H 3196 Session 112 (1997-1998)
H 3196 General Bill, By J.L.M. Cromer, Clyburn, Kirsh and Robinson
Similar(S 101)
A BILL TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER
118 TO TITLE 59, SO AS TO ENACT THE SOUTH CAROLINA PREPAID POST-SECONDARY
EDUCATION EXPENSE PROGRAM; TO ESTABLISH THE SOUTH CAROLINA PREPAID
POST-SECONDARY EDUCATION EXPENSE BOARD TO IMPLEMENT THE PROGRAM; TO AMEND
SECTION 12-7-435, AS AMENDED, RELATING TO DEDUCTIONS FROM SOUTH CAROLINA
TAXABLE INCOME, SO AS TO ALLOW THE DEDUCTION OF PAYMENTS FOR AND BENEFITS FROM
AN ADVANCE PAYMENT CONTRACT FOR UNIVERSITY AND COMMUNITY COLLEGE ADVANCE
PAYMENT PLANS, TO REQUIRE THE BOARD TO OBTAIN RULINGS FROM THE INTERNAL
REVENUE SERVICE AND THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO THE
PROGRAM AND TO REQUIRE THE INFORMATION TO BE PROVIDED TO PARTICIPANTS.
01/08/97 House Prefiled
01/08/97 House Referred to Committee on Ways and Means
01/14/97 House Introduced and read first time HJ-77
01/14/97 House Referred to Committee on Ways and Means HJ-78
A BILL
TO AMEND THE CODE OF LAWS OF SOUTH
CAROLINA, 1976, BY ADDING CHAPTER 118 TO TITLE
59, SO AS TO ENACT THE SOUTH CAROLINA PREPAID
POST-SECONDARY EDUCATION EXPENSE PROGRAM;
TO ESTABLISH THE SOUTH CAROLINA PREPAID
POST-SECONDARY EDUCATION EXPENSE BOARD TO
IMPLEMENT THE PROGRAM; TO AMEND SECTION
12-7-435, AS AMENDED, RELATING TO DEDUCTIONS
FROM SOUTH CAROLINA TAXABLE INCOME, SO AS
TO ALLOW THE DEDUCTION OF PAYMENTS FOR AND
BENEFITS FROM AN ADVANCE PAYMENT CONTRACT
FOR UNIVERSITY AND COMMUNITY COLLEGE
ADVANCE PAYMENT PLANS, TO REQUIRE THE
BOARD TO OBTAIN RULINGS FROM THE INTERNAL
REVENUE SERVICE AND THE SECURITIES AND
EXCHANGE COMMISSION WITH RESPECT TO THE
PROGRAM AND TO REQUIRE THE INFORMATION TO
BE PROVIDED TO PARTICIPANTS.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Title 59 of the 1976 Code is amended by
adding:
"CHAPTER 118
The South Carolina Prepaid Post-secondary
Education Expense Program
Section 59-118-10. This chapter may be cited as the South
Carolina Prepaid Post-secondary Education Expense Program.
Section 59-118-20. As used in this chapter:
(1) `Advance payment contract' means a contract entered
into by the board and a purchaser pursuant to this chapter.
(2) `Board' means the South Carolina Prepaid
Post-secondary Education Expense Board.
(3) `Community college' means a two-year state
post-secondary institution offering an associate degree.
(4) `Fund' means the Prepaid Post-secondary Education
Expense Trust Fund.
(5) `Program' means the South Carolina Prepaid
Post-secondary Education Expense Program.
(6) `Purchaser' means a person who makes or is obligated
to make advance registration or dormitory residence payments
in accordance with an advance payment contract.
(7) `Qualified beneficiary' means:
(a) A resident of this State at the time a purchaser enters
into an advance payment contract on behalf of the resident; or
(b) A nonresident who is the child of a noncustodial
parent who is a resident of this State at the time that the parent
enters into an advance payment contract on behalf of the child.
(8) `State post-secondary institution' means a public
institution of higher learning as defined in Section 59-103-5.
(9) `Registration fee' means the semester charges imposed
to attend a state post-secondary institution and all mandatory
fees required as a condition for enrolling as determined by the
board.
(10) `University' means a four-year state post-secondary
institution which offers a baccalaureate degree.
Section 59-110-25. (A) There is created the South Carolina
Prepaid Post-secondary Education Expense Program Board
consisting of nine members as follows:
(1) the State Treasurer, ex officio;
(2) eight members appointed by the Governor with the
advice and consent of the Senate as follows:
(a) one member nominated by the President Pro
Tempore of the Senate for a term coterminous with that of the
President Pro Tempore;
(b) one member nominated by the Speaker of the House
of Representatives for a term coterminous with that of the
Speaker of the House;
(c) one member nominated by the Council of Presidents
of State Institutions of Higher Learning for a term of four years;
(d) one member nominated by the Advisory Council of
Private College Presidents for a term of four years;
(e) four members who shall serve for terms of four
years, one of whom must be designated chairman.
(B) Vacancies must be filed in the manner of original
appointment for the unexpired portion of the term. Members
shall receive the per diem, mileage, and subsistence authorized
by law for members of state boards, committees, and
commissions.
Section 59-118-27. The board shall appoint an executive
director to serve as the chief administrative and operational
officer of the board and to perform other duties assigned to him
by the board.
The board has the powers necessary to carry out the
provisions of this chapter, including, but not limited to, the
power to:
(1) adopt an official seal and rules;
(2) sue and be sued;
(3) make and execute contracts and other necessary
instruments;
(4) establish agreements or other transactions with federal,
state, and local agencies, including state post-secondary
institutions;
(5) invest funds not required for immediate disbursement;
(6) appear in its own behalf before boards, commissions,
or other governmental agencies;
(7) hold, buy, and sell any instruments, obligations,
securities, and property determined appropriate by the board;
(8) require a reasonable length of state residence for
qualified beneficiaries;
(9) restrict the number of participants in the various plans.
However, any person denied participation solely on the basis of
the restriction must be granted priority for participation during
the succeeding year.
(10) segregate contributions and payments to the fund
into various accounts and funds;
(11) contract for necessary goods and services, employ
necessary personnel, and engage the services of private
consultants, actuaries, managers, legal counsel, and auditors for
administrative or technical assistance;
(12) solicit and accept gifts, grants, loans, and other aids
from any source or participate in any other way in any
government program to carry out the purposes of this chapter;
(13) require and collect administrative fees and charges
in connection with any transaction and impose reasonable
penalties, including default, for delinquent payments or for
entering into an advance payment contract on a fraudulent
basis;
(14) procure insurance against any loss in connection with
the property, assets, and activities of the fund or the board;
(15) impose reasonable time limits on use of the tuition
benefits provided by the program. However, any such
limitation must be specified within the advance payment
contract;
(16) delineate the terms and conditions under which
payments may be withdrawn from the fund and impose
reasonable fees and charges for the withdrawal. The terms and
conditions must be specified within the advance payment
contract.
(17) provide for the receipt of contributions in lump sums
or installment payments;
(18) establish other policies, procedures, and criteria to
implement and administer the provisions of this chapter.
Section 59-118-30. (A) There is created the South Carolina
Prepaid Post-secondary Education Expense Program to provide
a medium through which the cost of registration and dormitory
residence may be paid in advance of enrollment in a state
post-secondary institution at a rate lower than the projected
corresponding cost at the time of actual enrollment. These
payments must be combined and invested in a manner that
yields, at a minimum, sufficient interest to generate the
difference between the prepaid amount and the cost of
registration and dormitory residence at the time of actual
enrollment. Students who enroll in a state post-secondary
institution pursuant to this chapter may be charged no fees in
excess of the terms delineated in the advance payment contract.
(B) The board shall administer the fund in a manner that is
sufficiently actuarially sound to defray the obligations of the
program. The board shall annually evaluate or cause to be
evaluated the actuarial soundness of the fund. If the board
perceives a need for additional assets in order to preserve
actuarial soundness, the board may adjust the terms of
subsequent advance payment contracts to ensure such
soundness.
(C) The board, acting with the approval of the State Budget
and Control Board, shall establish a comprehensive investment
plan for the purposes of this chapter. The comprehensive
investment plan shall specify the investment policies to be
utilized by the board in its administration of the fund. The
board may place assets of the fund in savings accounts or use
assets to purchase fixed or variable life insurance or annuity
contracts, securities, evidence of indebtedness, or other
investment products pursuant to the comprehensive investment
plan and in the proportions as may be designated or approved
under that plan. The insurance, annuity, savings, or investment
products must be underwritten and offered in compliance with
the applicable federal and state laws, regulations, and rules by
persons who are authorized by applicable federal and state
authorities. Within the comprehensive investment plan, the
board may authorize investment vehicles, or products incident
to investment vehicles, as may be available or offered by
qualified companies or persons.
(D) The board may delegate responsibility for administration
of the comprehensive investment plan required in subsection
(C) of this section to a person the board determines to be
qualified. This person must be compensated by the board.
Directly or through this person, the board may contract with a
private corporation or institution to provide those services as
may be a part of the comprehensive investment plan or as
considered necessary by the board or the person, including, but
not limited to, providing consolidated billing, individual and
collective recordkeeping and accountings, and asset purchase,
control, and safekeeping.
(E) The board shall annually prepare or cause to be prepared
a report setting forth in appropriate detail an accounting of the
fund and a description of the financial condition of the program
at the close of each fiscal year. The report must be submitted
to the President of the Senate, the Speaker of the House of
Representatives, the State Budget and Control Board, and
members of the Commission on Higher Education before
March first of each year. In addition, the board shall make the
report available to purchasers of advance payment contracts.
The accounts of the fund are subject to annual audits by the
State Auditor or his designee.
(F) The board shall solicit answers to applicable ruling
requests from the Internal Revenue Service regarding the tax
status of fees paid pursuant to an advance payment contract to
the purchaser or qualified beneficiary and from the Securities
and Exchange Commission regarding the application of federal
securities laws to the fund. The board shall make the status of
these requests known before entering into an advance payment
contract.
(G) The board shall solicit proposals for the marketing of the
South Carolina Prepaid Post-secondary Education Expense
Program pursuant to the South Carolina Consolidated
Procurement Code. The entity designated pursuant to this
subsection shall serve as a centralized marketing agent for the
program and is solely responsible for the marketing of the
program. Any materials produced for the purpose of marketing
the program must be submitted to the board for review. No
materials may be made available to the public before the
materials are approved by the board. Any educational
institution may distribute marketing materials produced for the
program; however, all the materials must have been approved
by the board before distribution. Neither the State nor the
board shall be liable for misrepresentation of the program by a
marketing agent.
(H) The board may establish a direct-support organization
which is:
(1) A South Carolina corporation, not for profit, organized
under the applicable laws of this State.
(2) Organized and operated exclusively to receive, hold,
invest, and administer property and to make expenditures to or
for the benefit of the program.
(3) An organization which the board, after review, has
certified to be operating in a manner consistent with the goals
of the program and in the best interests of the State. Unless so
certified, the organization may not use the name of the
program.
(4) Subject to an annual post audit by an independent
certified public accountant in accordance with rules prescribed
by the board. The annual audit must be submitted to the
Department of Insurance and the State Auditor for review. The
Department of Insurance and the State Auditor may require and
receive from the organization or its independent auditor any
detail or supplemental data relative to the operation of the
organization. The identity of donors who desire to remain
anonymous must be protected, and this anonymity must be
maintained in the auditor's report. All records of the
organization other than the auditor's report and the
supplemental data requested by the Department of Insurance or
the State Auditor are not considered public records for the
purpose of the Freedom of Information Act.
The chairman of the board and the executive director must be
directors of the direct-support organization and shall jointly
name three other individuals to serve as directors of the
organization.
(I) The board may endorse insurance coverage written
exclusively for the purpose of protecting advance payment
contracts, and the purchasers or beneficiaries of the contracts,
which may be issued in the form of a group life policy.
Section 59-118-40. (A) The board shall construct advance
payment contracts for registration and advance payment
contracts for dormitory residence in accordance with the
provisions of this chapter. Advance payment contracts
constructed for the purposes of this section are exempt from the
provisions of the South Carolina insurance laws. The board
may request assistance from the Attorney General in the
development of the advance payment contracts. The contents
of both contracts must include, but not be limited to, the
following:
(1) the amount of the payment or payments and the
number of payments required from a purchaser on behalf of a
qualified beneficiary;
(2) the terms and conditions under which purchasers
shall remit payments including, but not limited to, the date or
dates upon which each payment is due;
(3) provisions for late payment charges and for
default;
(4) provisions for penalty fees for withdrawals from
the fund;
(5) the name and date of birth of the qualified
beneficiary on whose behalf the contract is drawn and the terms
and conditions under which another person may be substituted
as the qualified beneficiary;
(6) the name of a person who may terminate the
contract. The terms of the contract must specify whether the
contract may be terminated by the purchaser, the qualified
beneficiary, a specific designated person, or any combination
of these persons;
(7) the terms and conditions under which a contract
may be terminated, the name of the person entitled to a refund
due as a result of termination of the contract pursuant to the
terms and conditions, and the amount of refund, if any, due to
the person so named;
(8) the time limitations, if any, within which the
qualified beneficiary must claim his benefits through the
program;
(9) other terms and conditions considered by the board
to be appropriate.
(B) In addition to the provisions of Subsection (A), an
advance payment contract for registration must include, but not
be limited to, the following:
(1) the number of credit hours contracted by the
purchaser;
(2) the state post-secondary system toward which the
contracted credit hours will be applied;
(3) the assumption of a contractual obligation by the
board to the qualified beneficiary to provide for a specified
number of credit hours of undergraduate instruction at a state
post-secondary institution, not to exceed the average number of
credit hours required for the conference of the degree that
corresponds to the plan purchased on behalf of the qualified
beneficiary.
(C) In addition to the provisions of subsection (A), an
advance payment contract for dormitory residence must
include, but not be limited to, the following:
(1) the number of semesters of dormitory residence
contracted by the purchaser;
(2) the assumption of a contractual obligation by the
board to the qualified beneficiary to provide for a specified
number of semesters of dormitory residence at a state
university, not to exceed the maximum number of semesters of
full-time enrollment required for the conference of a
baccalaureate degree.
(D) An advance payment contract may provide that
contracts which have not been terminated or the benefits
exercised within a specified period of time are considered
terminated. Time expended by a qualified beneficiary as an
active duty member of any of the armed services of the United
States must be added to the time specified pursuant to this
subsection. No purchaser or qualified beneficiary whose
advance payment contract is terminated pursuant to this
subsection is entitled to a refund. The board shall retain any
monies paid by the purchaser for an advance payment contract
that has been terminated in accordance with this subsection.
Monies retained by the board must be used by the board to
further the purposes of this chapter.
(E) No refund provided pursuant to Subsection (A)(7)
may exceed the amount paid into the fund by the purchaser. If
an advance payment contract is converted from a university to
a community college registration plan, the refund amount must
be reduced by the amount transferred to a community college
on behalf of the qualified beneficiary. However, refunds may
exceed the amount paid into the fund in the following
circumstances:
(1) If the beneficiary is awarded a scholarship, the
terms of which cover the benefits included in the advance
payment contracts, monies paid for the purchase of the advance
payment contracts must be returned to the purchaser in
semester installments coinciding with the matriculation by the
beneficiary in amount of the original purchase price plus five
percent compounded interest.
(2) In the event of the death or total disability of the
beneficiary, monies paid for the purchase of advance payment
contracts must be returned to the purchaser together with five
percent compounded interest.
(3)(a) If an advance payment contract is converted
from a university plan to a community college plan or a
community college plus university plan, or is converted from
a community college plus university plan to a community
college plan, the amount refunded must be the value of the
original advance payment contract minus the value of the
contract after the conversion.
(b ) No refund is authorized through an advance
payment contract for any school year partially attended but not
completed. For purposes of this chapter, a school year partially
attended but not completed shall mean any one semester in
which the student is still enrolled at the conclusion of the
official drop-add period, but withdraws before the end of the
semester. If a beneficiary does not complete a community
college plan or university plan for reasons other than specified
in this section, the purchaser shall receive a refund of the
amount paid into the fund for the remaining unattended years
of the advance payment contract pursuant to rules prescribed by
the board.
Section 59-118-50. At a minimum, the board shall make
advance payment contracts available for three independent
plans to be known as the community college plan, the
university plan, and the dormitory residence plan, respectively.
(1) Through the community college plan, the advance
payment contract must provide prepaid registration fees for a
specified number of undergraduate semester credit hours not to
exceed the average number of hours required for the conference
of an associate degree. The cost of participation in the
community college plan must be based primarily on the average
current and projected registration fees within the Technical
Education System and the number of years expected to elapse
between the purchase of the plan on behalf of a qualified
beneficiary and the exercise of the benefits provided in the plan
by the beneficiary. Qualified beneficiaries shall bear the cost
of any laboratory fees associated with enrollment in specific
courses. Each qualified beneficiary must be classified as a
resident for tuition purposes regardless of his actual legal
residence.
(2) Through the university plan, the advance payment
contract must provide prepaid registration fees for a specified
number of undergraduate semester credit hours not to exceed
the average number of hours required for the conference of a
baccalaureate degree. The cost of participation in the
university plan must be based primarily on the current and
projected registration fees of state four-year post-secondary
institutions and the number of years expected to elapse between
the purchase of the plan on behalf of a qualified beneficiary and
the exercise of the benefits provided in the plan by the
beneficiary. Qualified beneficiaries must bear the cost of any
laboratory fees associated with enrollment in specific courses.
If a qualified beneficiary fails to be admitted to a state four-year
post-secondary institution or chooses to attend a community
college, the qualified beneficiary may convert the average
number of semester credit hours required for the conference of
an associate degree from a university plan to a community
college plan and may retain the remaining semester credit hours
in the university plan or may request a refund for prepaid credit
hours in excess of the average number of semester or quarter
credit hours required for the conference of an associate degree
pursuant to Section 59-118-40(A)(7). Each qualified
beneficiary must be classified as a resident for tuition purposes
regardless of his actual legal residence.
(3) Through the dormitory residence plan, the advance
payment contract must provide prepaid housing fees for a
maximum of ten semesters of full-time undergraduate
enrollment in a state four-year post-secondary institution.
Dormitory residence plans are optional and may be purchased
only in conjunction with a university plan. Dormitory
residence plans must be purchased in increments of two
semesters. The cost of participation in the dormitory residence
plan must be based primarily on the average current and
projected housing fees for state four-year post-secondary
institutions and the number of years expected to elapse between
the purchase of the plan on behalf of a qualified beneficiary and
the exercise of the benefits provided in the plan by the
beneficiary. Qualified beneficiaries must bear the cost of any
additional elective charges such as laundry service or long
distance telephone service. Each four-year post-secondary
institution may specify the residence halls eligible for inclusion
in the plan. In addition, any such institution may request
immediate termination of a dormitory residence contract based
on a violation or multiple violations of rules of the residence
hall. Qualified beneficiaries must have the highest priority in
the assignment of housing within residence halls. If sufficient
housing is not available for all qualified beneficiaries, the board
shall refund the purchaser or qualified beneficiary an amount
equal to the fees charged for dormitory residence during that
semester.
(4) A qualified beneficiary may apply a community college
plan, university plan, or dormitory residence plan toward any
eligible independent college or university in this State as
defined in Section 59-113-50. In order to be eligible for
participation in the dormitory residence plan, an eligible
independent college or university must provide written
certification to the board that it complies with the provisions of
item (3) of this section. The board shall transfer or cause to
have transferred to the eligible independent college or
university designated by the qualified beneficiary an amount
not to exceed the redemption value of the plan within a state
post-secondary institution. If the cost of registration or housing
fees at the independent college or university is less than the
corresponding fees at a state post-secondary institution, the
amount transferred may not exceed the actual cost of
registration or housing fees. No transfer authorized pursuant to
this item may exceed the number of semester credit hours or
semesters of dormitory residence contracted on behalf of a
qualified beneficiary.
Section 59-118-60. The board shall solicit proposals for the
operation of the South Carolina Post-secondary Education
Expense Program pursuant to the South Carolina Consolidated
Procurement Code, through which the board shall contract for
the services of a records administrator, a trustee services firm,
and one or more product providers.
(1) The records administrator must be the entity designated
by the board to conduct the daily operations of the program on
behalf of the board. The goals of the board in selecting a
records administrator must be to provide all purchasers with the
most secure, well-diversified, and beneficially administered
post-secondary education expense plan possible, to allow all
qualified firms invested in providing the services equal
consideration and to provide the services to the State at no cost
and to the purchasers at the lowest cost possible. Evaluations
of proposals submitted pursuant to this paragraph must include,
but not be limited to, the following criteria:
(a) fees and other costs charged to purchasers that affect
account values or operational costs related to the program;
(b) past experience in records administration and current
ability to provide timely and accurate service in the areas of
records administration, audit, and reconciliation, plan
communication, participant service, and complaint resolution;
(c) sufficient staff and computer capability for the scope
and level of service expected by the board;
(d) financial history and current financial strength and
capital adequacy to provide administrative services required by
the board.
(2) The trustee services firm must be the entity designated by
the board to select and supervise investment programs on
behalf of the board. The goals of the board in selecting a
trustee services firm must be to obtain the highest standards of
professional trustee services, to allow all qualified firms
interested in providing these services equal consideration, and
to provide the services to the State at no cost and to the
purchasers at the lowest cost possible. The trustee services firm
shall agree to meet the obligations of the board to qualified
beneficiaries if monies in the fund fail to offset the obligations
of the board as a result of imprudent selection or supervision of
investment programs by the firm. Evaluation of proposals
submitted pursuant to this item must include, but not be limited
to, the following criteria:
(a) adequacy of trustee services for supervision and
management of the program, including current operations and
staff organization and commitment of management to the
proposal;
(b) capability to execute program responsibilities within
time and regulatory constraints;
(c) past experience in trustee services and current ability
to maintain regular and continuous interactions with the board,
records administrator, and product provider;
(d) the minimum purchaser participation assumed within
the proposal and any additional requirements of purchasers;
(e) adequacy of technical assistance and services proposed
for staff;
(f) adequacy of a management system for evaluation and
improving overall trustee services to the program;
(g) adequacy of facilities, equipment, and electronic data
processing services;
(h) detailed projections of administrative costs, including
the amount and type of insurance coverage, and detailed
projections of total costs.
(3) (a) The product providers must be the entities designated
by the board to develop investment portfolios on behalf of the
board to achieve the purposes of this chapter. Product
providers are limited to authorized insurers, banks, savings and
loan associations, authorized Securities and Exchange
Commission investment advisors, and investment companies as
defined in the Investment Company Act of 1940. All product
providers must have their principal place of business and
corporate charter located and registered in the United States.
In addition, each product provider must agree to meet the
obligations of the board to qualified beneficiaries if monies in
the fund fail to offset the obligations of the board as a result of
imprudent investing by the provider. Each authorized insurer
shall evidence superior performance overall on an acceptable
level of surety in meeting its obligations to its policyholders
and other contractual obligations. Only qualified public
depositories approved by the Director of the Department of
Insurance and State Treasurer are eligible for board
consideration. Each investment company shall provide
investment plans as specified within the request for proposals.
(b) The goals of the board in selecting a product provider
company must be to provide all purchasers with the most
secure, well-diversified, and beneficially administered
post-secondary education expense plan possible, to allow all
qualified firms interested in providing the services equal
consideration, and to provide the services to the State at no cost
and to the purchasers at the lowest cost possible. Evaluations
of proposals submitted pursuant to this section must include,
but not be limited to, the following criteria:
(i) fees and other costs charged to purchasers that affect
account values or operational costs related to the program;
(ii) past and current investment performance, including
investment and interest rate history, guaranteed minimum rates
of interest, consistence of investment performance, and any
terms and conditions under which monies are held;
(iii) past experience and ability to provide timely and
accurate service in the areas of records administration, benefit
payments, investment management, and complaint resolution;
( iv) financial history and current financial strength and
capital adequacy to provide products, including operating
procedures and other methods of protecting program assets.
Section 59-118-70. The State shall agree to meet the
obligations of the board to qualified beneficiaries if monies in
the fund fail to offset the obligations of the board. The General
Assembly shall appropriate to the Prepaid Post-secondary
Education Expense Trust Fund the amount necessary to meet
the obligations of the board to qualified beneficiaries.
Section 59-118-80. The assets of the fund must be
maintained, invested, and expended solely for the purposes of
this chapter and may not be loaned, transferred, or otherwise
used by the State for any purpose other than the purposes of
this chapter. This section may not be construed to prohibit the
board from investing in, by purchase or otherwise, bonds,
notes, or other obligations of the State or an agency or
instrumentality of the State. Unless otherwise specified by the
board, assets of the fund must be expended in the following
order of priority:
(1) to make payments to state post-secondary institutions on
behalf of qualified beneficiaries;
(2) to make refunds upon termination of advance payment
contracts;
(3) to pay the costs of program administration and
operations.
Section 59-118-90. Monies paid into or out of the fund by or
on behalf of a purchaser or qualified beneficiary of an advance
payment contract made under this chapter, which contract has
not been terminated, are exempt from all claims of creditors of
the purchaser or the beneficiary.
Section 59-118-100. The State or a county, municipality, or
other political subdivision may by contract agree with any
employee to remit payments toward advance payment contracts
through payroll deductions made by the appropriate officer or
officers of the State, county, municipality, or political
subdivision. The payments must be held and administered in
accordance with this chapter.
Section 59-118-110. Nothing in this chapter may be
construed as a promise or guarantee that a qualified beneficiary
will be admitted to a state post-secondary institution or to a
particular state post-secondary institution, will be allowed to
continue enrollment at a state post-secondary institution after
admission, or will be graduated from a state post-secondary
institution.
Section 59-118-120. If the State determines the program to
be financially infeasible, the state may discontinue the program.
Any qualified beneficiary who has been accepted by and is
enrolled or is within five years of enrollment in an eligible
independent college or university or state post-secondary
institution is entitled to exercise the complete benefits for
which he has contracted. All other contract holders shall
receive a refund, pursuant to Section 58-118-40(A)(7), of the
amount paid in and an additional amount in the nature of
interest at a rate that corresponds, at a minimum, to the
prevailing interest rates for savings accounts provided by banks
and savings and loan associations."
SECTION 2. Section 12-7-435 of the 1976 Code, as
amended, is further amended by adding an appropriately
lettered item to read:
"( ) An amount paid to purchase a university or
community college advance payment plan, not including a
dormitory residence plan, pursuant to Chapter 118 of Title 59
and an amount equal to income attributable for federal income
tax purposes to a beneficiary from payments of tuition and fees
by a university or community college advance payment contract
in the year the beneficiary's tuition is paid."
SECTION 3. The initial terms of two of the four members
of the South Carolina Prepaid Post-secondary Education
Expense Program Board established by this act is two years and
the Governor shall note the term of the appointment.
SECTION 4. This act takes effect July 1, 1997.
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