Account Guaranteed Savings
Program Fund, the Tuition Account Investment Program Fund or the
account owners as a result of the investment managers', program
managers' and trustees' negligent, fraudulent or imprudent
selection or supervision of investments.
Section 309.2. General provisions governing both tuition
account programs.
* * *
(b) Period of participation.--Notwithstanding any of the
provisions of this [chapter] subchapter, the following shall
apply:
* * *
Section 314. Safeguards and protections.
(a) General rule.--Nothing in this [chapter] subchapter or
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in a Tuition Account Program Contract entered into pursuant to
this [chapter] subchapter shall be construed as a promise or
guarantee by the department that a person will be admitted to an
institution of higher education, will be allowed to continue to
attend an institution of higher education after having been
admitted or will be graduated from an institution of higher
education.
* * *
(c) Construction.--Nothing in this [chapter] subchapter can
be construed to:
* * *
Section 317. Federal taxation.
The department may take appropriate action in order to obtain
a determination from the Internal Revenue Service or the Federal
courts as to whether contributions made pursuant to a Tuition
Account Program Contract, the increase in value of such
contributions and payment of qualified higher education expenses
pursuant to a Tuition Account Program Contract shall be a
transaction which will subject account owners or the income of
either or both of the funds to Federal taxation and may respond
to such determination in any manner permitted under this
[chapter] subchapter.
Section 5. Chapter 3 of the act is amended by adding a
subchapter to read:
SUBCHAPTER C
KEYSTONE SCHOLARS GRANT PROGRAM
Section 321. Definitions.
The following words and phrases when used in this subchapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
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"Account." The Keystone Scholars Grant Program Account
established under section 324(a).
"Eligible child." An individual born after December 31,
2018, who is a resident of this Commonwealth at the time of
2018, WHO IS:
(1) A RESIDENT OF THIS COMMONWEALTH AT THE TIME OF birth
and at the time that the grant for qualified higher education
expenses is applied for or received . ; OR
(2) AN ADOPTEE IN RECEIPT OF A VALID DECREE OF ADOPTION
UNDER 23 PA.C.S. ยง 2902 (RELATING TO REQUIREMENTS AND FORM OF
DECREE OF ADOPTION), WHOSE ADOPTING PARENT OR PARENTS WERE
RESIDENTS OF THIS COMMONWEALTH AT THE TIME THE DECREE OF
ADOPTION WAS ENTERED AND WHO IS A RESIDENT AT THE TIME THAT
THE GRANT FOR QUALIFIED HIGHER EDUCATION EXPENSES IS APPLIED
FOR OR RECEIVED .
The term shall not include an individual over 29 years of age.
"Program." The Keystone Scholars Grant Program established
under section 322(a).
Section 322. Keystone Scholars Grant Program.
(a) Establishment.--The department shall establish a grant
program as part of the Tuition Account Guaranteed Savings
Program Fund established under section 306 to be known as the
Keystone Scholars Grant Program.
(b) Purpose.--The purpose of the program shall be to promote
access to postsecondary educational opportunities for each
eligible child.
Section 323. Procedure.
(a) Department of Health.--No later than 90 days following
the birth of an eligible child, the Department of Health shall
transmit information and record data to the department necessary
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to administer the program and establish the eligibility of each
child born after December 31, 2018. Information under this
section shall include, but not be limited to, record data such
as the full name and residential address of the child's parent
or legal guardian and birth date of the child.
(b) Notice.--Following receipt of the information under
subsection (a), the department shall notify each parent or
guardian of each eligible child about the program.
(c) Exclusion.--The department shall provide an opportunity
to be excluded from the program.
(d) Security.--The department shall ensure the security and
confidentiality of the information and record data provided
under subsection (a).
Section 324. Keystone Scholars Grant Program Account.
(a) Establishment.--The Keystone Scholars Grant Program
Account is established as a separate account within the Tuition
Account Guaranteed Savings Program Fund. Money contained in this
account shall be for the exclusive purpose of providing
scholarship grants to eligible children to pay for qualified
higher education expenses associated with the attendance at an
eligible educational institution.
(b) Contributions and investment.--The following apply:
(1) Subject to paragraph (3), at the end of each fiscal
year, assets of the Tuition Account Guaranteed Savings
Program Fund that are in excess of 5% of the actuarially
determined liabilities of the Tuition Account Guaranteed
Savings Program Fund shall be allocated to the account.
(2) Annual allocations under this subsection may not
exceed an amount equal to $100 multiplied by the number of
children born in this Commonwealth in the fiscal year.
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(3) An allocation under paragraph (1) may not be made if
the allocation would cause the actuarially determined surplus
of the Tuition Account Guaranteed Savings Program to fall
below 5% of the Tuition Account Guaranteed Savings Program's
actuarially determined liabilities.
(4) The department shall have the authority to invest
and reinvest money in the account as provided for under
section 307.
(5) A financial contribution may not be required from an
eligible child or an eligible child's parent or guardian as a
condition to receive a grant under this subchapter.
(6) Annually, the State Treasurer shall report to the
Governor, the Appropriations Committee of the Senate and the
Appropriations Committee of House of Representatives the
actuarial status of the Tuition Account Guaranteed Savings
Program Fund as required under section 306(b)(2).
(7) This subsection shall expire December 31, 2029.
(d) (C) Purpose.--Money in the account shall be used for the
purpose of providing grants for qualified higher education
expenses associated with the attendance at an eligible
educational institution and for costs associated with the
administration of the program. Costs associated with the
administration of the program shall be reported to the Governor,
the Appropriations Committee of the Senate and the
Appropriations Committee of the House of Representatives in the
same manner as required under paragraph SUBSECT ION (b)(6).
(e) (D) Scholarship grants.--Upon application and the
submission of documentation necessary to establish the child's
eligibility and enrollment as a student at an eligible
educational institution, the department shall provide a
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scholarship grant in the amount of $100, plus such investment
earnings attributed TO the initial grant amount since the birth
date of the eligible child as calculated by the department, for
qualified higher education expenses associated with attendance
at an eligible educational institution.
(f) (E) Balances.--The department shall make program account
balances available to each parent or guardian of an eligible
child through a secured Internet account.
Section 325. Additional grants.
(a) Annual match.--Subject to the availability of money
under section 324 326 , the State Treasurer may establish an
annual match of contributions made by a parent or guardian of an
eligible child into an established Guaranteed Savings Plan
Account under section 309.
(b) Financial incentives.--Subject to the availability of
money from contributions made under section 309 326 , the State
Treasurer may establish financial incentives, such as school
attendance, for additional grants for an eligible child WITH AN
ESTABLISHED TUITION ACCOUNT GUARANTEED SAVINGS PROGRAM ACCOUNT
UNDER SECTION 309 .
(c) Prohibition.--Money from the Tuition Account Guaranteed
Savings Program Fund may not be used for purposes under
subsections (a) and (b).
Section 326. Additional contributions.
Notwithstanding section 324(b)(3), the department may receive
contributions from any person or legal entity to the account on
behalf of, and make grants to, eligible children to pay for
qualified higher education expenses associated with attendance
at an eligible educational institution.
Section 327. Board.
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In addition to the duties under section 304, the board shall
consider, study and review the work of the program, advise the
department on request and make recommendations for the
improvement of the program.
Section 6. This act shall take effect in 60 days.
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