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

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Date Published: 03/14/2019 09:00 PM
AB15:v98#DOCUMENT

Amended  IN  Assembly  March 14, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill No. 15


Introduced by Assembly Members Nazarian, McCarty, and Ting

December 03, 2018


An act to add Title 19.5 (commencing with Section 99200) to the Government Code, relating to savings accounts. 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, at the end of each fiscal year, make a seed deposit of moneys from the fund into a Scholarshare 529 account established pursuant to the bill’s provisions in an amount determined by the board, designated and separately accounted 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 scholarships 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.

Existing law establishes the Every Kid Counts College Savings Program, which requires the Student Aid Commission to implement and administer a grant program that supports local governments and other entities that sponsor one or more comprehensive citywide or regional children’s savings account programs to help families, especially low-income families with young children, establish and maintain college savings accounts.

This bill would express the intent of the Legislature to enact future legislation to establish a universal statewide children’s savings account program, established for each child at entrance into kindergarten, to ensure that California’s children and families save, build assets, and achieve economic mobility.

Vote: MAJORITY   Appropriation: NOYES   Fiscal Committee: NOYES   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 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), the State Department of Public Health shall provide the board with birth data for the child in a file format as defined by the board. Information in the certificate is confidential and shall not be disclosed except as necessary for the program. After receiving the birth certificate 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.
(c) Upon appropriation by the Legislature, or upon a determination by the Department of Finance that sufficient moneys have been received in the fund from other sources, the board shall establish one or more accounts and, at the end of each fiscal year, shall make a separately accounted seed deposit from the fund into 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 grants for qualified higher education expenses associated with the attendance of the child at an eligible institution of higher education. A child’s seed deposit shall be deposited into one account. No child shall receive more than one seed deposit.
(d) Upon receiving documentation of a child’s enrollment as a student at an institution of higher education, the board shall provide a scholarship grant 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 an institution of higher education.
(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 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 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) 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, 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.
(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 to pay for the higher education expenses of the child. 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) 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.
(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.

SECTION 1.Title 19.5 (commencing with Section 99200) is added to the Government Code, to read:
19.5.Children’s Savings Account Program
99200.

It is the intent of the Legislature to enact future legislation to establish a universal statewide children’s savings account program, established for each child at entrance into kindergarten, to ensure that California’s children and families save, build assets, and achieve economic mobility.