Brief⁽¹⁾

Sub. for S.B. 402 provides for the State Treasurer to conduct a feasibility study to develop criteria for a postsecondary education savings plan. The study would include at least the following:

• examination of existing state-sponsored postsecondary education savings plans;



• determination of participation guidelines;



• maximization of participants' state and federal tax benefits under current tax codes;



• consideration of the range of coverage of savings programs in terms of restricting them to tuition and fees or also including additional postsecondary education costs;



• examination of investment procedures and regulations, including programs managed by the private sector; and



• consideration of establishing an oversight committee or an appointed board of directors, including the State Treasurer or other representatives affiliated with higher education and the investment community.

In regard to the feasibility study, the State Treasurer will consult with the Governor, State Board of Regents, State Board of Education, public and private institutions of postsecondary education, students, and other interested institutions. Also, the Treasurer periodically will consult with House and Senate Education Committees, the Legislative Budget Committee, and the Legislative Educational Planning Committee.

The feasibility study findings will be reported to a joint meeting of the House and Senate Education Committees no later than January 15, 1999.

Background

S.B. 402, as introduced, was recommended by the Legislative Educational Planning Committee pursuant to its 1997 interim study activity. For more information, see the report entitled "Planning for Postsecondary Education,"pages 10-1 through 10-6 of the Committee Reports to the 1998 Kansas Legislature, Part I--Special Committees, Kansas Legislative Research Department, December 1997. The proposal was modeled on a 1996 Colorado enactment.

As introduced, the bill proposed enactment of the Kansas Postsecondary Expense Program. The bill, which included the concept of a feasibility study, proposed establishment of "prepaid expenses" and "savings" components.

Spokespersons for the State Treasurer's Office and State Board of Regents presented testimony generally supportive of the idea of a postsecondary education expense program, preceded by a feasibility study.

The Executive Director of the State Board of Regents explained that the Board had endorsed the concept of a tax-free educational savings plan, but that it did not support a guaranteed expense or guaranteed tuition program. Also, the Executive Director urged consideration of the role that the private sector might perform in managing the program's investment options. Also proposed was the notion of creating an oversight group including the State Treasurer, the Chairperson of the Pooled Money Investment Board, trustees' representation from all postsecondary education sectors, a public representative with an investment background, and one or more gubernatorial appointees. The Executive Director noted that a strong element of such a plan is exemption of program investment income from state taxation.

Subsequent to the hearing on S.B. 402, the consensus of the Senate Education Committee was that the State Treasurer take the lead in redrafting the bill to provide only for a feasibility study of a tax-free savings plan. The substance of Sub. for S.B. 402 was prepared in response to that request. Upon making minor changes in the proposal, it was adopted.

The spokesperson for the State Treasurer's Office said that the sum of $30,000 would be requested for the study.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext-bill.html.