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AB-15 Student financial aid: Children’s Savings Account Program. (2019-2020)

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Date Published: 05/17/2019 09:00 PM
AB15:v96#DOCUMENT

Amended  IN  Assembly  May 17, 2019
Amended  IN  Assembly  March 25, 2019
Amended  IN  Assembly  March 14, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill No. 15


Introduced by Assembly Members Nazarian, McCarty, and Ting
(Coauthors: Assembly Members Berman, Friedman, Gabriel, Levine, and Blanca Rubio)
(Coauthors: Senators Allen, Glazer, and Jackson)

December 03, 2018


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 15, as amended, Nazarian. 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 establish the Children’s Savings Account Program Fund in the State Treasury to serve as the initial repository of all moneys received from state and private sources for the program, and would continuously appropriate moneys in the fund to the board for the program. Subject to available moneys in the fund, the bill would require the board to establish one or more Scholarshare 529 accounts and make a seed deposit of moneys from the fund into a Scholarshare 529 account established pursuant to the bill’s provisions in an amount of at least $25, as determined by the board, board. Specifically, those moneys would be deposited in subaccounts, one designated for each California resident child born on or after January 1, 2020, who is a California resident at the time of birth, except for children whose parents or legal guardians have opted out, as specified. Subject to sufficient moneys in the fund, the bill would authorize additional incentive payments from the fund, as specified. The bill would require the board to provide awards from these Scholarshare 529 accounts, as specified, for each participating child’s higher education expenses at an eligible institution of higher education. The bill would prescribe the powers and duties of the board to administer and implement the program. The bill would authorize the board to consider marketing the program to California residents, as specified. 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.
Vote: MAJORITY   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

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 Scholarshare 529 account established pursuant to this article under Article 19 (commencing with Section 69980).
(b) “Beneficiary” has the same meaning as “designated beneficiary,” as provided in Section 529(e)(1) 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 subdivision (a) of Section 69996.6.
(e) “Institution of higher education” has the same meaning as “eligible educational institution,” as provided in Section 529(e)(5) 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 or legal guardian of an eligible child, or a parent or legal guardian of a child described in subdivision (d) of Section 69996.3, or any private individual or entity who contributes moneys to the program.
(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 Section 529(e)(3) of the Internal Revenue Code. Notwithstanding Section 529(c)(7) of the Internal Revenue Code, “qualified higher education expenses” shall not include any tuition expenses in connection with enrollment or attendance at an elementary or secondary public, private, or religious school.
(k) “Seed deposit” means an initial contribution into an account for a child born on or after January 1, 2020.

69996.3.
 (a) Each eligible child born on or after January 1, 2020, 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), (a) is born, the State Department of Public Health shall provide the board with identifiable birth data for the child in a file format as defined by the board. Information in the certificate The birth data shall include, but not necessarily be limited to, the child’s name and birth date and the name, email address, and telephone number of each parent or guardian of the child. The birth data is confidential and shall not be disclosed except as necessary for the program. After No more than 90 days after receiving the birth certificate data from the department, the board shall notify each parent or guardian of each eligible child about the program. A parent or legal guardian shall have an opportunity to opt out of the program. The notification shall include information on how the parent or legal guardian may opt out of the program.
(c) Upon appropriation by the Legislature, or upon a determination by the Department of Finance pursuant to subdivision (c) of Section 69996.6, the board shall establish one or more accounts and shall make a seed deposit from the fund into a subaccount established within an account in an amount determined by the board. Each seed deposit shall be designated for a particular child for whom the board receives birth data pursuant to subdivision (b), if no parent or legal guardian has opted that child out of the program. Moneys in an account designated for a child, including any investment earnings attributed to the amount of the child’s seed deposit since the date of the deposit as calculated by the board, shall be used for the purpose of providing awards for qualified higher education expenses associated with the attendance of the child at an eligible institution of higher education. No child shall receive more than one seed deposit. Each seed deposit shall be at least twenty-five dollars ($25).
(d) Upon receiving documentation of a child’s enrollment as a student at an institution of higher education, the board shall make a payment to that institution in the amount of the seed deposit designated for the child pursuant to subdivision (c), plus any investment earnings attributed to that amount since the date of that deposit as calculated by the board, for qualified higher education expenses associated with the child’s attendance at that institution.
(e) The board shall make a child’s designated balance in an account available to the child’s parent or legal guardian through a secured internet link.
(f) Subject to available money in the fund, the board may do either of the following:
(1) The board may provide additional incentives from the fund for low-income households.
(2) The board may establish additional dollar incentives from the fund for accomplishments of the child, as determined by the board, including, but not limited to, good school attendance.
(g) (1) A Subject to available funding, a parent or legal guardian, residing in California, of a child who meets the criteria in paragraph (2) may apply to the board to enroll the child into the program. Subject to available funding, the enrollee shall be eligible for any incentives described in subdivision (f), as applicable, but is not eligible for a seed deposit.
(2) The child is a current California resident under 16 ten years of age who was either of the following:
(A) Born a California resident before January 1, 2020.
(B) Not a California resident at the time of birth.
(h) (1) If a beneficiary does not use any portion, or all, of the funds intended for the beneficiary in an account for a qualified higher education expense for any reason, including death or disability of the beneficiary, before the beneficiary turns 26 years of age, all contributions made for the beneficiary into the account and any earnings from those funds shall be forfeited and deposited into the fund for the program.
(2) Notwithstanding paragraph (1), subject to available funding, the board may establish an appeal process to allow a beneficiary to use moneys designated for the beneficiary in an account after the beneficiary turns 26 years of age.
(3) All contributions made into an account for a child who has opted out of the program pursuant to subdivision (b), including any investment earnings attributed to the amount of the child’s seed deposit since the date of the deposit as calculated by the board, shall be forfeited and deposited into the fund for the program in a timely manner.
(i) The board shall encourage each parent and legal guardian of a beneficiary, including each parent and legal guardian of a child who applies to enroll the child into the program as a beneficiary pursuant to subdivision (g), to establish a separate account pursuant to Article 19 (commencing with Section 69980). The board shall provide assistance on how to establish the separate account.

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, 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.
(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 may consider marketing the program to California residents. The board may 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 combination of savings strategies that may be appropriate for them.

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 board for the program. The fund shall be the initial repository of all appropriations, gifts, or other financial assets received by the board in connection with operation of the program.
(b) (1) Subject to available funding, the program shall be implemented before January 1, 2021. 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, 2021, 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, state and local governmental entities, and third-party sources for the program on terms the board deems advisable.
(2) Before the program is implemented and throughout the program’s operation, the board may authorize a county, city, nonprofit organization, or any other entity operating a local child savings account program to provide input to the program established pursuant to this article. The input may include, but is not limited to, information on any of the following:
(A) Infrastructure and systems development.
(B) Outreach and coordination with local child savings account programs.
(C) Program incentives to promote equity.
(D) Administrative fees and caps.
(E) Contribution strategies.
(F) Program accessibility, including language, identification, and banking access.
(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.