AB 762

This bill creates a WisKids savings account program under which the Department of Financial Institutions establishes one or more holding accounts from which money may be distributed to pay for qualified higher education expenses of children born or adopted in this state. The bill also requires the Department of Health Services to provide information to DFI related to the WisKids savings account program.

Under current law, the College Savings Program Board (board), which is attached to DFI, administers the state’s college savings program, commonly referred to by its two program options “Edvest” and “Tomorrow’s Scholar.” The state’s college savings program is a qualified tuition program authorized under federal law, more generally known as a 529 plan. Under the program, a person may establish a college savings account to cover certain expenses specified under federal law, including a beneficiary’s tuition, fees, room and board, and other costs required to attend an eligible educational institution; tuition expenses at an elementary or secondary school; certain apprenticeship expenses and expenses related to postsecondary credential programs; and qualified education loan payments.

Current law requires DFI to select a vendor for the college savings program through a competitive bidding process, based on factors determined by DFI. The contract between DFI and the vendor must contain certain requirements, including that the vendor reimburse the state for administrative program costs.

The bill creates, if funding is available, a WisKids savings account program under which DFI must establish in the college savings program a master holding account, and may establish interim holding accounts or additional accounts, for money that may be distributed to pay for qualified higher education expenses of children born or adopted in this state. Under the bill, DHS is granted an exception to existing disclosure prohibitions allowing the state registrar of vital records to provide to DFI, subject to specified limitations, information related to the birth of a child in this state and requiring that the state registrar provide DFI with at least the name of the child, the child’s date of birth, the birth record state file number, and the name and address of the child’s birth parent.

Under the bill, if DFI receives a child’s birth information from DHS or proof from a child’s parent that the child was born or adopted in this state and resides in this state and if funds are available, DFI must deposit at least $25 on behalf of the child into the master holding account, interim holding account, or other account established by DFI upon receiving notice that the child has been designated as a beneficiary of a Wisconsin college savings account before the child has reached 10 years of age. However, if DFI’s action is based on birth information received from DHS, DFI must first provide a notice to the child’s birthing parent and allow the child to opt out of the program. The bill also allows a child who resides in this state but who does not meet the requirements described above to participate in the program but the child does not receive the deposit of at least $25. However, DFI may make other deposits into accounts established under the program in accordance with policies established by the board. DFI may not make total deposits of more than $2,000,000 annually. If DFI makes a deposit on behalf of or establishes an account for a child, DFI must maintain an accounting that includes the name of the child (the “program participant”), the names of the child’s parents, and the principal and earnings in the account established for the child.

Under the bill, DFI makes distributions to third parties, or to the Wisconsin college savings account for which a child is designated as a beneficiary, to pay the program participants’ qualified higher education expenses, but these expenses may not include elementary or secondary school tuition. The bill allows DFI to remove a program participant from the program and make the funds that had been attributable to the program participant available for use by other program participants if 1) DFI has not made any distribution for the program participant before the program participant reaches 21 years of age; 2) DFI has not distributed all funds attributable to the program participant within two years of the first distribution to the program participant; 3) the program participant dies; or 4) the program participant withdraws from the program.

The bill allows DFI to accept contributions to the program from any person on behalf of program participants. As part of DFI’s administration of the program, DFI may collect data and conduct research related to the program’s operation and results. Any person may share data with DFI to assist in this research or in program fundraising.

The bill requires DFI to implement the provisions of the bill as soon as feasible but no later than two years after the bill’s effective date. However, DFI must implement the provisions of the bill only if funding is available for the program.