164A.701 Commonwealth postsecondary education prepaid tuition trust fund --
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Prepaid postsecondary tuition administrative account.
(a)There is hereby created an instrumentality of the Commonwealth to be known
as the "Commonwealth postsecondary education prepaid tuition trust fund", to
be governed by the board and administered by the Tuition Account Program
Office. The fund shall be attached to the Kentucky Higher Education
Assistance Authority for administrative and reporting purposes, and shall be
governed, managed, and administered as a separate and distinct
instrumentality of the Commonwealth under the provisions of KRS 164A.700
to 164A.709.
(b)The fund shall consist of payments received from prepaid tuition contracts
under KRS 164A.700 to 164A.709. Payments received relating to contracts in
existence on April 25, 2006, and income earned from the investment of those
payments shall be maintained separately from payments received relating to
contracts entered into after April 25, 2006, and income earned from the
investment of those payments. Income earned from the investment of
payments to the fund shall remain in the fund and be credited to it.
(c)Notwithstanding any other statute to the contrary, all moneys received under
the authority of KRS 164A.700 to 164A.709 shall be deemed to be trust funds
to be held and applied solely for payment to qualified beneficiaries and
purchasers and to meet the expenses necessary for the administration and
maintenance of the fund as provided in KRS 164A.700 to 164A.709.
(d)The fund shall not constitute an investment company as defined in KRS
291.010.
(e)Obligations under a prepaid tuition contract incurred in accordance with the
provisions of KRS 164A.700 to 164A.709 shall not be deemed to constitute a
debt, liability, or obligation of the Kentucky Higher Education Assistance
Authority, but shall be payable solely from the fund. Each prepaid tuition
contract shall contain a statement that the obligation shall be payable solely
from the fund.
(2)The purposes of the fund are:
(a)To provide affordable access to participating institutions for the qualified
beneficiaries; and
(b)To provide students and their parents economic protection against rising
tuition costs.
(3)The Tuition Account Program Office and the facilities of the Kentucky Higher
Education Assistance Authority shall be used and employed in the administration of
the fund including, but not limited to, the keeping of records, the employment of
staff to assist in the administration of the fund, the management of accounts and
other investments, the transfer of funds, and the safekeeping of securities
evidencing investments.
(a)Assets of the fund shall be invested in any of the following security types that
are deemed appropriate by the board:
1. Government and agency bonds;
2. Investment grade asset-backed securities and corporate bonds;
3. Mortgages, excluding interest-only (IO), principal-only (PO), and
inverse floaters; and
4. Equities.
(b)Equities shall constitute no greater than sixty percent (60%) of the entire
portfolio, including up to ten percent (10%) in equities from outside the
United States.
(c)The duration of the fixed-income portion of the portfolio shall reflect the
future liability of the fund for tuition payments.
(d)Assets may be pooled for investment purposes with any other investment of
the Commonwealth that is eligible for asset pooling.
(e)Leveraging is strictly prohibited.
(5)The board may receive and deposit into the fund gifts made by any individual or
agency as deemed acceptable by the board together with funds that are obtained
from sources legally available and determined by the board to be applicable for the
purposes of KRS 164A.700 to 164A.709.
(6)There is created a separate account within the Kentucky Higher Education
Assistance Authority to be known as the prepaid postsecondary tuition
administrative account for the purposes of implementing and maintaining the fund.
(a)Moneys shall be transferred from the fund to the administrative account to
meet the expenses necessary for the administration and maintenance of the
fund. Expenses incurred by the board and the Tuition Account Program Office
in carrying out the provisions of KRS 164A.700 to 164A.709 shall be made
payable from the fund through the administrative account, and no
administrative expenses shall be incurred by the Kentucky Higher Education
Assistance Authority beyond those for which moneys are provided by the
fund.
(b)The board may establish administrative fees for handling prepaid tuition
contracts and deposit the funds attributable to the fees in the administrative
account.