AB595: Bill Text

LRB-3488/3

PG:kmg&jlg:lp

1997 - 1998 LEGISLATURE

1997 Assembly BILL 595

November 11, 1997 - Introduced by Representatives Kreibich, Hasenohrl, Schafer, Brandemuehl, Cullen, Freese, Gard, Green, Grothman, Hahn, Huber, Hutchison, Kelso, F. Lasee, Meyer, Musser, Olsen, Plouff, Porter, Powers, Seratti, Underheim, Ward, L. Young and Sykora, cosponsored by Senators Darling, Drzewiecki, Farrow, Roessler, Rosenzweig, Weeden and Zien. Referred to Committee on Colleges and Universities.

AB595,1,5 An Act to repeal 16.24 (3) (c); to renumber and amend 16.24 (7) (a) to (e), 16.24 (7) (f) and 16.24 (12) (b); to amend 16.24 (3) (a) (intro.), 1. and 2., 16.24 (3) (d), 16.24 (4), 16.24 (5) (a) and 16.24 (6) (a) (intro.); to repeal and recreate 16.24 (3) (a) 3. and 4.; and to create 16.24 (7) (a) (intro.), 16.24 (7m) and 16.24 (12) (b) 2. of the statutes; relating to: the college tuition prepayment program.

Analysis by the Legislative Reference Bureau

The department of administration (DOA) currently administers the college tuition prepayment program. Under the program, an individual may contract with DOA to purchase tuition units on behalf of a beneficiary named in the contract. DOA may not enter into more than one contract on behalf of the same beneficiary. Either the individual or the beneficiary must be a Wisconsin resident, and the beneficiary must be the child or grandchild of the individual. To the extent possible, the cost of each tuition unit, which is determined by DOA, must be an amount that, in the academic year in which the beneficiary intends to enroll in an accredited institution of higher education, is equal to 1% of the weighted average tuition of bachelor's degree-granting institutions within the University of Wisconsin (UW) System. When the beneficiary enrolls in an accredited institution of higher education in the United States, each tuition unit purchased on his or her behalf entitles the beneficiary to apply toward tuition at the institution an amount equal to 1% of the weighted average tuition of bachelor's degree-granting institutions within the UW System in that academic year, as estimated at the time of purchase.

This bill makes the following changes to the program:

1. The bill allows an individual to purchase tuition units on his or her own behalf; allows a legal guardian to purchase on behalf of a child who is under the legal guardianship of the legal guardian; and allows a trust to purchase on behalf of the beneficiary of the trust.

2. The bill requires that the beneficiary or the individual purchasing the units be a Wisconsin resident; if the purchaser is a legal guardian that is not an individual, the legal guardian must be organized under the laws of this state; and if the purchaser is a trust, the trust must be created under the laws of this state.

3. The bill allows a purchaser to purchase a sufficient number of tuition units to cover the cost of mandatory student fees in addition to the cost of tuition.

4. The bill allows DOA to adjust the value of a tuition unit based on actual earnings, less expenses, if the beneficiary wishes to use the unit in a year other than the year specified in the purchase contract, or if the beneficiary or the purchaser wishes to receive a refund in a year other than the one specified in the purchase contract.

5. The bill allows DOA to impose penalties or to increase the specified penalties for refunds if DOA determines that such action is necessary to maintain the program's status as a qualified state tuition program under federal law. Under a qualified state tuition program, federal income taxes on program earnings are deferred.

6. The bill allows DOA to keep personal and financial information pertaining to a purchaser or to a beneficiary closed to the public.

7. Finally, the bill eliminates the prohibition against DOA entering into more than one contract on behalf of the same beneficiary.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB595, s. 1 Section 1. 16.24 (3) (a) (intro.), 1. and 2. of the statutes are amended to read:

AB595,2,4 16.24 (3) (a) (intro.) Except as provided under par. (c), the The department shall contract with an individual, a trust or a legal guardian for the sale of tuition units to that individual, trust or legal guardian if all of the following apply:

AB595,2,5 1. The individual purchaser pays a $50 nonrefundable enrollment fee.

AB595,2,7 2. The individual purchaser is purchasing the tuition units on behalf of a beneficiary named in the contract.

AB595, s. 2 Section 2. 16.24 (3) (a) 3. and 4. of the statutes are repealed and recreated to read:

AB595,3,4 16.24 (3) (a) 3. When the contract is executed, at least one of the following applies:

AB595,3,5 a. The beneficiary is a resident of this state.

AB595,3,6 b. If the purchaser is an individual, he or she is a resident of this state.

AB595,3,8 c. If the purchaser is a legal guardian that is not an individual, the legal guardian is organized under the laws of this state.

AB595,3,9 d. If the purchaser is a trust, the trust is created under the laws of this state.

AB595,3,10 4. At least one of the following applies:

AB595,3,11 a. The beneficiary is the purchaser.

AB595,3,13 b. If the purchaser is an individual, the beneficiary is the child or grandchild of the individual or is a child who is under the legal guardianship of the individual.

AB595,3,15 c. If the purchaser is a legal guardian that is not an individual, the beneficiary is a child who is under the legal guardianship of the legal guardian.

AB595,3,16 d. If the purchaser is a trust, the beneficiary is the beneficiary of the trust.

AB595, s. 3 Section 3. 16.24 (3) (c) of the statutes is repealed.

AB595, s. 4 Section 4. 16.24 (3) (d) of the statutes is amended to read:

AB595,3,21 16.24 (3) (d) The department shall promulgate rules authorizing an individual a person who has entered into a contract under this subsection to change the beneficiary named in the contract.

AB595, s. 5 Section 5. 16.24 (4) of the statutes is amended to read:

AB595,4,5 16.24 (4) Number of tuition units purchased. An individual A person who enters into a contract under sub. (3) may purchase tuition units at any time and in any number, except that the total number of tuition units purchased on behalf of a single beneficiary may not exceed the number necessary to pay for 4 years of full-time attendance, including mandatory student fees, as a resident undergraduate at the institution within the University of Wisconsin System that has the highest resident undergraduate tuition, as determined by the department, in the anticipated academic years of their use.

AB595, s. 6 Section 6. 16.24 (5) (a) of the statutes is amended to read:

AB595,4,13 16.24 (5) (a) If Except as provided in sub. (7m), if an individual named as beneficiary in a contract under sub. (3) attends an institution of higher education in the United States, each tuition unit purchased on his or her behalf entitles that beneficiary to apply toward the payment of tuition at the institution an amount equal to 1% of the anticipated weighted average tuition of bachelor's degree-granting institutions within the University of Wisconsin System for the year of attendance, as estimated under sub. (2) in the year in which the tuition unit was purchased.

AB595, s. 7 Section 7. 16.24 (6) (a) (intro.) of the statutes is amended to read:

AB595,4,16 16.24 (6) (a) (intro.) A contract under sub. (3) may be terminated by the individual person entering into the contract if any of the following occurs:

AB595, s. 8 Section 8. 16.24 (7) (a) (intro.) of the statutes is created to read:

AB595,4,19 16.24 (7) (a) (intro.) Except as provided in sub. (7m), the department shall do all of the following:

AB595, s. 9 Section 9. 16.24 (7) (a) to (e) of the statutes are renumbered 16.24 (7) (a) 1. to 5. and amended to read:

AB595,5,4 16.24 (7) (a) 1. When a beneficiary completes the program in which he or she is enrolled, if the beneficiary has not used all of the tuition units purchased on his or her behalf, the department shall refund to the individual person who entered into the contract an amount equal to 1% of the anticipated weighted average tuition in the academic year in which the beneficiary completed the program, as estimated under sub. (2) in the year in which the tuition units were purchased, multiplied by the number of tuition units purchased by the individual person and not used by the beneficiary.

AB595,5,10 2. If a contract is terminated under sub. (6) (a) 1., 2. or 3., the department shall refund to the individual person who entered into the contract an amount equal to 1% of the anticipated weighted average tuition in the academic year in which the contract is terminated, as estimated under sub. (2) in the year in which the tuition units were purchased, multiplied by the number of tuition units purchased by the individual person and not used by the beneficiary.

AB595,5,16 3. If a contract is terminated under sub. (6) (a) 4. or (b), the department shall refund to the individual person who entered into the contract an amount equal to 99% of the amount determined under par. (b) subd. 2. If a contract is terminated under sub. (6) (a) 4., the department may not issue a refund for one year following receipt of the notice of termination and may not issue a refund of more than 100 tuition units in any year.