HBA-DMD, MAJ H.B. 470 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 470 By: Wise Appropriations 2/10/1999 Introduced BACKGROUND AND PURPOSE Typically, college students who travel abroad come from middle to high-income families. Even though financial aid money may be used for tuition associated with studying abroad, it may be insufficient to cover travel expenses. H.B. 470 establishes a combined public/private trust fund that utilizes matching funds through the comptroller's office to be used to pay for travel and tuition at U.S. tuition rates through a study abroad program. The student's parents and their employers may pay into the trust fund up to $5,000 per student and have up to that amount matched by the state. The bill provides that an individual account be established in the trust fund during the second year of high school to be used during the student's junior year of college. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Higher Education Coordinating Board in SECTION 1 (Section 61.906, Education Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 61, Education Code, by adding Subchapter U, as follows: SUBCHAPTER U. TRUST FUND FOR SCHOLARSHIPS FOR DISADVANTAGED STUDENTS STUDYING OUTSIDE THE UNITED STATES Sec. 61.901 DEFINITION. Defines "fund," for purposes of this subchapter, to mean the trust fund for economically or educationally disadvantaged students studying outside the United States. Sec. 61.902. ESTABLISHMENT OF TRUST FUND. Establishes the trust fund for economically or educationally disadvantaged students studying outside the United States. Provides that the fund is outside the state treasury. Specifies that the fund will consist of money acquired from private sources on behalf of specified students, state appropriations to the fund, income from money deposited in the fund, and gifts and grants made to the fund. Requires the Texas Higher Education Coordinating Board (board) to administer the assets of the fund. Provides that the board is the trustee of the fund's assets. Authorizes the board to appoint a person to supervise the administration of the fund. Requires the board to deposit in a separate account in the fund contributions from private sources for a specified student and that income from the money for the specified student be credited to the student's account. Requires the legislature to appropriate an amount of general revenue to the fund, not to the credit of any student account, for each biennium equal to the contributions from private sources on behalf of a specified student for the preceding biennium. Sec. 61.903. COMPTROLLER. Provides that the Comptroller of Public Accounts (comptroller) is the custodian of the assets of the fund, except as otherwise provided by this subchapter. Requires the comptroller to pay money from the fund on a warrant drawn by the comptroller supported only on a voucher signed by the board or a person appointed by the board to supervise the administration of the fund. Requires the comptroller to furnish to the board annually and on the board's request a sworn statement of the amount of the fund's assets in the comptroller's custody. Authorizes the board to select one or more commercial banks, depository trust companies, or other entities to serve as custodian of all or part of the assets of the fund. Sec. 61.904. INVESTMENT OF FUND ASSETS. Requires the board to invest the assets of the fund. Authorizes the board to contract with private professional investment managers to assist the board in investing the assets of the fund. Requires the board to develop written investment objectives concerning the investment of the assets of the fund, which may address desired rates of return, risks involved, investment time frames, and any other relevant considerations. Requires the board to exercise the judgment and care in investing the assets of the fund under circumstances prevailing at the time of the investment that persons of ordinary prudence and intelligence would exercise in the management of their own affairs when making a permanent disposition of their money. Sec. 61.905. USE OF FUND. Requires the board to use the money in the fund to provide a scholarship to a student who applies for a scholarship, is a citizen of the United States and has resided in this state for at least one year before the date the student applies for a scholarship, is economically or educationally disadvantaged, is enrolled in an internship for academic credit at an institution of higher education under which the student is to study outside the United States, and for whom an account in the fund has been established under Section 61.902(c). Provides that the amount of the scholarship is the sum of the amount in the account and an additional amount from the portion of the fund not credited to student accounts equal to the lesser of the amount in the account or $5,000. Requires that, if the portion of the fund not credited to student accounts is insufficient to cover the portion of scholarships, the board must allocate the available amount proportionally to the scholarships awarded for that academic year. Requires that if the student does not qualify for a scholarship, the board will refund the money in the account to the source that contributed it. Sec. 61.906. RULES. Requires the board to adopt rules to administer this subchapter, including rules relating to the definition of economically or educationally disadvantaged students. SECTION 2. Effective date: September 1, 1999. SECTION 3. Emergency clause.