ASSEMBLY, No. 2400

STATE OF NEW JERSEY

INTRODUCED OCTOBER 7, 1996

By Assemblyman O'TOOLE

An Act establishing a Prepaid Higher Education Expense Program and amending and supplementing Title 18A of the New Jersey Statutes.

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. (New Section) This act shall be known and may be cited as the "New Jersey Prepaid Higher Education Expense Program Act of 1996."

    2. (New Section) The Legislature finds and declares: that educational opportunity at the college and university level is a critical State interest which is linked to the needs of the State to ensure a well-educated work force; that educational opportunity is best ensured through the provision of institutions of higher education which are geographically and financially accessible; that it is in the best interests of this State to adopt and foster mechanisms which will encourage its citizens to engage in the timely financial planning which is necessary to guarantee that students will have the financial resources necessary to pursue a higher education given the annually escalating level of resources which such attendance requires; and that one such mechanism which has proven successful in some other states is the establishment of a program through which many of the costs associated with attendance at institutions of higher education may be paid in advance and fixed at a guaranteed level for the duration of undergraduate enrollment.

    3. (New Section) As used in this act:

    "Advance payment contract" means a contract entered into by the board and a purchaser pursuant to the provisions of this act;

    "Board" means the Prepaid Higher Education Expense Board established pursuant to section 7 of this act.

    "Fund" means the Prepaid Higher Education Expense Trust Fund established pursuant to section 5 of this act.

    "Independent institution of higher education" means those institutions of higher education incorporated and located in this State, which, by virtue of law or character or license, are nonprofit educational institutions empowered to grant academic degrees and which provide a level of education which is equivalent to the education provided by the State's public institutions of higher education as attested by the receipt of and continuation of regional accreditation by the Middle States Association of Colleges and Schools, and which are eligible to receive State aid under the provisions of the Constitution of the United States and the Constitution of the State of New Jersey. "Independent institution of higher education" does not include any educational institution dedicated primarily to the preparation or training of ministers, priests, rabbis, or other professional persons in the field of religion.

    "Purchaser" means a person who makes or is obligated to make payments in accordance with an advance payment contract.

    "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 the State at the time that the parent enters into an advance payment contract on behalf of the child.

     "Public institution of higher education" means Rutgers, The State University, the State colleges or universities established pursuant to chapter 64 of Title 18A of the New Jersey Statutes, the New Jersey Institute of Technology, the University of Medicine and Dentistry of New Jersey, the county colleges and any other public university or college now or hereafter established or authorized by State law.

    "Program" means the New Jersey Prepaid Higher Education Expense Program established pursuant to section 4 of this act.

    "Registration fees" means any fees imposed by an institution of higher education, in addition to tuition, required for matriculation at the institution.

    4. (New Section) There is established the New Jersey Prepaid Higher Education Expense Program to provide a mechanism through which the cost of tuition, registration fees, and dormitory residence may be paid in advance of enrollment in a public institution of higher education at a rate lower than the projected corresponding cost at the time of actual enrollment. Under the program, moneys remitted in accordance with advance payment contracts shall 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 tuition, registration fees, and dormitory residence at the time of actual enrollment. A student who enrolls in a public institution of higher education pursuant to this act shall not be charged any fees in excess of the terms set forth in the advance payment contract.

    5. (New Section) There is created within the Department of the Treasury the Prepaid Higher Education Expense Trust Fund. The fund shall consist of State appropriations, moneys acquired from other governmental or private sources, and moneys remitted in accordance with advance payment contracts. Dividends, interest, and gains accruing to the fund shall increase the total funds available for the program. Any funds associated with contracts terminated pursuant to section 15 of this act or with canceled contracts for which refunds have not been claimed shall increase the total funds available for the program. However, the board shall establish procedures for notifying purchasers who cancel a contract of any unclaimed refund and shall establish a time period after which a refund may not be claimed.

    Any balance contained in the fund at the end of a fiscal year shall remain therein and shall be available for carrying out the purposes of the program.

    6. (New Section) The assets of the fund shall be maintained, invested, and expended solely for the purposes of this act and shall not be loaned, transferred, or otherwise used by the State for any purpose other than the purposes of this act. This section shall 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 shall be expended in the following order of priority:

    a. to make payments to institutions of higher education on behalf of qualified beneficiaries;

    b. to make refunds upon cancellation of advance payment contracts; and

    c. to pay the costs of program administration and operations.

    7. a. (New Section) The program shall be administered by the Prepaid Higher Education Expense Board. The board is established as a body corporate and politic in the Executive Branch of State Government and for the purposes of complying with the provisions of Article V, Section IV, paragraph 1 of the New Jersey Constitution, the board is allocated in but not of the Department of the Treasury, but notwithstanding this allocation, the board shall be independent of any supervision or control by the department or by any board or officer thereof.

    b. The board shall consist of seven members including the State Treasurer, the chairman of the Commission on Higher Education, and five members appointed by the Governor with the advice and consent of the Senate without regard for political affiliation. Each member appointed by the Governor shall possess knowledge, skill, and experience in the areas of accounting, actuary, risk management, or investment management. The State Treasurer and the Chairman of the Commission on Higher Education may each appoint a designee to sit on the board; however, any designee named shall meet the qualifications required of gubernatorial appointees to the board. Members appointed by the Governor shall serve terms of three years except that in making the initial appointments, the Governor shall appoint one member to serve for one year, two members to serve for two years, and two members to serve for three years. Any member appointed to fill a vacancy on the board shall be appointed in a like manner and shall serve until a successor qualifies. Members of the board shall serve without compensation but shall be reimbursed for any necessary expenses incurred in the performance of their duties.

    8. (New Section) The Governor shall appoint a member of the board to serve as the initial chair of the board. Thereafter, the board shall elect a chair annually. The board shall annually elect a board member to serve as vice-chair and shall designate a secretary-treasurer who need not be a member of the board. The secretary-treasurer shall keep a record of the proceedings of the board and shall be the custodian of all printed material filed with or by the board and of its official seal. Notwithstanding the existence of vacancies on the board, a majority of the members shall constitute a quorum. The board shall take no official action in the absence of a quorum. The board shall meet, at a minimum, on a quarterly basis at the call of the chair.

    9. (New Section) The board shall have the powers necessary or proper to carry out the provisions of this act, including, but not limited to, the power to:

    a. appoint an executive director to serve as the chief administrative and operational officer of the board and to perform other duties assigned by the board;

    b. adopt an official seal and rules;

    c. sue and be sued;

    d. make and execute contracts and other necessary instruments;

    e. establish agreements or other transactions with federal, State, and local agencies, including public institutions of higher education;

    f. invest funds not required for immediate disbursement;

    g. appear in its own behalf before boards, commissions, or other governmental agencies;

    h. hold, buy, and sell any instruments, obligations, securities, and property determined appropriate by the board;

    i. require a reasonable length of State residence for qualified beneficiaries;

    j. restrict the number of participants in the county college plan, university plan, and dormitory residence plan, as those plans are defined in section 18 of this act. A person denied participation solely on the basis of this restriction shall be granted priority for participation during the succeeding year;

    k. segregate contributions and payments to the fund into various accounts;

    l. 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;

    m. 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 act;

    n. 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;

    o. procure insurance against any loss in connection with the property, assets, and activities of the fund or the board;

    p. impose reasonable time limits on use of the tuition benefits provided by the program. This limitation shall be specified within the advance payment contract;

    q. delineate the terms and conditions under which payments may be withdrawn from the fund and impose reasonable fees and charges for withdrawals. The terms and conditions shall be specified within the advance payment contract;

    r. provide for the receipt of contributions in lump sums or installment payments;

    s. establish other policies, procedures, and criteria to implement and administer the provisions of this act; and

    t. require that purchasers of advance payment contracts verify, under oath, any requests for contract conversions, substitutions, transfers, cancellations, refund requests, or contract changes of any nature.

    10. (New Section) 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 determines a need for additional assets in order to preserve actuarial soundness, the board may adjust the terms of subsequent advance payment contracts to ensure soundness.

    11. (New Section) a. The board, acting with the approval of the State Treasurer, shall establish a comprehensive investment plan for the purposes of this act. 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 the funds 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 such proportions as may be designated or approved under that plan. The insurance, annuity, savings, or investment products shall be underwritten and offered in compliance with the applicable federal and State laws and regulations and by persons who are duly authorized by applicable federal and State authorities. Within the comprehensive investment plan, the board may authorize investment vehicles, or products incident thereto, as may be available or offered by qualified companies or persons.

    b. The board may delegate responsibility for administration of the comprehensive investment plan required pursuant to subsection a. of this section to a person the board determines to be qualified. The person shall be compensated by the board. Directly or through that person, the board may contract with a private corporation or institution to provide such services as may be a part of the comprehensive investment plan or as may be deemed necessary or proper by the board or designated person, including, but not limited to, providing consolidated billing, individual and collective record keeping and accounting, and asset purchase, control, and safekeeping.

    c. 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 shall be submitted to the Governor, the President of the Senate, the Speaker of the General Assembly, the State Treasurer and members of the Commission on Higher Education on or before August 1 each year. In addition, the board shall make the report available to purchasers of advance payment contracts. The board shall provide to the Commission on Higher Education by August 1 each year complete advance payment contract sales information including projected higher education enrollments of qualified beneficiaries. The accounts of the funds shall be subject to annual audits by the State Auditor or his designee.

    d. The board shall solicit answers to applicable ruling requests from the federal 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 the requests known before entering into an advance payment contract.

    e. The board shall solicit proposals for the marketing of the program. The entity designated pursuant to this subsection shall serve as a centralized marketing agent for the program and shall be solely responsible for the marketing of the program. Materials produced for the purpose of marketing the program shall be submitted to the board for review and approval. Marketing materials shall not be made available or distributed to the public prior to the materials being approved by the board. An institution of higher education may distribute marketing materials produced for the program. The State and the board shall not be liable for misrepresentation of the program by a marketing agent.

    f. The board may make available insurance coverage written exclusively for the purpose of protecting advance payment contracts, and the purchasers or beneficiaries thereof, which may be issued in the form of a group term life policy to purchasers of advance payment contracts.

    12. (New Section) The board shall develop advance payment contracts for tuition and registration fees and advance payment contracts for dormitory residence. Advance payment contracts shall be exempt from the provisions of Subtitle 3 of Title 17 of the Revised Statutes and Subtitle 3 of Title 17B of the New Jersey Statutes. The board may request assistance from the Office of the Attorney General in the development of the advance payment contracts. The contents of both types of contracts shall include, but not be limited to, the following:

    a. the amount of the payments and the number of payments required from a purchaser;

    b. the terms and conditions under which purchasers are required to remit payments, including, but not limited to, the date or dates upon which each payment is due;

    c. provisions for late payment charges and for default;

    d. provisions for penalty fees for withdrawals from the fund;

    e. 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;

    f. the name of any person who may cancel the contract. The terms of the contract shall specify whether the contract may be canceled by the purchaser, the qualified beneficiary, a specific designated person, or any combination of these persons;

    g. the terms and conditions under which a contract may be canceled, the name of the person entitled to any refund due as a result of the cancellation, and the amount of refund, if any, due to the person named;

    h. the time limitations, if any, within which the qualified beneficiary is required to claim benefits through the program; and

    i. other terms and conditions deemed by the board to be necessary or proper.

    13. (New Section) In addition to the provisions of section 12 of this act, an advance payment contract for tuition and registration fees shall include, but not be limited to, the following:

    a. the number of semester credit hours contracted by the purchaser;

    b. whether the contracted credit hours are to be applied toward a four-year public institution of higher education or a county college;

    c. the assumption of a contractual obligation by the board to the qualified beneficiary to provide for a specified number of semester credit hours of undergraduate instruction at a public institution of higher education, 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.

    14. (New Section) In addition to the provisions of section 12 of this act, an advance payment contract for dormitory residence shall include, but not be limited to, the following:

    a. the number of semesters of dormitory residence contracted by the purchaser; and

    b. 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 public institution of higher education, not to exceed the maximum number of semesters of full-time enrollment required for the conference of a baccalaureate degree.

    15. (New Section) An advance payment contract may provide that a contract which has not been canceled and under which benefits have not been exercised within a specified period of time, shall be considered terminated. Time expended by a qualified beneficiary as an active duty member of any of the armed services of the United States shall be added to the period of time permitted to exercise the benefits under the advance payment contract. A purchaser or qualified beneficiary whose advance payment contract is terminated pursuant to this section shall not be entitled to a refund. The board shall retain any moneys paid by the purchaser for an advance payment contract that has been terminated in accordance with this section. The moneys retained by the board shall be used by the board to further the purposes of this act.

    16. (New Section) A refund provided pursuant to of subsection g. of section 12 of this act, shall not exceed the amount paid into the fund by the purchaser, except as provided in this section. Refunds may exceed the amount paid into the fund in the following circumstances:

    a. if the qualified beneficiary is awarded a scholarship, the terms of which cover the benefits included in the advance payment contracts, moneys paid for the purchase of the advance payment contracts shall be returned to the purchaser in semester installments coinciding with the matriculation by the qualified beneficiary in amounts of either the original purchase price plus 5% compounded interest, or the current rates at public institutions of higher education, whichever is less;

    b. in the event of the death or total disability of the qualified beneficiary, moneys paid for the purchase of advance payment contracts shall be returned to the purchaser together with 5% compounded interest, or the current rates at public institutions of higher education, whichever is less; and

    c. if an advance payment contract is converted from a university plan to a county college plan, the amount refunded shall be the value of the original advance payment contract minus the value of the contract after the conversion.

    17. (New Section) A refund shall not be authorized through an advance payment contract for any school year partially attended but not completed. For purposes of this section, a school year partially attended but not completed means any one semester whereby the student is still enrolled at the conclusion of the official drop-add period, but withdraws before the end of the semester. If a qualified beneficiary does not complete a county college plan or university plan, as those terms are defined pursuant to section 18 of this act, for reasons other than specified in section 16 of this act, 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 promulgated by the board.

    18. (New Section) At a minimum, the board shall make advance payment contracts available for three independent plans to be known as the county college plan, the university plan, and the dormitory residence plan.

    a. Through the county college plan, the advance payment contract shall provide prepaid tuition and 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 county college plan shall be based primarily on the average current and projected tuition and registration fees within the county college 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 qualified beneficiary. Qualified beneficiaries shall bear the cost of any laboratory fees associated with enrollment in specific courses. Each qualified beneficiary shall be classified as a resident for tuition purposes regardless of his actual legal residence.

    b. Through the university plan, the advance payment contract shall provide prepaid tuition and 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 shall be based primarily on the current and projected tuition and registration fees of the four-year public institutions of higher education 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. In the event that a qualified beneficiary fails to be admitted to a four-year public institution of higher education or chooses to attend a county 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 county 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 credit hours required for the conference of an associate degree pursuant to section 16 of this act. Each qualified beneficiary shall be classified as a resident for tuition purposes regardless of his actual legal residence.

    c. Through the dormitory residence plan, the advance payment contract shall provide prepaid housing fees for a maximum of 10 semesters of full-time undergraduate enrollment in a four-year public institution of higher education. Dormitory residence plans are optional and may be purchased only in conjunction with a university plan. Dormitory residence plans shall be purchased in increments of two semesters. The cost of participation in the dormitory residence plan shall be based primarily on the average current and projected housing fees of four-year public institutions of higher education 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 qualified beneficiary. Qualified beneficiaries shall bear the cost of any additional elective charges such as laundry service or long-distance telephone service. Each four-year public institution of higher education may specify the residence halls eligible for inclusion in the plan. In addition, a four-year public institution of higher education may request immediate termination of a dormitory residence contract based on a violation or multiple violations of rules of the residence hall. Qualified beneficiaries shall have the highest priority in the assignment of housing within residence halls. In the event that 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.

    d. In addition to the plans required pursuant to this section, the board may make advance payments contacts available for other plans, such as the community college plus university plan whereby the advance payment contract would provide tuition and registration fees that would allow a qualified beneficiary to attend a community college for an associate degree and then attend a four-year public institution of higher education for a baccalaureate degree.

    e. A qualified beneficiary may apply a county college plan, university plan, or dormitory residence plan toward any eligible independent institution of higher education. The board shall transfer or cause to have transferred to the eligible independent institution of higher education designated by the qualified beneficiary an amount not to exceed the redemption value of the advance payment contract within a public institution of higher education. In the event that the cost of tuition and registration fees or housing fees at the independent institution of higher education are less than the corresponding fees at a public institution of higher education, the amount transferred shall not exceed the actual cost of tuition and registration fees or housing fees. A transfer authorized pursuant to this subsection shall not exceed the number of semester credit hours or semesters of dormitory residence contracted on behalf of a qualified beneficiary.

    f. A qualified beneficiary may apply the benefits of an advance payment contract toward an eligible out-of-state public college or university. An out-of-state public college or university which is not for profit, is accredited by a regional accrediting association, and which confers baccalaureate degrees shall be eligible for such application. The board shall transfer, or cause to have transferred, an amount not to exceed the redemption value of the advance payment contract or the original purchase price plus 5% compounded interest, whichever is less, after assessment of a reasonable transfer fee. In the event that the cost of registration or housing fees charged the qualified beneficiary at the eligible out-of-state college or university is less than this calculated amount, the amount transferred shall not exceed the actual cost of tuition and registration fees or housing fees. Any remaining amount shall be transferred in subsequent semesters until the transfer value is depleted. A transfer authorized pursuant to this subsection shall not exceed the number of semester credit hours or semesters of dormitory residence contracted on behalf of a qualified beneficiary.

    19. (New Section) The board shall solicit proposals for the operation of the program through which the board shall contract for the services of a records administrator, a trustee services firm, and one or more product providers.

    a. The records administrator shall 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 shall be to provide purchasers with the most secure, well-diversified, and beneficially administered higher 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 subsection shall include, but not be limited to, the following criteria:

    (1) fees and other costs charged to purchasers that affect account values or operational costs related to the program;

    (2) 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;

    (3) sufficient staff and computer capability for the scope and level of service expected by the board; and

    (4) financial history and current financial strength and capital adequacy to provide administrative services required by the board.

    b. The trustee services firm shall 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 shall be to obtain the highest standards of professional trustee services, to allow all qualified firms interested in providing services equal consideration, and to provide 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 moneys 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. Evaluations of proposals submitted pursuant to this subsection shall include, but not be limited to the following criteria:

    (1) adequacy of trustee services for supervision and management of the program, including current operations and staff organization and commitment of management to the proposal;

    (2) capability to execute program responsibilities within time and regulatory constraints;

    (3) past experience in trustee services and current ability to maintain regular and continuous interactions with the board, records administrator, and product provider;

    (4) the minimum purchaser participation assumed within the proposal and any additional requirements of purchasers;

    (5) adequacy of technical assistance and services proposed for staff;

    (6) adequacy of a management system for evaluating and improving overall trustee services to the program;

    (7) adequacy of facilities, equipment, and electronic data processing services; and

    (8) detailed projections of administrative costs, including the amount and type of insurance coverage, and detailed projections of total costs.

    20. (New Section) Moneys 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 act, which contract has not been terminated or canceled, are exempt for all claims of creditors of the purchaser or the beneficiary.

    21. (New Section) The State or any State agency, county, municipality, or other political subdivision may, by contract or collective bargaining agreement, agree with any employee to remit payments toward advance payment contracts through payroll deductions made by the appropriate officer or officers of the State, State agency, county, municipality, or political subdivision. The payments shall be held and administered in accordance with this act.

    22. (New Section) Nothing in this act shall be construed as a promise or guarantee that a qualified beneficiary shall be admitted to a public institution of higher education or to a particular public institution of higher education, shall be allowed to continue enrollment at a public institution of higher education after admission, or shall be graduated from a public institution of higher education.

    23. (New Section) The State shall agree to meet the obligations of the board to qualified beneficiaries, if moneys in the fund fail to offset the obligations of the board. The Legislature shall appropriate to the Prepaid Higher Education Expense Trust Fund the amount necessary to meet the obligations of the board to qualified beneficiaries.

    24. (New Section) In the event that the State Treasurer determines the program to be financially infeasible, the State may discontinue the provision of the program. A qualified beneficiary who has been accepted by and is enrolled or is within five years of enrollment in an independent institution of higher education or public institution of higher education shall be entitled to exercise the benefits for which he has contracted. All other contract holders shall receive a refund of the amount paid into the fund, plus interest at the prevailing rate.

    25. Section 6 of P.L.1994, c.48 (C.18A:3B-6) is amended to read as follows:

    6. The governing board of each public institution of higher education shall have the following general powers and duties to fulfill its mission and the Statewide goals in cooperation with other institutions and the State coordinating structures:

    a. To develop an institutional plan and to determine the programs and degree levels to be offered by the institution consistent with this plan and the institution's programmatic mission;

    b. To have authority over all matters concerning the supervision and operations of the institution including fiscal affairs, the employment and compensation of staff not classified under Title 11A of the New Jersey Statutes, and capital improvements in accordance with law;

    c. To set tuition and fees; however, prior to the date of the adoption of a tuition or fee schedule or an overall institutional budget, and with reasonable notice thereof, the governing board shall conduct a public hearing at such times and places as will provide those members of the college community who wish to testify with an opportunity to be heard. The tuition and fees shall be set according to guidelines promulgated by the New Jersey Commission on Higher Education to accommodate the provisions of the New Jersey Prepaid Higher Education Expense Program established pursuant to section 4 of P.L. , c. (C. )(now pending before the Legislature as this bill);     d. To establish admission standards and requirements and standards for granting diplomas, certificates and degrees;

    e. To recommend for appointment by the Governor, members to the institution's governing board. The recommendation shall be made with regard to the mission of the institution and the diversity of the community to be served;

    f. To have final authority to determine controversies and disputes concerning tenure, personnel matters of employees not classified under Title 11A of the New Jersey Statutes, and other issues arising under Title 18A of the New Jersey Statutes involving higher education except as otherwise provided herein. Any hearings conducted pursuant to this section shall conform to the requirements of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). The final administrative decision of a governing board of a public institution of higher education is appealable to the Superior Court, Appellate Division;

    g. To invest and reinvest the funds of the institution; however, institutions which invest the funds of the institution through the Director of the Division of Investment in the Department of the Treasury on or before the effective date of this act shall continue to do so, unless this requirement is waived by the State Treasurer on an annual basis, which waiver shall not be unreasonably withheld;

    h. To retain legal counsel of the institution's choosing. State entities may choose representation by the Attorney General; however, as to claims of a tortious nature, the institution shall elect within 75 days of the effective date of this act whether it, and its employees, shall be represented in all such matters by the Attorney General. If the institution elects not to be represented by the Attorney General, it shall be considered and its employees considered employees of a sue and be sued entity for the purposes of the "New Jersey Tort Claims Act" only. The institution shall be required in that circumstance to provide its employees with defense and indemnification consistent with the terms and conditions of the Tort Claims Act in lieu of the defense and indemnification that such employees would otherwise seek and be entitled to from the Attorney General pursuant to N.J.S.59:10-1 et seq. and P.L.1972, c.48 (C.59:10A-1 et seq.);

    i. To be accountable to the public for fulfillment of the institution's mission and Statewide goals and for effective management of the institution;

    j. To submit a request for State support to the Division of Budget and Accounting in the Department of the Treasury and to the commission in accordance with the provisions of this act;

    k. To have prepared and made available to the public an annual financial statement, and a statement setting forth generally the moneys expended for government relations, public relations and legal costs;

    l. To have prepared an annual independent financial audit, which audit and any management letters regarding that audit shall be deemed public documents.

    These powers and duties are in addition to and not a limitation of the specific powers and duties provided for the governing board of each public institution under chapters 64, 64A, 64G or 64E of Title 18A of the New Jersey Statutes. If the provisions of this section are inconsistent with these specific powers and duties, the specific powers and duties shall govern.

(cf: P.L.1994, c.48, s.6)

    26. Section 14 of P.L.1994, c.48 (C.18A:3B-14) is amended to read as follows:

    14. The commission shall be responsible for:

    a. Statewide planning for higher education including research on higher education issues and the development of a comprehensive master plan, including, but not limited to, the establishment of new institutions, closure of existing institutions, and consolidation of institutions, which plan shall be long-range in nature and regularly revised and updated. The council may request the commission to conduct a study of a particular issue. The commission may require from institutions of higher education such reports or other information as may be necessary to enable the commission to perform its duties;

    b. advocacy on behalf of higher education including informing the public of the needs and accomplishments of higher education in New Jersey;

    c. making recommendations to the Governor and Legislature on higher education initiatives and incentive programs of Statewide significance;

    d. final administrative decisions over institutional licensure and university status giving due consideration to the accreditation status of the institution. The commission shall furnish the Presidents' Council with any pertinent information compiled on behalf of the subject institution and the council shall then make recommendations to the commission concerning the licensure of the institution or university status within sixty days of receipt of the information;

    e. adopting a code of ethics applicable to institutions of higher education;

    f. final administrative decisions over new academic programs that go beyond the programmatic mission of the institution and final administrative decisions over a change in the programmatic mission of an institution;

    g. reviewing requests for State support from the institutions in relation to the mission of the institution and Statewide goals and proposing a coordinated budget policy statement to the Governor and Legislature;

    h. communicating with the State Board of Education and Commissioner of Education to advance public education at all levels including articulation between the public schools and higher education community;

    i. applying for and accepting grants from the federal government, or any agency thereof, or grants, gifts or other contributions from any foundation, corporation, association or individual, and complying with the terms, conditions and limitations thereof, for the purpose of advancing higher education. Any money so received may be expended by the commission upon warrant of the director of the Office of Management and Budget in the Department of the Treasury on vouchers certified by the executive director of the commission;

    j. acting as the lead agency of communication with the federal government concerning higher education issues;

    k. exercising all of the powers and duties previously exercised by the Board of Higher Education, the Department of Higher Education, and the Chancellor of Higher Education, under the "New Jersey Higher Education Building Construction Bond Act of 1971," P.L.1971, c.164, the "New Jersey Medical Education Facilities Bond Act of 1977," P.L.1977, c.235, the "Jobs, Science and Technology Bond Act of 1984," P.L.1984, c.99 and the "Jobs, Education and Competitiveness Bond Act of 1988," P.L.1988, c.78, the "Higher Education Equipment Leasing Fund Act," P.L.1993, c.136, the "Higher Education Facilities Trust Fund Act," P.L.1993, c.375 and the "N.J. CLASS Loan Program," P.L.1991, c.268; [and]

    l. exercising any other power or responsibility necessary in order to carry out the provisions of this act; and

    m. preparing guidelines for the use of governing boards of public institutions of higher education in setting tuition and fees, in order to accommodate the provisions of the New Jersey Prepaid Higher Education Expense Program established pursuant to section 4 of P.L.   , c. (C. )(now pending before the Legislature as this bill).

(cf: P.L.1994, c.48, s.14)

    27. N.J.S.18A:64-6 is amended to read as follows:

    18A:64-6. The board of trustees of a State college shall have general supervision over and shall be vested with the conduct of the college. It shall have the power and duty to:

    a. Adopt and use a corporate seal;

    b. Determine the educational curriculum and program of the college consistent with the programmatic mission of the institution or approved by the Commission on Higher Education;

    c. Determine policies for the organization, administration and development of the college;

    d. Study the educational and financial needs of the college; annually acquaint the Governor and Legislature with the condition of the college; and prepare and present the annual budget to the Governor, the Division of Budget and Accounting in the Department of the Treasury and the Legislature in accordance with law;

    e. Disburse all moneys appropriated to the college by the Legislature and all moneys received from tuition, fees, auxiliary services and other sources;

    f. Direct and control expenditures and transfers of funds appropriated to the college and tuition received by the college, in accordance with the provisions of the State budget and appropriation acts of the Legislature, reporting changes and additions thereto and transfers thereof to the Director of the Division of Budget and Accounting in the State Department of the Treasury and as to funds received from other sources, direct and control expenditures and transfers in accordance with the terms of any applicable trusts, gifts, bequests, or other special provisions. All accounts of the college shall be subject to audit by the State at any time;

    g. In accordance with the provisions of the State budget and appropriation acts of the Legislature, appoint and fix the compensation of a president of the college, who shall be the executive officer of the college and an ex officio member of the board of trustees, without vote, and shall serve at the pleasure of the board of trustees;

    h. Notwithstanding the provisions of Title 11, Civil Service, of the Revised Statutes, upon nomination by the president appoint a treasurer and such deans and other professional members of the academic, administrative and teaching staffs as defined in section 13 of P.L.1986, c.42 (C.18A:64-21.2) as shall be required and fix their compensation and terms of employment in accordance with salary ranges and policies which shall prescribe qualifications for various classifications and shall limit the percentage of the educational staff that may be in any given classification;

    i. Upon nomination by the president, appoint, remove, promote and transfer such other officers, agents or employees as may be required for carrying out the purposes of the college and assign their duties, determine their salaries and prescribe qualifications for all positions, all in accordance with the provisions of Title 11, Civil Service, of the Revised Statutes;

    j. Grant diplomas, certificates and degrees;

    k. Pursuant to the provisions of the "State College Contracts Law," P.L.1986, c.43 (C.18A:64-52 et seq.) enter into contracts and agreements for the purchase of lands, buildings, equipment, materials, supplies and services; enter into contracts and agreements with the State or any of its political subdivisions or with the United States, or with any public body, department or other agency of the State or the United States or with any individual, firm, or corporation, which are deemed necessary or advisable by the board for carrying out the purposes of the college;

    l. If necessary, take and condemn land and other property in the manner provided by the "Eminent Domain Act of 1971," P.L.1971, c.361 (C.20:3-1 et seq.), whenever authorized by law to purchase land or other property;

    m. Adopt, after consultation with the president and faculty, bylaws and make and promulgate such rules, regulations and orders, not inconsistent with the provisions of this article, that are necessary and proper for the administration and operation of the college and the carrying out of its purposes;

    n. Establish fees for room and board sufficient for the operation, maintenance, and rental of student housing and food service facilities;     o. Fix and determine tuition rates and other fees to be paid by students. The tuition and fees shall be set according to guidelines promulgated by the New Jersey Commission on Higher Education to accommodate the provisions of the New Jersey Prepaid Higher Education Expense Program established pursuant to section 4 of P.L.   , c. (C. )(now pending before the Legislature as this bill);

    p. Accept from any government or governmental department, agency or other public or private body or from any other source grants or contributions of money or property, which the board may use for or in aid of any of its purposes;

    q. Acquire by gift, purchase, condemnation or otherwise, own, lease, dispose of, use and operate property, whether real, personal or mixed, or any interest therein, which is necessary or desirable for college purposes;

    r. Employ architects to plan buildings; secure bids for the construction of buildings and for the equipment thereof; make contracts for the construction of buildings and for equipment; and supervise the construction of buildings;

    s. Manage and maintain, and provide for the payment of all charges and expenses in respect to all properties utilized by the college;

    t. Borrow money for the needs of the college, as deemed requisite by the board, in such amounts, and for such time and upon such terms as may be determined by the board, provided that this borrowing shall not be deemed or construed to create or constitute a debt, liability, or a loan or pledge of the credit, or be payable out of property or funds, other than moneys appropriated for that purpose, of the State;

    u. Authorize any new program, educational department or school consistent with the institution's programmatic mission or approved by the commission;

    v. (Deleted by amendment, P.L.1994, c.48); and

    w. Pursuant to the "State College Contracts Law," P.L.1986, c.43 (C.18A:64-52 et seq.), award contracts and agreements for the performance of any construction work or the furnishing of any materials or supplies to the lowest responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the State colleges.

(cf: P.L.1994, c.48, s.96)

    28. N.J.S.18A:64-13 is amended to read as follows:

    18A:64-13. Students in each State college who are residents of New Jersey shall be required to pay each year a minimum tuition fee and nonresidents of the State shall pay an additional fee. Such fees and any increase of the minimum tuition fee shall be determined by each college board of trustees, according to guidelines promulgated by the New Jersey Commission on Higher Education to accommodate the provisions of the New Jersey Prepaid Higher Education Expense Program established pursuant to section 4 of P.L. , c. (C. )(now pending before the Legislature as this bill). The board of trustees may waive the payment of the college's anticipated tuition revenues to accomplish mission-related or policy goals.

(cf: P.L.1994, c.48, s.99)

    29. N.J.S.18A:64A-12 is amended to read as follows:

    18A:64A-12. For the effectuation of the purposes of this chapter, the board of trustees of a county college in addition to such other powers expressly granted to it by law, is hereby granted the following powers:

    a. To adopt or change the name of the county college;

    b. To adopt and use a corporate seal;

    c. To sue and be sued;

    d. To determine the educational curriculum and program of the college consistent with the programmatic mission of the institution or approved by the Commission on Higher Education;

    e. To appoint and fix the compensation and term of office of a president of the college who shall be the executive officer of the college and an ex officio member of the board of trustees;

    f. To appoint, upon nomination of the president, members of the administrative and teaching staffs and fix their compensation and terms of employment subject to the provisions of N.J.S.18A:64A-13;

    g. To appoint or employ such other officers, agents and employees as may be required to carry out the provisions of this chapter and to fix and determine their qualifications, duties, compensation, terms of office and all other conditions and terms of employment and retention;       h. To fix and determine tuition rates and other fees to be paid by students. The tuition and fees shall be set according to guidelines promulgated by the New Jersey Commission on Higher Education to accommodate the provisions of the New Jersey Prepaid Higher Education Expense Program established pursuant to section 4 of P.L.   , c. (C. )(now pending before the Legislature as this bill);

    i. To grant diplomas, certificates or degrees;

    j. To enter into contracts and agreements with the State or any of its political subdivisions or with the United States, or with any public body, department or other agency of the State or the United States or with any individual, firm or corporation which are deemed necessary or advisable by the board for carrying out the provisions of this chapter;

    k. To accept from any government or governmental department, agency or other public or private body or from any other source grants or contributions of money or property which the board may use for or in aid of any of its purposes;

    l. To acquire (by gift, purchase, condemnation or otherwise), own, lease, use and operate property, whether real, personal or mixed, or any interest therein, which is necessary or desirable for college purposes;

    m. To determine that any property owned by the county college is no longer necessary for college purposes and to sell the same at such price and in such manner and upon such terms and conditions as shall be established by the board;

    n. To exercise the right of eminent domain, pursuant to the provisions of Title 20, Eminent Domain, of the Revised Statutes, to acquire any property or interest therein;

    o. To make and promulgate such rules and regulations, not inconsistent with the provisions of this chapter or with the rules and regulations promulgated hereunder that are necessary and proper for the administration and operation of a county college and to implement the provisions of this chapter;

    p. To exercise all other powers, not inconsistent with the provisions of this chapter or with the rules and regulations promulgated hereunder which may be reasonably necessary or incidental to the establishment, maintenance and operation of a county college; and

    q. To establish and maintain a dedicated reserve fund for minor capital needs which in any given year shall not exceed 3% of the replacement value of the college's physical plant.

(cf: P.L.1994, c.48, s.128)

    30. Section 8 of P.L.1982, c.42 (C.18A:64A-57) is amended to read as follows:

     8. The board of trustees shall have general supervision over and be vested with the conduct of the college. It shall have the authority and responsibility to:

    a. Adopt and use a corporate seal;

    b. Sue or be sued;

    c. Determine the educational curriculum and program of the college;

    d. With the advice and consent of the board of governors, upon expiration of the term of the current president of the private institution, appoint and fix the compensation and term of office of a president of the college, who shall be the executive officer of the college;

    e. Appoint, upon nomination of the president, members of the administrative and teaching staff and fix their compensation and terms of employment, subject to the provisions of general law;

    f. Employ other officers, agents and employees, as may be required to carry out the provisions of this act and fix and determine their qualifications, duties, compensation, terms of office and all other conditions and terms of employment;

    g. Fix and determine tuition rates and other fees to be paid by students. The tuition and fees shall be set according to guidelines promulgated by the New Jersey Commission on Higher Education to accommodate the provisions of the New Jersey Prepaid Higher Education Expense Program established pursuant to section 4 of P.L.   , c. (C. )(now pending before the Legislature as this bill);

    h. Grant diplomas, certificates or degrees;

     i. Enter into contracts and agreements with the State or any of its political subdivisions or with the United States, or with any public body, department or other agency of the county, State or United States, or with any individual firm or corporation, which is deemed necessary or advisable by the board for carrying out the provisions of this act;

    j. Accept from any government or governmental department, agency or other public or private body or from any other source grants or contributions of money or property, which the board of trustees may use for its purposes;

    k. Disburse all moneys appropriated to the college by the county and State, moneys received from tuition, fees, auxiliary services and other sources, and from or by the direction of the board of governors;     l. Direct and control the expenditures of the college as to funds received from the board of governors and other sources in accordance with the terms of any applicable trusts, gifts, bequests, or other special provisions;

    m. Acquire by gift, purchase, condemnation or otherwise, own, lease, use and operate property, whether real, personal or mixed, or any interest therein, which is necessary or desirable for college purposes;

    n. Determine that any property owned and controlled by the board of trustees of the county college is no longer necessary for college purposes and sell the same at the price and in the manner and upon the terms and conditions as shall be established by the board;

    o. Make and promulgate rules and regulations not inconsistent with the provisions of general law or of this act or with the rules and regulations promulgated hereunder that are necessary and proper for the administration or operation of the county college;

    p. Exercise all other powers not inconsistent with the provisions of this act or with rules and regulations promulgated hereunder, or with general law, which may be reasonable, necessary or incidental to the establishment, maintenance and operation of a county college; and     q. Establish and maintain a dedicated reserve fund for minor capital needs, which in any given year shall not exceed 3% of the replacement value of the college's physical plant.

(cf: P.L.1994, c.48, s.156)

    31. Section 7 of P.L.1995, c.400 (C.18A:64E-18) is amended to read as follows:

    7.   The board of trustees of the university shall have general supervision over and be vested with the conduct, control, management and administration of the university. It shall have the authority and responsibility to:

    a.    Adopt, use, and modify, as it deems appropriate, its corporate seal;

    b.    Determine the policies for the organization, administration and development of the university;

    c.    Approve the establishment of new educational programs and the discontinuance of existing educational programs at the university consistent with the university's programmatic mission as authorized by the State Board of Higher Education prior to July 1, 1994, or authorized thereafter in accordance with the provisions of the "Higher Education Restructuring Act of 1994," P.L.1994, c.48 (C.18A:3B-1 et seq.);

    d.    Study the educational and financial needs of the university, annually acquaint the Governor and Legislature with the condition of the university, and prepare and submit an annual request for appropriation to the Division of Budget and Accounting in the Department of the Treasury in accordance with law;

    e.    Disburse all moneys appropriated to the university by the Legislature and thereafter provided the university and disburse all moneys received from tuition, fees, auxiliary services and other sources;

    f.    Direct and control expenditures and transfers of funds appropriated and provided by the State through its legislative and executive branches and as to funds received from other sources, direct and control expenditures and transfers in accordance with the terms of any applicable trusts, gifts, bequests, or other special provisions. The university shall annually report changes and additions thereto and transfers thereof to the Director of the Division of Budget and Accounting in the Department of the Treasury. All accounts of the university shall be subject to audit by the State at any time;

    g.    Appoint and fix the compensation and term of office of a president of the university, who, as the executive officer of the university, shall be assigned that authority and delegated those duties that the board, consistent with law and duly adopted bylaws of the board, determines are in keeping with the purposes of this act and in the best interests of the university;

    h.    Consistent with the provisions of its budget, this act and any and all controlling collective bargaining agreements, have the power, upon nomination or recommendation of the president, to appoint, remove, promote and transfer all other officers, agents, or employees which may be required to carry out the provisions of this act and prescribe qualifications for those positions, and assign requisite duties and determine and fix respective compensation for those positions in accordance with duly adopted salary program parameters;

    i. Subject to provision for impartial binding dispute resolution through collective bargaining or as provided by university policy and further subject to and limited by any law to the contrary, have final authority to determine controversies and disputes concerning tenure, personnel matters and other issues involving the university arising under Title 18A of the New Jersey Statutes. Any hearings conducted by the board pursuant to this section shall conform to the requirements of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). The final administrative decision of the board, in any action enabled hereunder, is appealable to the Superior Court, Appellate Division;

    j.     Borrow money for the needs of the university, as deemed requisite by the board, in such amounts, for such time and upon such terms as may be determined by the board; provided that no such borrowing shall be deemed or construed to create or constitute a debt, liability, or a loan or pledge of the credit, or be payable out of property or funds, other than moneys appropriated for that purpose, of the State;

    k.    Purchase, lease, acquire by gifts, condemnation or otherwise, manage, use, control, encumber and dispose of property, or any interest therein, whether real, personal or mixed, including, but not limited to, all buildings and grounds, as necessary or deemed desirable for university purposes.

    (1)  Employ architects and engineers to plan buildings and other campus facilities; secure bids for the construction of buildings and for the equipment thereof; make contracts for the construction of buildings and for the equipment thereof; and supervise that construction;

    (2)  Accept from any government or governmental department, agency or other public or private body or from any other source grants or contributions of money or property which the board may use for or in aid of any of its purposes;

    (3)  Adopt standing operating rules and procedures for the purchase of all properties, whether real, personal or mixed and including all equipment, materials and supplies and for the purchase of all services. These rules and procedures shall include public competitive bidding, where the sum to be expended exceeds $17,700 or the amount determined by the Governor as provided herein and the awarding of contracts to that responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the university, price and other factors considered . This public bidding process shall not be required in those exceptions created by the board of trustees of the university, which shall be in substance those exceptions contained in sections 4 and 5 of P.L.1954, c.48 (C.52:34-9 and 10). Neither shall public bidding be required for the supplying of any product or the rendering of any service by a public utility, subject to the jurisdiction of the Board of Public Utilities of the State and tariffs and schedules of the charges, made, charged, or exacted by the public utility for any products to be supplied or services to be rendered as are filed with that board. Commencing January 1, 1997 and every two years thereafter, the Governor, in consultation with the Department of the Treasury, shall adjust the threshold amount set forth in this paragraph in direct proportion to the rise or fall of the consumer price index for all urban consumers in the New York City and the Philadelphia areas as reported by the United States Department of Labor. The Governor shall notify the university of the adjustment. The adjustment shall become effective on July 1 of the year in which it is reported.

    This subsection shall not prevent the university from having any work done by its own employees, nor shall it apply to repairs, or to the furnishing of materials, supplies or labor or the hiring of equipment or vehicles, when the safety or protection of its or other public property or the public convenience requires or the exigency of the university's service will not admit of such advertisement. In such case, the university shall, by resolution passed by an affirmative vote of its board of trustees, declare the exigency or emergency to exist, remediate as practicable and maintain appropriate records as to the reason for such awards, reporting as soon as practicable thereafter to its board of trustees on all such purchases, the amounts and the reasons therefor;

    (4)  Manage and maintain, and provide for the payment of all charges on and expenses in respect of, all properties utilized by the university;

    (5)  Invest certain moneys in such obligations, securities and other investments as the board shall deem prudent consistent with the purpose and provisions of this act and in accordance with State and federal law, as follows:

    Investment in not for profit corporations or for profit corporations organized and operated pursuant to the provisions of subsection s. of this section may utilize income realized from the sale or licensing of intellectual property as well as the reinvestment of earnings on intellectual property. Investment in not for profit corporations may also utilize income from overhead grant fund recovery as permitted by federal law as well as other university funds except those specified in paragraph 4 of subsection s. of this section;

    (6)  Exercise the right of eminent domain, pursuant to the provisions of the "Eminent Domain Act of 1971," P.L.1971, c.361 (C.20:3-1 et seq.), to acquire any property or interest therein;

    l.     Fix and determine tuition rates, and other fees to be paid by students, after reasonable notice and public hearing pursuant to the provisions of the "Higher Education Restructuring Act of 1994," P.L.1994, c.48 (C.18A:3B-1 et seq.). The tuition and fees shall be set according to guidelines promulgated by the New Jersey Commission on Higher Education to accommodate the provisions of the New Jersey Prepaid Higher Education Expense Program established pursuant to section 4 of P.L. , c. (C. )(now pending before the Legislature as this bill);

    m.   Grant diplomas, certificates or degrees;

    n.    Enter into contracts and agreements with the State or any of its political subdivisions or with the United States, or with any public body, department or other agency of the State or the United States or with any individual, firm or corporation which are deemed necessary or advisable by the board for carrying out the provisions of this act. A contract or agreement pursuant to this subsection may require a municipality to undertake obligations and duties to be performed subsequent to the expiration of the term of office of the elected governing body of the municipality which initially entered into or approved the contract or agreement, and the obligations and duties so incurred by the municipality shall be binding and of full force and effect, notwithstanding that the term of office of the elected members of the governing body of the municipality which initially entered into or approved that contract or agreement, shall have expired.

    Pursuant to this subsection, the board of trustees may procure and enter into contracts for any type of insurance and indemnify against loss or damage to property from any cause, including loss of use and occupancy, against death or injury of any person, against employees' liability, against any act of any member, officer, employee or servant of the university, whether part-time, full-time, compensated or non-compensated in the performance of the duties of his office or employment or any other insurable risk. In addition, the university shall carry its own liability insurance or maintain an actuarially sound program of self-insurance. Any joint venture, subsidiary corporation, or partnership or other jural entity entered into or owned wholly or in part by the university shall maintain insurance or reserves in such amounts as are determined by an actuary to be sufficient to meet its actual or accrued claims;

    o.    Adopt bylaws and amend the same as deemed necessary from time to time and make, promulgate and modify at its pleasure such rules, regulations and orders, not inconsistent with the provisions of this act, as are deemed necessary and proper for the administration and operation of the university and to implement the provisions of this act;

    p.    Develop an institutional plan and determine the schools, departments, programs and degree levels to be offered by the university consistent with that plan and the university's programmatic mission as authorized by the State Board of Higher Education prior to July 1, 1994, or authorized thereafter in accordance with the provisions of the "Higher Education Restructuring Act of 1994," P.L.1994, c.48 (C.18A: 3B-1 et seq.);

    q.    Function as a public employer under the "New Jersey Employer-Employee Relations Act," P.L.1941, c.100 (C.34:13A-1 et seq.), appointing its chief spokesperson and continuing to conduct all labor negotiations with the participation of the Governor's Office of Employee Relations;

    r.    Continue to retain independent counsel;

    s.    Participate as the general partner or as a limited partner, either directly or through a subsidiary corporation created by the university, in limited partnerships, general partnerships, or joint ventures engaged in the development, manufacture, or marketing of products, technology, scientific information or services and create or form for profit or not for profit corporations to engage in such activities; provided that any such participation shall be consistent with the mission of the university and the board shall have determined that such participation is prudent.

    (1)  The decision to participate in any of the activities described in this subsection, including the creation or formation of for profit or not for profit corporations, shall be articulated in the minutes of the board of trustees meeting in which action was approved. A true copy of the minutes of that meeting shall be delivered to the Governor. No such action shall take effect until 30 days, Saturdays, Sundays and public holidays excepted, after the copy of the minutes shall have been delivered to the Governor. If, within the 30-day period, the Governor returns the minutes of the meeting with a veto of the action taken by the board, the action taken by the board shall be null and void and of no effect.

    (2)  Any actions taken by the university pursuant to this subsection shall be in conformity with the university's policy on conflicts of interest and the provisions of P.L.1971, c.182 (C.52:13D-12 et seq.), which shall apply to the university, its employees and officers.

    (3)  Nothing herein shall be deemed or construed to create or constitute a debt, liability, or a loan or pledge of the credit or be payable out of property or funds of the State.

    (4)  Funds directly appropriated to the university from the State or derived from the university's academic programs shall not be utilized by the for profit or not for profit corporations organized and operated pursuant to this subsection in the development, manufacture or marketing of products, technology or scientific information.

    (5)  Employees of any joint venture, subsidiary corporation, partnership or other jural entity entered into or owned wholly or in part by the university shall not be deemed public employees.

    (6)  A joint venture, subsidiary corporation, partnership or other jural entity entered into or owned wholly or in part by the university shall not be deemed an instrumentality of the State of New Jersey.

    (7)  Income realized by the university as a result of participation in the development, manufacture or marketing of products, technology, or scientific information may be invested, reinvested or retained by the board in accordance with the provisions of this act and any other State or federal law for use in furtherance of any of the purposes of this act or of other applicable statutes.

    (8)  The board shall include in its annual report to the State Treasurer, the operation of all joint ventures, subsidiary corporations, partnerships or other jural entities entered into or owned wholly or in part by the university;

    t.     Create, operate, or participate in the operation of such auxiliary organizations as permitted by law which the board deems prudent and which are in keeping with the educational and public service mission of the university; and

    u.    Sue and be sued in its own name.

(cf: P.L.1995, c.400, s.7)

    32. Section 6 of P.L.1970, c.102 (C.18A:64G-6) is amended to read as follows:

    6. The board of trustees of the university shall have the general supervision over and be vested with the conduct of the university, including its health care facilities regardless of the source of funding. It shall have the power and duty to:

    (a) Adopt and use a corporate seal;

    (b) Determine the educational curriculum and program of the university;

    (c) Determine policies for the organization, administration, and development of the university;

    (d) Study the educational and financial needs of the university, annually acquaint the Governor and Legislature with the condition of the university, and prepare and submit an annual request for appropriation to the Division of Budget and Accounting in the Department of the Treasury in accordance with law;

    (e) Disburse all moneys appropriated to the university by the Legislature and all moneys received from tuition, fees, auxiliary services and other sources;

    (f) Direct and control expenditures and transfers of funds appropriated to the university in accordance with the provisions of the State budget and appropriation acts of the Legislature, and, as to funds received from other sources, direct and control expenditures and transfers in accordance with the terms of any applicable trusts, gifts, bequests, or other special provisions, reporting changes and additions thereto and transfers thereof to the Director of the Division of Budget and Accounting in the Department of the Treasury. All accounts of the university shall be subject to audit by the State at any time;

    (g) In accordance with the provisions of the State budget and appropriation acts of the Legislature, appoint and fix the compensation and term of office of a president of the university who shall be the executive officer of the university;

    (h) In accordance with the provisions of the State budget and appropriation acts of the Legislature, appoint, upon nomination of the president, such deans and other members of the academic, administrative and teaching staffs as shall be required and fix their compensation and terms of employment;

    (i) In accordance with the provisions of the State budget and appropriation acts of the Legislature, appoint, remove, promote and transfer such other officers, agents, or employees as may be required to carry out the provisions of this act and assign their duties, determine their salaries, and prescribe qualifications for all positions and in accordance with the salary schedules of the Civil Service Commission wherever possible;

    (j) Fix and determine tuition rates, and other fees to be paid by students . The tuition and fees shall be set according to guidelines promulgated by the New Jersey Commission on Higher Education to accommodate the provisions of the New Jersey Prepaid Higher Education Expense Program established pursuant to section 4 of P.L.   , c. (C. )(now pending before the Legislature as this bill);

    (k) Grant diplomas, certificates or degrees;

    (l) Enter into contracts and agreements with the State or any of its political subdivisions or with the United States, or with any public body, department or other agency of the State or the United States or with any individual, firm or corporation which are deemed necessary or advisable by the board for carrying out the provisions of this act. A contract or agreement pursuant to this subsection may require a municipality to undertake obligations and duties to be performed subsequent to the expiration of the term of office of the elected governing body of such municipality which initially entered into or approved said contract or agreement, and the obligations and duties so incurred by such municipality shall be binding and of full force and effect, notwithstanding that the term of office of the elected governing body of such municipality which initially entered into or approved said contract or agreement, shall have expired;

    (m) Accept from any government or governmental department, agency or other public or private body or from any other source grants or contributions of money or property which the board may use for or in aid of any of its purposes;

    (n) (1) Acquire (by gift, purchase, condemnation or otherwise), own, lease, dispose of, use and operate property, whether real, personal or mixed, or any interest therein, which is necessary or desirable for university purposes;

    (2) Adopt standing operating rules and procedures for the purchase of all equipment, materials, supplies and services; however, no contract on behalf of the university shall be entered into for the purchase of services, materials, equipment and supplies, for doing of any work, or for the hiring of equipment or vehicles, where the sum to be expended exceeds $12,500.00 or the amount determined by the Governor as provided herein, unless the university shall first publicly advertise for bids and shall award the contract to that responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the university, price and other factors considered. Such advertising shall not be required in those exceptions created by the board of trustees of the university, which shall be in substance those exceptions contained in sections 4 and 5 of P.L.1954, c.48 (C.52:34-9 and 10) or for the supplying of any product or the rendering of any service by a public utility subject to the jurisdiction of the Board of Public Utilities of this State and tariffs and schedules of the charges, made, charged, or exacted by the public utility for any such products to be supplied or services to be rendered are filed with the said board. Commencing January 1, 1985 and every two years thereafter, the Governor, in consultation with the Department of the Treasury, shall adjust the threshold amount set forth in this paragraph in direct proportion to the rise or fall of the consumer price index for all urban consumers in the New York City and the Philadelphia areas as reported by the United States Department of Labor. The Governor shall notify the university of the adjustment. The adjustment shall become effective on July 1 of the year in which it is reported.

    This subsection shall not prevent the university from having any work done by its own employees, nor shall it apply to repairs, or to the furnishing of materials, supplies or labor, or the hiring of equipment or vehicles, when the safety or protection of its or other public property or the public convenience requires or the exigency of the university's service will not admit of such advertisement. In such case, the university shall, by resolution passed by the affirmative vote of its board of trustees, declare the exigency or emergency to exist, and set forth in the resolution the nature and approximate amount to be expended; shall maintain appropriate records as to the reason for such awards; and shall report regularly to its board of trustees on all such purchases, the amounts and the reasons therefor;

    (3) Employ architects to plan buildings; secure bids for the construction of buildings and for the equipment thereof; make contracts for the construction of buildings and for equipment; and supervise the construction of buildings;

    (4) Manage and maintain, and provide for the payment of all charges on and expenses in respect of, all properties utilized by the university; and

    (5) Invest certain moneys in such obligations, securities and other investments as the board shall deem prudent in accordance with State and federal law, as follows:

    In not for profit corporations utilizing income realized from the sale or licensing of intellectual property, as well as the reinvestment of earnings on intellectual property; income realized from the operation of faculty practice plans of the university; and income from overhead grant fund recovery as permitted by federal law;

    In for profit corporations utilizing income realized from the sale or licensing of intellectual property, as well as the reinvestment of earnings on intellectual property.

    (o) Borrow money and to secure the same by a mortgage on its property or any part thereof, and to enter into any credit agreement for the needs of the university, as deemed requisite by the board, in such amounts and for such time and upon such terms as may be determined by the board, provided that no such borrowing shall be deemed or construed to create or constitute a debt, liability, or a loan or pledge of the credit or be payable out of property or funds, other than moneys appropriated for that purpose, of the State;

    (p) Exercise the right of eminent domain, pursuant to the provisions of the "Eminent Domain Act of 1971," P.L.1971, c.361 (C.20:3-1 et seq.), to acquire any property or interest therein;

    (q) Adopt bylaws and make and promulgate such rules, regulations and orders, not inconsistent with the provisions of this act as are necessary and proper for the administration and operation of the university and to implement the provisions of this act;

    (r) Authorize any new program, educational department or school not inconsistent with the programmatic mission of the institution or approved by the Commission on Higher Education which will require, at the time of establishment or thereafter, an additional expenditure of money, if provision is made therefor by law;

    (s) Function as a public employer under the "New Jersey Employer-Employee Relations Act," P.L.1941, c.100 (C.34:13A-1 et seq.) and conduct all labor negotiations, and with the participation of the Governor's Office of Employee Relations act as the chief spokesperson with respect to all matters under negotiation;

    (t) Sue and be sued in its own name;

    (u) Retain independent counsel including representation by the Attorney General in accordance with subsection h. of section 6 of P.L.1994, c.48 (C.18A:3B-6);

    (v) (1) Participate as the general partner or as a limited partner, either directly or through a subsidiary corporation created by the university, in limited partnerships, general partnerships, or joint ventures engaged in the development, manufacture, or marketing of products, technology, scientific information or health care services and create or form for profit or not for profit corporations to engage in such activities; provided that any such participation shall be consistent with the mission of the university and the board shall have determined that such participation is prudent. Nothing herein shall be construed to authorize any change in the legal status of University Hospital;

    (2) The decision to participate in any activity described in paragraph (1) of subsection (v) of section 6 of P.L.1970, c.102 (C.18A:64G-6), including the creation or formation of for profit or not for profit corporations, shall be articulated in the minutes of the Board of Trustees meeting in which the action was approved. A true copy of the minutes shall be delivered to the Governor. No such action shall have affect until 30 days, Saturdays, Sundays and public holidays excepted, after the copy of the minutes shall have been delivered to the Governor. If, within the 30-day period, the Governor returns the minutes of the meeting with a veto of the action taken by the board, the action taken by the board shall be null and void and of no effect;       (3) The provisions of P.L.1971, c.182 (C.52:13D-12 et seq.) shall continue to apply to the university, its employees and officers;

    (4) Nothing herein shall be deemed or construed to create or constitute a debt, liability, or a loan or pledge of the credit or be payable out of property or funds of the State;

    (5) Funds directly appropriated to the university from the State or derived from the university's academic programs or derived from payment for coverage provided by the self insurance fund for claims accruing prior to the effective date of this act shall not be utilized in the development, manufacture or marketing of products, technology or scientific information;

    (6) Employees of any joint venture, subsidiary corporation, partnership or other jural entity entered into or owned wholly or in part by the university shall not be deemed public employees;

    (7) A joint venture, subsidiary corporation, partnership or other jural entity entered into or owned wholly or in part by the university shall not be deemed an instrumentality of the State of New Jersey;

    (8) Income realized by the university as a result of participation in the development, manufacture or marketing of products, technology, or scientific information may be invested or reinvested pursuant to paragraph (5) of subsection (n) of section 6 of P.L.1970, c.102 (C.18A:64G-6) or retained by the board for use in furtherance of any of the purposes of this act;

    (9) The board shall annually report to the State Treasurer on the operation of all joint ventures, subsidiary corporations, partnerships or such other jural entities entered into or owned wholly or in part by the university;

    (w) (1) Procure and enter into contracts for any type of insurance and indemnify against loss or damage to property from any cause, including loss of use and occupancy, against death or injury of any person, against employees' liability, against any act of any member, officer, employee or servant of the university, whether part-time, full-time, compensated or non-compensated in the performance of the duties of his office or employment or any other insurable risk. In addition, the university shall carry its own liability insurance or maintain an actuarially sound program of self insurance. Any joint venture, subsidiary corporation, or partnership or such other jural entity entered into or owned wholly or in part by the university shall carry insurance or maintain reserves in such amounts as are determined by an actuary to be sufficient to meet its actual or accrued claims;

    (2) Moneys in the fund known as the Self-Insurance Trust Fund administered by the State Treasurer shall continue to be available to the university solely to indemnify and defend claims against the university and its employees, officers and servants but only to the extent that the University has elected on behalf of itself and its employees to obtain representation from the Attorney General pursuant to subsection h. of section 6 of P.L.1994, c.48 (C.18A:3B-6) and such entity or individuals would have been entitled to defense and indemnification pursuant to the "New Jersey Tort Claims Act," N.J.S.59:1-1 et seq., as a State entity or State employee but for the provision of subsection (t) of section 6 of P.L.1970, c.102 (C.18A:64G-6). Any expenditure of such funds shall be made only in accordance with the provisions of the "New Jersey Tort Claims Act," N.J.S.59:1-1 et seq., including but not limited to the provisions of chapters 10, 10A and 11 of Title 59 of the New Jersey Statutes. Nothing herein shall be construed to authorize the use of the Self-Insurance Trust Fund to indemnify or insure in any way, directly or indirectly the activities of any joint venture, partnership or corporation entered into or created by the university pursuant to paragraphs (1) and (2) of subsection (v) of section 6 of P.L.1970, c.102 (C.18A:64G-6); and

    (x) Create auxiliary organizations subject to the provisions of P.L.1982, c.16 (C.18A:64-26 et seq.).

(cf: P.L.1994, c.48, s.169)

    33. This act shall take effect immediately.

STATEMENT

    This bill is entitled the "New Jersey Prepaid Higher Education Expense Program Act of 1996." It establishes the New Jersey Prepaid Higher Education Expense Program, to provide a mechanism through which the cost of tuition, registration fees, and dormitory residence may be paid in advance of enrollment in a public institution of higher education at a rate lower than the cost at the time of actual enrollment.     The bill provides for the creation of the Prepaid Higher Education Expense Board, in but not of, the Department of the Treasury. The board will consist of the Treasurer, the chairman of the Commission on Higher Education, or their designees, and five members appointed by the Governor who will possess knowledge, skill and experience in the areas of accounting, actuary, risk management, or investment management. The board will be responsible for administering the New Jersey Prepaid Higher Education Expense Program.

    The board, pursuant to the bill, will develop two types of advance payment contracts, one for tuition and registration fees and the other for dormitory residence. The bill sets forth provisions that must be included in both types of advance payment contracts. These provisions include: 

     - the amount of the payment and the number of payments required;

    - the terms and conditions under which a purchaser will remit payments, including, but not limited to, the dates upon which each payment will be due;

    - provisions for late payment charges and for default;

    - provisions for penalty fees for withdrawals from the fund;

    - 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;

    - the name of any person who may cancel the contract;

    - the terms and conditions under which a contract may be canceled, the name of the person entitled to any refund due as a result of the cancellation, and the amount of refund, if any, due to the person named;

    - the time limitations, if any, within which the qualified beneficiary must claim benefits through the program; and

    - other terms and conditions deemed by the board to be necessary or proper.

    In addition to these general provisions, the bill also requires that each type of advance payment contract include specific provisions. The advance payment contract for tuition and registration fees, for example, will have to include the number of semester credit hours contracted by the purchaser and whether the credit hours will be applied toward a four- year public institution of higher education or a county college. This type of advance payment contract will also include a provision obligating the board to provide to the qualified beneficiary the specified number of semester credit hours, 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.

    An advance payment contract for dormitory residence will have to include the number of semesters of dormitory residence contracted by the purchaser. This advance payment contract, similar to the advance payment contract for tuition and registration fees, will have to include a provision obligating the board to provide to a qualified beneficiary the specified number of semesters of dormitory residence, not to exceed the maximum number of semesters of full-time enrollment required for the conference of a baccalaureate degree.

    Under the bill, the board will be required to make advance payment contracts available for three independent plans, to be known as the county college plan, the university plan, and the dormitory residence plan. Through a county college plan, the advance payment contract will provide prepaid tuition and 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. Through a university plan, the advance payment contract will provide prepaid tuition and 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 participating in each of these plans will be based primarily on the average current and projected tuition and registration fees within the county college system or the four-year public institutions of higher education, respectively, and the number of years expected to elapse between the purchase of the plan and the exercise of the benefits by the qualified beneficiary.

    Through the dormitory plans, the advance payment contract will provide prepaid housing fees for a maximum of 10 semesters of full-time undergraduate enrollment in a four-year public institution of higher education. These plans are optional, and may be purchased only in conjunction with a university plan. As with the university plan, costs of participation will be based primarily on the average current and projected housing fees within the four-year public institutions of higher education and the number of years expected to elapse between the purchase of the plan and the exercise of the benefits by the qualified beneficiary.

    The bill permits any of these plans to be applied toward any independent institution of higher education located within the State. Under these circumstances, the board will transfer to these institutions an amount not to exceed the redemption value of the advance payment contract within a public institution of higher education. If the costs at the independent institution of higher education is less than the corresponding costs at a public institution of higher education, then the amount transferred may not exceed the actual cost of tuition and registration fees or housing fees.

    The bill also permits the benefits of an advance payment contract to be applied toward an out-of-state public college or university. To be eligible, these institutions must be not for profit, accredited by a regional accrediting association and confer baccalaureate degrees. Under these circumstances, the board will transfer to these institutions an amount not to exceed the redemption value of the advance payment contract or the original purchase price plus 5% compounded interest, whichever is less, after assessment of a reasonable transfer fees. If the costs at the out-of-state public college or university are less than the calculated amount, then the amount transferred may not exceed the actual cost of tuition and registration fees or housing fees.

     The bill states that it should not be construed as providing or guaranteeing that a qualified beneficiary of an advance payment contract will be admitted to a public institution of higher education or to a particular one of these institutions, will be allowed to continue enrollment at one of these institutions after admission or will be graduated from one of these institutions.

    The bill guarantees that in the event that moneys in the fund are insufficient to offset the obligations of the board, then the State will meet those obligations. As a measure of protection for the State, the bill also allows the Commission on Higher Education to promulgate guidelines which will govern the setting of tuition and other fees by the public institutions of higher education.

    Finally, the bill provides that if the State Treasurer determines that the program is financially infeasible, the State may discontinue the program. In this case a qualified beneficiary who has been accepted by and is enrolled or is within five years of enrollment in an independent institution of higher education or public institution of higher education will be entitled to exercise the benefits for which he has contracted. Other contract holders will receive a refund of the amount paid into the fund plus interest at the prevailing rate.

Establishes New Jersey Prepaid Higher Education Expense Program and provides for certain State control of tuition increases.