Bill Text: NY A06500 | 2019-2020 | General Assembly | Introduced

Bill Title: Enacts the "New York state family tuition investment program act" to provide for the advance purchase of tuition to colleges in the state.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Introduced) 2019-03-08 - referred to higher education [A06500 Detail]

Download: New_York-2019-A06500-Introduced.html

                STATE OF NEW YORK
                               2019-2020 Regular Sessions
                   IN ASSEMBLY
                                      March 8, 2019
        Introduced  by  M.  of  A.  MAGNARELLI, WOERNER, PAULIN -- read once and
          referred to the Committee on Higher Education
        AN ACT to amend the education law and the state finance law, in relation
          to establishing the New York state family tuition investment program
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section  1.  Legislative  findings.  The  legislature hereby finds and
     2  declares that it is an essential function of state government to  foster
     3  higher education in order to provide for a well-educated and financially
     4  secure population. The legislature further finds that the cost of higher
     5  education is becoming less affordable and predictable, adversely affect-
     6  ing  the  ability  of individuals and families to plan for future educa-
     7  tional expenses. The legislature further finds that it is  in  the  best
     8  interests of the state to provide its citizens with financing assistance
     9  for higher education and protection against rising costs, and to encour-
    10  age  savings  to  enhance the ability of residents of New York to obtain
    11  financial access to institutions of higher education.  Accordingly,  the
    12  legislature  finds  and declares that the creation of the New York state
    13  family tuition investment program for the advance  purchase  of  tuition
    14  will  help to make higher education affordable and accessible to all New
    15  York's students, to the ultimate benefit of all citizens of the state.
    16    § 2. The education law is amended by adding a new article 14-B to read
    17  as follows:
    18                                ARTICLE 14-B
    19                        NEW YORK STATE FAMILY TUITION
    20                           INVESTMENT PROGRAM ACT
    21  Section 696.   Short title.
    22          696-a. Definitions.
    23          696-b. New  York  state  family  tuition   investment   program;
    24                   purpose.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 6500                             2
     1          696-c. Powers and duties of the higher education services corpo-
     2                   ration.
     3          696-d. Prepayment agreements; pricing; redemption.
     4          696-e. Disclosure to purchasers.
     5          696-f. Termination of prepayment agreements; refunds.
     6          696-g. State financial aid.
     7          696-h. Scholarship program.
     8          696-i. Annual accounting and actuarial study.
     9          696-j. Exemption from security laws.
    10          696-k. Relief from attachment.
    11    §  696.  Short  title. This article shall be known and may be cited as
    12  the "New York state family tuition investment program act".
    13    § 696-a. Definitions. For the purposes of this article, the  following
    14  terms shall have the following meanings:
    15    1. "Beneficiary" means an individual designated in a prepayment agree-
    16  ment  as  the individual entitled to apply tuition units purchased under
    17  such agreement to the payment of that individual's tuition.
    18    2. "Comptroller" means the state comptroller.
    19    3. "Corporation" means the New York state  higher  education  services
    20  corporation.
    21    4.  "Owner"  means the purchaser or beneficiary of a prepayment agree-
    22  ment designated by the purchaser pursuant to paragraph a of  subdivision
    23  one of section six hundred ninety-six-d of this article.
    24    5.  "Prepayment  agreement"  means  an  agreement  entered into by the
    25  corporation and a purchaser providing  for  the  prepayment  of  tuition
    26  units by the purchaser, at a price determined by the corporation for the
    27  year  in which the units are purchased, and the redemption of such units
    28  at the time of the  beneficiary's  college  matriculation,  at  a  value
    29  determined  in  accordance with section six hundred ninety-six-d of this
    30  article.
    31    6. "Program" means  the  New  York  state  family  tuition  investment
    32  program established by section six hundred ninety-six-b of this article.
    33    7.  "Purchaser"  means  a  person, including a natural person, limited
    34  liability company, corporation, association, foundation, partnership  or
    35  other  legal  entity,  who  enters  into a prepayment agreement with the
    36  corporation for the prepayment of tuition.
    37    8. "Trust fund" means the New York  state  family  tuition  investment
    38  program  trust  fund  established pursuant to section seventy-eight-c of
    39  the state finance law.
    40    9. "Tuition" means the charges imposed by colleges for attendance  for
    41  an  academic  year as an undergraduate and all fees required as a condi-
    42  tion of enrollment as determined by the corporation. Such term shall not
    43  include tuition charged to out-of-state residents, laboratory fees, room
    44  and board, or other similar fees and charges.
    45    10. "Unit" or "tuition unit" means one percent of the annual  weighted
    46  average  tuition for a group of colleges, as described in and determined
    47  pursuant to section six hundred ninety-six-d of this article.
    48    § 696-b. New York state family tuition  investment  program;  purpose.
    49  There  is  hereby  established within the corporation the New York state
    50  family tuition investment program for the purpose of improving the high-
    51  er  educational  opportunities  of  beneficiaries  through  the  advance
    52  purchase  of  tuition at public institutions of higher education in this
    53  state, which shall be an official state function.
    54    § 696-c. Powers and duties of the  higher  education  services  corpo-
    55  ration. 1. The corporation shall:

        A. 6500                             3
     1    a.  promulgate  necessary  rules  and  regulations, within ninety days
     2  after the effective date of this article, for the implementation of  the
     3  program,  including but not limited to reasonable time limits for use of
     4  tuition units, reasonable limits on the number of program  participants,
     5  reasonable  restrictions on the substitution of beneficiaries, residency
     6  requirements for beneficiaries which shall be consistent with  residency
     7  requirements  established  by  qualified  institutions,  and  reasonable
     8  administrative fees and charges in connection with any transaction under
     9  this article;
    10    b. employ and fix the compensations of personnel, who shall be in  the
    11  classified service, but shall not be in the competitive class, as neces-
    12  sary to carry out its responsibilities under this article;
    13    c. engage, on a contract basis, the services of financial consultants,
    14  actuaries,  auditors and other consultants as necessary to carry out its
    15  responsibilities under this article;
    16    d. contract for other services, or for goods,  needed  by  the  corpo-
    17  ration in the conduct of its business;
    18    e.  make, execute and deliver contracts, conveyances and other instru-
    19  ments necessary to the management and operation of the program;
    20    f. purchase insurance from insurers licensed to do  business  in  this
    21  state  providing coverage against any loss in connection with the corpo-
    22  ration's property, assets or activities, or to further ensure the  value
    23  of units;
    24    g. promote, advertise and publicize the program through, at a minimum,
    25  wide  dissemination  of informational materials to the public explaining
    26  the provisions of the program and specifically,  a  clear  statement  in
    27  plain  language summarizing the provisions of sections six hundred nine-
    28  ty-six-e and six hundred ninety-six-f of this article, regarding disclo-
    29  sure and termination;
    30    h. enter into agreements with any  agency  of  the  state,  the  comp-
    31  troller,  political subdivisions of the state and with private employers
    32  under which an employee may agree to have a designated  amount  deducted
    33  in  each  payroll  period from the wages or salary due such employee for
    34  the purpose of purchasing tuition units pursuant to a prepayment  agree-
    35  ment;
    36    i.  enter into an agreement with the comptroller under which the comp-
    37  troller will receive and credit to the  trust  fund,  from  any  banking
    38  institution  authorized  to  do  business  in this state, amounts that a
    39  depositor of the banking  institution  authorizes  such  institution  to
    40  withdraw  periodically  from  his  or  her  account  for  the purpose of
    41  purchasing units pursuant to a prepayment agreement;
    42    j. solicit and accept gifts, grants or loans from any person,  associ-
    43  ation, board, foundation or governmental agency; and
    44    k.  perform  all acts necessary and proper to carry out the duties and
    45  responsibilities of the corporation pursuant to this article.
    46    2. The comptroller shall act as the sole trustee of  the  trust  fund.
    47  The  comptroller  will  have  authority to make all investment decisions
    48  regarding the trust fund.
    49    3. The corporation shall submit a request to the division of the budg-
    50  et for funds sufficient, as determined by such corporation, to cover the
    51  expenses of initial planning, organization  and  administration  of  the
    52  program.  Any  appropriations  to the corporation shall be repaid to the
    53  state from the fees, charges and investment earnings of the  trust  fund
    54  within  a  five-year  period, commencing two years after units have been
    55  offered for sale to the public. Commencing one  year  after  units  have
    56  been  offered  for  sale  to the public, expenses incurred by the corpo-

        A. 6500                             4
     1  ration shall be paid from the fees, charges and investment  earnings  of
     2  the fund or any other available funds.
     3    4.  The  program  is backed by the full faith and credit of the state.
     4  The state pledges to benefactors and  designated  beneficiaries  of  the
     5  program  that  the  state  will  not limit or alter the rights which are
     6  vested in the program until such obligations  are  met  and  discharged.
     7  However,  this  subdivision shall not be deemed to preclude such limita-
     8  tion if adequate provision is made by law  for  the  protection  of  the
     9  benefactors  and designated beneficiaries pursuant to the obligations of
    10  the corporation.
    11    § 696-d. Prepayment agreements; pricing; redemption.  1.  Election  of
    12  options.  The  corporation may enter into prepayment agreements with any
    13  person or entity for the purchase of any  number  of  tuition  units.  A
    14  purchaser shall elect one of the following options at the time of enter-
    15  ing into a prepayment agreement under this section:
    16    a. One or more specific individuals shall be designated as the benefi-
    17  ciaries of the units. A purchaser selecting this option shall also elect
    18  whether to retain ownership of the units or to allocate ownership of the
    19  units  in  the account to one or more of the designated beneficiaries. A
    20  purchaser who retains ownership may allocate units among  the  specified
    21  beneficiaries  at  the time of enrollment in a college. If the purchaser
    22  assigns ownership of the units to the beneficiaries, each beneficiary is
    23  entitled to use those units. In accordance  with  rules  of  the  corpo-
    24  ration,  beneficiaries  may  be  deleted, added or substituted for those
    25  originally named in the prepayment agreement and ownership of the assets
    26  may be changed during the life of the agreement, provided that  no  more
    27  than  five  unrelated individuals shall be included under one prepayment
    28  agreement at any one time; or
    29    b. A unit account may be established for no more than  five  unrelated
    30  beneficiaries.  From time to time, the purchaser may transfer units from
    31  such account to one or more specified beneficiaries in  accordance  with
    32  paragraph a of this subdivision, or to a scholarship program established
    33  pursuant  to this section. The purchaser shall be the owner of the units
    34  until they are transferred; or
    35    c. Any number of units of any  group  may  be  purchased  and  donated
    36  directly  to a scholarship program established pursuant to this section.
    37  The person or organization that  establishes  such  scholarship  program
    38  shall  be  the  owner of units purchased pursuant to this paragraph, and
    39  the purchaser shall have no right to the units.
    40    2. Unit pricing. a. In accordance with sound actuarial practices,  the
    41  corporation  shall  establish,  and  re-establish  annually,  prices for
    42  tuition units which shall be redeemable in specific years or periods  of
    43  years. Tuition unit prices shall be based on in-state tuition, and shall
    44  be  established for a twelve month period to be determined by the corpo-
    45  ration. Annually, the corporation shall have the actuarial soundness  of
    46  the  trust  fund  evaluated by a nationally recognized actuary and shall
    47  determine whether additional assets are necessary to  meet  the  current
    48  and projected future obligations of the corporation.
    49    b.  Separate  tuition unit prices shall be established for each of the
    50  following college groups:
    51    (i) colleges for which annual tuition does not  exceed  five  thousand
    52  dollars;
    53    (ii)  colleges  for which annual tuition is greater than five thousand
    54  dollars but not more than ten thousand dollars;
    55    (iii) colleges for which annual tuition is greater than  ten  thousand
    56  dollars but not more than fifteen thousand dollars;

        A. 6500                             5
     1    (iv)  colleges  for which annual tuition is greater than fifteen thou-
     2  sand dollars but not more than twenty thousand dollars; and
     3    (v) colleges for which annual tuition exceeds twenty thousand dollars.
     4    The  corporation  may,  by regulation, adjust the dollar parameters of
     5  the groups set forth in this paragraph, and any  such  adjustment  shall
     6  operate only prospectively.
     7    c.  Tuition unit prices shall be based on an amount which approximates
     8  one percent of the weighted average tuition for each group of  colleges.
     9  The  term "weighted average tuition," as used in this section, means the
    10  tuition cost resulting from the following calculation:
    11    (i) add the products of the annual tuition for each college  within  a
    12  group,  multiplied by total undergraduate fiscal year enrollment at each
    13  college; and
    14    (ii) divide the gross total of the products from subparagraph  (i)  of
    15  this  paragraph  by the total undergraduate academic year enrollment for
    16  each group of colleges.
    17    d. On an annual  basis,  the  corporation  shall  compile  information
    18  sufficient to calculate the price of units at each group of colleges. On
    19  or  before July thirty-first of each year, each college shall certify to
    20  the corporation the tuition to  be  charged  by  such  college  for  the
    21  academic year beginning on or after August first of that year and ending
    22  on  or  before  July thirty-first of the following year. At such time as
    23  the corporation shall determine,  each  college  shall  certify  to  the
    24  corporation  the  tuition  charged by the college for the current or any
    25  previous academic year.
    26    e. Each tuition unit price shall include an amount deemed necessary by
    27  the corporation to defray the costs of administering the program.
    28    f. To promote the purchase of units and in accordance with actuarially
    29  sound principles, the corporation, in consultation with the  comptroller
    30  may  adjust  the  sales  price  as  part  of incentive programs, such as
    31  discounting for lump sum purchases and multi-year installment plans at a
    32  fixed rate of purchase.
    33    3. Redemption of units. In accordance with such terms  and  conditions
    34  as set forth in this section, in the prepayment agreement or by rules of
    35  the  corporation, the beneficiary may redeem the value of tuition units,
    36  as follows:
    37    a. One percent of the weighted average tuition for the  academic  year
    38  in  which  units  are redeemed, charged by the college group selected by
    39  the purchaser under the prepayment agreement, multiplied by  the  number
    40  of  tuition units to be redeemed in the academic term in which the bene-
    41  ficiary matriculates at a college.
    42    b. The corporation will pay directly to the college in which a benefi-
    43  ciary is enrolled during an academic term the amount represented by  the
    44  units being redeemed that term. The beneficiary shall be responsible for
    45  the payment of all charges required by such college in which the benefi-
    46  ciary is enrolled in excess of the value of units which are redeemed.
    47    c.  If, at any time after units are purchased on behalf of a benefici-
    48  ary or awarded to a beneficiary pursuant to a scholarship  program,  the
    49  beneficiary  chooses  to  attend a college within a group other than the
    50  one for which units were purchased, the  value  of  units  purchased  or
    51  awarded  to  the  beneficiary  may  be  redeemed  by the beneficiary and
    52  applied toward the payment of  any  tuition,  fees  or  charges  of  the
    53  college  the  beneficiary attends. The corporation shall pay directly to
    54  the college the value of units which are redeemed.
    55    d. A minimum period of four years  must  elapse  between  the  time  a
    56  prepayment  agreement  is  entered  into  and the time that units may be

        A. 6500                             6
     1  redeemed. The corporation may prescribe an alternative period  of  time,
     2  but  no  shorter  than  four years, which must elapse between the time a
     3  prepayment agreement is entered into and the time that tuition units may
     4  be redeemed.
     5    e.  The  corporation shall permit the redemption of units for master's
     6  degree and other post baccalaureate programs. The corporation  may  also
     7  permit  units  remaining in an account after tuition is fully paid to be
     8  applied for other educational expenses and fees directly charged to  the
     9  beneficiary by the college.
    10    4.  No guarantee.  Nothing in this article or in any prepayment agree-
    11  ment entered into pursuant to this article shall be construed as a guar-
    12  antee by the state, the corporation or any college, that  a  beneficiary
    13  will  be  admitted to a college, or, upon admission to a college will be
    14  permitted to continue to attend or will receive a degree from a college.
    15    § 696-e. Disclosure to purchasers. 1. The following information  shall
    16  be  disclosed  by  the  corporation  in  writing  to  each purchaser and
    17  prospective purchaser of tuition units  and  to  each  school  district,
    18  public  high school, nonpublic high school, or other person or organiza-
    19  tion maintaining a scholarship program:
    20    a. the terms and conditions for purchasing tuition units;
    21    b. any restrictions on  the  substitution  of  beneficiaries  and  any
    22  restrictions  on  the  transfer  of  ownership  of  tuition units in the
    23  payment account;
    24    c. the person or entity entitled to terminate  the  prepayment  agree-
    25  ment;
    26    d.  the  terms and conditions under which the prepayment agreement may
    27  be terminated and the amount of the refund and penalty, if any, to which
    28  the person or entity terminating the  agreement,  or  that  person's  or
    29  entity's designee, is entitled or responsible for, upon termination;
    30    e.  the obligation of the corporation to make payments to a college on
    31  behalf of a beneficiary, based upon the number  of  units  purchased  on
    32  behalf  of  the  beneficiary or awarded to the beneficiary pursuant to a
    33  scholarship program and reciting in any promotional materials and in the
    34  prepayment agreement, in at least sixteen point, bold type: "The benefi-
    35  ciary shall be responsible for the payment of all  charges  required  by
    36  such college in which the beneficiary is enrolled in excess of the value
    37  of units which are redeemed";
    38    f.  the  method by which tuition units shall be applied toward payment
    39  of tuition if in any  academic  term  the  beneficiary  is  a  part-time
    40  student;
    41    g.  the  method by which tuition units shall be applied toward payment
    42  of tuition if during any academic term a tuition change occurs;
    43    h. the period of time during which a beneficiary may receive  benefits
    44  under the prepayment agreement;
    45    i.  the  terms  and  conditions  under  which  money  may be wholly or
    46  partially withdrawn from the program, including, but not limited to, any
    47  reasonable charges and fees that may be imposed for withdrawal;
    48    j. the probable state and federal  tax  consequences  associated  with
    49  purchasing and redeeming units; and
    50    k.  all  other  rights and obligations of the purchaser and the corpo-
    51  ration and any other terms, conditions, and provisions  the  corporation
    52  considers necessary and appropriate.
    53    2. Prepayment agreements shall be subject to section fourteen-c of the
    54  banking  law  and  the "truth-in-savings" regulations promulgated there-
    55  under.

        A. 6500                             7
     1    § 696-f. Termination of prepayment agreements; refunds. 1.  A  prepay-
     2  ment  agreement  may be terminated by the purchaser, the beneficiary, or
     3  by any person or combination of persons, as provided in  the  prepayment
     4  agreement,  and the corporation shall issue a refund as provided in this
     5  subdivision.
     6    a.  Unless  otherwise  provided  for  in  the  prepayment agreement, a
     7  prepayment agreement may be terminated by the owner  under  any  of  the
     8  following circumstances:
     9    (i) upon the death or permanent disability of the beneficiary;
    10    (ii)  upon  certification  by  the  owner  of units under a prepayment
    11  agreement, not more than four years prior  to  the  earliest  redemption
    12  date  provided  by  the  prepayment  agreement,  that  the principal and
    13  accrued interest in such owner's account will be transferred to  another
    14  prepaid tuition program offered by a college or another state;
    15    (iii)  upon  notification to the board in writing that the beneficiary
    16  is age eighteen or older, and has decided not to attend a college;
    17    (iv) upon completion of the degree requirements at a college;
    18    (v) upon a decision by the beneficiary to attend a college or  univer-
    19  sity located outside of the state; and
    20    (vi)  upon  the  occurrence  of  other circumstances determined by the
    21  corporation to be grounds for termination.
    22    b. In the case of a termination under subparagraph (i) of paragraph  a
    23  of this subdivision, the owner shall be entitled to and receive the full
    24  value  of units, without penalty, for the year in which such termination
    25  occurs or shall be entitled to substitute a new  beneficiary  under  the
    26  existing prepayment agreement.
    27    c.  For each category of terminations under paragraph a of this subdi-
    28  vision, other than under subparagraph (i) of such paragraph, the  corpo-
    29  ration  shall  prescribe, by rule, the percentage of value of units, the
    30  method and the schedule for payment of refunds  upon  termination  of  a
    31  prepayment agreement.
    32    d. If a beneficiary is awarded a scholarship other than under a schol-
    33  arship  program established under this article, a tuition waiver, grant,
    34  or the like, that the corporation determines cannot  be  converted  into
    35  money  by  the  beneficiary, the corporation shall, during each academic
    36  term that the beneficiary furnishes  the  corporation  such  information
    37  about  such  scholarship, waiver, or grant, as the corporation requires,
    38  refund to the beneficiary, without penalty, an amount equal to the value
    39  of the tuition units that would have been directly paid to a college  if
    40  the  scholarship, waiver, or grant had not been available to the benefi-
    41  ciary for that purpose.
    42    2. If a prepayment agreement has not been terminated or a  beneficiary
    43  designated in the prepayment agreement has not used tuition units within
    44  the  time  specified  in  such  agreement,  the  rights  and  procedures
    45  prescribed by the abandoned property law shall apply.
    46    3. If, in any academic term for which units have been used to pay  all
    47  or  part  of  a  beneficiary's tuition, the beneficiary withdraws from a
    48  college prior to the end of the academic term, any refund of tuition  as
    49  a  result  of  the withdrawal which is attributable to the redemption of
    50  units for such term shall be made to the corporation, unless the  corpo-
    51  ration  designates  a  different procedure. The corporation shall credit
    52  any refund received, less any reasonable charges and fees  provided  for
    53  by the corporation, to the beneficiary's account.
    54    §  696-g. State financial aid. Ownership of credits shall not penalize
    55  purchasers or beneficiaries in  any  determination  of  eligibility  for

        A. 6500                             8
     1  state funded general awards, academic performance awards or fellowships,
     2  including tuition assistance program awards.
     3    §  696-h. Scholarship program. 1. The board of education of any school
     4  district, or the governing board of any nonprofit educational, religious
     5  or charitable organization may establish a scholarship program to  award
     6  scholarships consisting of units purchased pursuant to prepayment agree-
     7  ments.  Any  scholarship program established under this section shall be
     8  registered with the corporation. The corporation shall  be  notified  of
     9  the  name and address of each scholarship beneficiary under the scholar-
    10  ship program, the number of tuition units awarded, and  the  college  in
    11  which the beneficiary shall be enrolled. Scholarship beneficiaries shall
    12  be  selected  by the governing body of the organization that established
    13  the scholarship program in accordance with criteria established by  such
    14  governing  body.  In  the case of a scholarship program established by a
    15  board of education, scholarships  shall  be  awarded  only  to  students
    16  enrolled  in  the  school district. No beneficiary may receive more than
    17  the minimum number of units necessary to fund four academic years at the
    18  selected college.
    19    2. Any person or entity may purchase units on behalf of a  scholarship
    20  program  established  under  this section and registered with the corpo-
    21  ration at the same price as charged for the purchase of units for  named
    22  beneficiaries pursuant to this article, as provided in subdivision three
    23  of this section. Such units shall have the same value to the beneficiary
    24  of  a scholarship awarded pursuant to this section as they would have to
    25  any other beneficiary.
    26    3. If a scholarship beneficiary does not use units  awarded  within  a
    27  length  of  time  specified under the scholarship program, the governing
    28  board of the scholarship program may award the units to another  benefi-
    29  ciary.
    30    §  696-i.  Annual  accounting  and actuarial study. 1. The corporation
    31  shall prepare, in consultation with the comptroller, and cause  to  have
    32  audited  an  annual  financial  report  on all financial activity of the
    33  trust fund, within ninety days of the end of the fiscal year.  Biennial-
    34  ly, the corporation shall contract with a nationally recognized firm  to
    35  perform a management audit of the program, which shall include a compli-
    36  ance audit of the program's compliance with the "truth-in-savings" regu-
    37  lations,  as  required by section six hundred ninety-six-e of this arti-
    38  cle. The corporation and the  comptroller  shall  transmit  the  audited
    39  financial  report  and  the  management  audit,  within  thirty  days of
    40  completion, to the governor and to the chairperson and ranking  minority
    41  member  of  the  assembly  ways and means committee, the chairperson and
    42  ranking minority member of the senate finance committee, and the  chair-
    43  persons  and  ranking minority members of the assembly and senate higher
    44  education committees. Copies of the audited  financial  report  and  the
    45  management  audit  also  shall  be  made available, upon request, to the
    46  public.
    47    2. The comptroller or his or her  legally  authorized  representative,
    48  from  time to time may examine the books and accounts of the corporation
    49  including  its  receipts,   disbursements,   contracts,   administrative
    50  expenses and any other matters relating to the financial standing of the
    51  trust fund.
    52    § 696-j. Exemption from security laws. Prepayment agreements and units
    53  are exempt from any state statute regulating securities, including arti-
    54  cle twenty-three of the general business law.
    55    §  696-k. Relief from attachment. The right of a person to a credit or
    56  a payment under this article pursuant to a prepayment agreement or scho-

        A. 6500                             9
     1  larship program shall not be subject to execution, garnishment,  attach-
     2  ment, the operation of bankruptcy or the insolvency laws, or other proc-
     3  ess of law.
     4    §  3. The state finance law is amended by adding a new section 78-c to
     5  read as follows:
     6    § 78-c. New York state family tuition investment program  trust  fund.
     7  a.  There  is  hereby established in the sole custody of the state comp-
     8  troller a special fund to be known as the "New York state family tuition
     9  investment program trust fund", which shall be outside the state  treas-
    10  ury.  Notwithstanding  the  provisions of subdivision one of section six
    11  hundred ninety-six-c of the education law, or any other law, moneys  may
    12  be  paid  out of such fund without an appropriation by law. All payments
    13  of moneys from such fund shall be made only in accordance with the rules
    14  and regulations of the New York state higher education  services  corpo-
    15  ration and the comptroller.
    16    b.  The  trust  fund shall consist of a trust account and an operating
    17  account. The trust account shall consist of moneys received by  the  New
    18  York  state higher education services corporation pursuant to prepayment
    19  agreements, all interest and investment income earned by the trust fund,
    20  administrative charges and fees received by the program and all receipts
    21  of the program from any other source. Upon certification of  the  chair-
    22  person  of the New York state higher education services corporation, the
    23  comptroller shall, from time to time, transfer  moneys  from  the  trust
    24  account to the operating account to be used for the immediate payment of
    25  obligations  of the New York state higher education services corporation
    26  under prepayment agreements, and the cost of administering the New  York
    27  state family tuition investment program.
    28    c.  Moneys  in  the trust fund shall be kept separate and shall not be
    29  commingled with other funds. The comptroller shall invest the moneys  in
    30  the  trust  fund,  on  behalf  of  the  New  York state higher education
    31  services corporation, pursuant to the standards set forth  in  paragraph
    32  (b)  of  subdivision  nine  of  section one hundred seventy-seven of the
    33  retirement and social security law. The comptroller may enter into writ-
    34  ten agreements with one or more financial organizations for the  invest-
    35  ment  and  custody  of  trust funds. All investment fees and other costs
    36  incurred in connection with the investment of the trust fund moneys  and
    37  reasonable  expenses  of administering the trust fund shall be paid from
    38  the assets of the fund.
    39    d. Moneys in the trust fund not required for the immediate payment  of
    40  obligations  of the New York state higher education services corporation
    41  under prepayment agreements and the cost of administering the  New  York
    42  state  family  tuition  program may be contractually loaned to the state
    43  university of New York and  the  city  university  of  New  York  to  be
    44  utilized  for  educational  purposes  as detailed within said loans. Any
    45  contracts entered into by  the  comptroller  under  this  section  shall
    46  provide  for  a repayment schedule with interest which ensures the trust
    47  fund's ability to meet its obligations under the New York  state  family
    48  tuition investment program. The total of all amounts loaned to the state
    49  university  of  New York and the city university of New York shall be in
    50  the same proportion  as  the  proportion  of  the  average  state  funds
    51  provided to each system during the last five years.
    52    §  4.  This act shall take effect on the first of July next succeeding
    53  the date on which it shall have become a law.