Senate Bill 1852

CODING: Words stricken are deletions; words underlined are additions.



    Florida Senate - 1998                                  SB 1852

    By Senator Kirkpatrick





    5-1004-98

  1                      A bill to be entitled

  2         An act relating to postsecondary student

  3         financial aid; creating ss. 240.801, 240.802,

  4         240.810, 240.811, 240.812, 240.813, 240.814,

  5         240.815, 240.816, 240.817, 240.818, 240.819,

  6         240.820, 240.821, 240.822, 240.823, 240.824,

  7         240.840, F.S.; creating the Florida Student

  8         Financial Aid Corporation; providing for the

  9         corporation's membership, powers, and duties;

10         authorizing the corporation to administer state

11         and federal financial aid and scholarship

12         programs for students attending public and

13         nonpublic postsecondary education institutions;

14         providing an effective date.

15

16  Be It Enacted by the Legislature of the State of Florida:

17

18         Section 1.  Sections 240.801, 240.802, 240.810,

19  240.811, 240.812, 240.813, 240.814, 240,815, 240.816, 240.817,

20  240.818, 240.819, 240.820, 240.821, 240.822, 240.823, 240.824,

21  and 240.840, Florida Statutes, are created to read:

22         240.801  Florida Student Financial Aid

23  Corporation.--There is created a public body corporate known

24  as the Florida Student Financial Aid Corporation, which shall

25  have the primary responsibility for administering state and

26  federal financial aid and scholarship programs for students

27  attending public and nonpublic postsecondary education

28  institutions. The corporation is constituted as a public

29  instrumentality of state government, and the exercise by the

30  corporation of the powers conferred by this act is held to be

31  the performance of an essential public function, including the

                                  1

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 1998                                  SB 1852
    5-1004-98




  1  issuance of scholarships, grants, and loans to Florida

  2  students attending eligible postsecondary education

  3  institutions.

  4         240.802  Definitions.--As used in ss. 240.801-240.840,

  5  the term:

  6         (1)  "Board" means the board of directors of the

  7  corporation.

  8         (2)  "Corporation" means the Florida Student Financial

  9  Aid Corporation.

10         (3)  "Postsecondary educational institution" means an

11  institution, public or private, that provides courses of

12  instruction beyond those offered in secondary schools and is

13  approved and authorized by the state to participate in state

14  or federal financial aid programs.

15         240.810  Nonprofit public corporation.--The Florida

16  Student Financial Aid Corporation shall operate as a nonprofit

17  public corporation. Through a contract with the state, the

18  corporation will be the primary agency responsible for the

19  administration of state-authorized postsecondary student

20  financial aid and scholarship programs and the Federal Family

21  Education Loan Program, including all related and necessary

22  services. The corporation shall not be considered a state

23  agency for the purposes of complying with state purchasing,

24  employment, and procurement of services requirements.

25         240.811  Composition of board of directors.--

26         (1)  The corporation is to be governed by a board of

27  nine directors serving for 4 years each and appointed in

28  accordance with this section.

29         (a)  The Governor shall appoint six members, subject to

30  the confirmation of the Senate. Four members must have

31  knowledge of or experience in finance, including management of

                                  2

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 1998                                  SB 1852
    5-1004-98




  1  funds or business operations; one member must be a student

  2  enrolled in a postsecondary institution; and one member must

  3  be employed by a public or nonpublic postsecondary education

  4  institution.

  5         (b)  The Commissioner of Education shall appoint two

  6  members, subject to the confirmation of the Senate. One of the

  7  members must have knowledge of or experience in finance,

  8  including management of funds or business operations; one

  9  member must be employed by a public or nonpublic postsecondary

10  education institution.

11         (c)  The Comptroller or designee shall serve as an

12  ex-officio voting member of the board.

13         (2)  Appointments to the board must reflect race and

14  gender distribution in the population. Each member of the

15  board must be a resident of the state.

16         (3)  A person may not serve on the board of directors

17  of the corporation who has a direct interest in any company,

18  institution, or organization that may financially benefit from

19  the administration of public funds.

20         (4)  Members of the board are appointed to serve for a

21  term of 4 years, except that, in making the initial

22  appointment, the Governor shall appoint three members for 3

23  years each and three members for 2 years each and the

24  Commissioner shall appoint one member for 3 years and one

25  member for 2 years. Members may be reappointed to more than

26  one term.

27         240.812  Removal of board member.--

28         (1)  A member may be removed from the board if the

29  member:

30         (a)  Does not have, at the time of appointment, the

31  qualifications required by this act.

                                  3

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 1998                                  SB 1852
    5-1004-98




  1         (b)  Does not maintain during service on the board the

  2  qualifications required by this act.

  3         (c)  Violates a prohibition established by this act.

  4         (d)  Cannot discharge the member's duties for a

  5  substantial part of the term for which the member is

  6  appointed.

  7         (e)  Is absent from more than half of the regularly

  8  scheduled board meetings that the member is eligible to attend

  9  during a calendar year unless the absence is excused by a

10  majority vote of the board.

11         (2)  The validity of an action of the board is not

12  affected by the fact that it was taken when a ground for

13  removal of a board member existed.

14         (3)  Removal of a board member must be by the

15  appointing authority with a recommendation from the majority

16  of the board.

17         240.813  Vacancies.--

18         (1)  A member of the board vacates the office if the

19  member ceases to be a member of the field from which he or she

20  was appointed.

21         (2)  A vacancy on the board shall be filled by the

22  appointing authority, for the remainder of the unexpired term.

23         240.814  Expenses.--Members of the board shall serve

24  without compensation but are entitled to reimbursement for

25  actual and necessary expenses in attending board meetings or

26  performing other official duties authorized by the

27  chairperson.

28         240.815  Powers and duties of the board.--The board has

29  power to:

30         (1)  Secure funding for programs and activities of the

31  corporation, from federal, state, local, and private sources,

                                  4

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 1998                                  SB 1852
    5-1004-98




  1  and from fees charged for services, and may solicit, receive,

  2  hold, invest, and administer any grant, payment, or gift of

  3  funds or property and make expenditures consistent with the

  4  power granted to it.

  5         (2)  Make and enter into contracts and other

  6  instruments necessary or convenient for the exercise of its

  7  powers and functions, except that any contract made with the

  8  auxiliary organization must be approved by the Department of

  9  Education.

10         (3)  Sue and be sued, and appear and defend in all

11  actions and proceedings, in its corporate name to the same

12  extent as a natural person.

13         (4)  Adopt, use, and alter a common corporate seal for

14  the corporation, and its board. Notwithstanding any provisions

15  of chapter 617 to the contrary, this seal is not required to

16  contain the words "corporation not for profit."

17         (5)  Elect or appoint such officers and agents as its

18  affairs require and allow them reasonable compensation that is

19  derived from the income of the corporation.

20         (6)  Adopt, amend, and repeal bylaws, not inconsistent

21  with the powers granted to it or the articles of

22  incorporation, for the administration of the affairs of the

23  corporation and the exercise of its corporate powers.

24         (7)  Acquire, enjoy, use, and dispose of patents,

25  copyrights, and trademarks and any licenses, royalties, and

26  other rights or interests in them.

27         (8)  Do all acts and things necessary or convenient to

28  carry out the powers granted to it.

29         (9)  Use the state seal, notwithstanding the provisions

30  of s. 15.03, when appropriate, to establish that the

31  corporation is the principal administrator of state and

                                  5

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 1998                                  SB 1852
    5-1004-98




  1  federal student financial assistance to postsecondary

  2  education students of the state. Use of the state seal is not

  3  to replace the use of a corporate seal as provided in this

  4  section.

  5         (10)  Carry forward any unexpended state appropriations

  6  into succeeding fiscal years.

  7         (11)  Procure insurance or require bond against any

  8  loss in connection with the property of the corporation or its

  9  boards, in amounts and from insurers as is necessary or

10  desirable.

11         (12)  In addition to any indemnification available

12  under chapter 617, the corporation may indemnify, and purchase

13  and maintain insurance on behalf of, directors, officers, and

14  employees of the corporation against any personal liability or

15  accountability by reason of actions taken while acting within

16  the scope of their authority.

17         240.816  Fiscal provisions.--

18         (1)  The corporation shall establish a reserve fund

19  into which all money received by the corporation shall be

20  deposited. The corporation shall establish separate accounts

21  in that fund as follows:

22         (a)  A guarantee account to administer the federal

23  guarantee loan program.

24         (b)  The "Bright Futures" account to administer the

25  merit scholarship programs funded through the Educational

26  Enhancement Trust Fund.

27         (c)  A state aid account to administer needs-based

28  financial assistance programs.

29         (d)  A miscellaneous scholarship account to administer

30  all other scholarships.

31

                                  6

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 1998                                  SB 1852
    5-1004-98




  1         (e)  An operational and administrative services account

  2  to deposit funds for administering the state's financial

  3  assistance programs.

  4         (2)  Funds in the guarantee account may only be used

  5  for meeting the claims of eligible lenders on defaulted loans.

  6  The corporation may pledge and use money in the guarantee

  7  account to repay indebtedness incurred for meeting the claims

  8  of eligible lenders on defaulted loans. Federal money advanced

  9  to the corporation for the purpose of helping to establish or

10  strengthen the reserve fund must be deposited in the guarantee

11  account and tracked as a separate item.

12         (3)  All income, property, and other assets of the

13  corporation are exempt from taxation by the state and

14  political subdivisions of the state.

15         (4)  All money of the corporation may be invested in

16  direct obligations of the United States of America;

17  obligations that in the opinion of the Attorney General of the

18  United States are general obligations of the United States and

19  backed by its full faith and credit; obligations guaranteed by

20  the United States of America; evidences of indebtedness of the

21  Federal Land Banks, Federal Intermediate Credit Banks, Banks

22  for Cooperatives, Federal Home Loan Banks, Federal National

23  Mortgage Association, Federal Financing Bank Participation

24  Certificates in the Federal Assets Financing Trust, New

25  Housing Authority Bonds and Project notes fully secured by

26  contracts with the United States or any other agency or

27  instrumentality of the United State of America; and deposits

28  or certificates of deposit of any bank or trust company which

29  are fully secured by obligations in which the corporation may

30  invest under the provisions of this section.

31

                                  7

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 1998                                  SB 1852
    5-1004-98




  1         (5)  At least once each year the corporation must have

  2  a fiscal audit performed by a certified public accountant. A

  3  copy of the annual audit must be submitted to the auditor

  4  general for review.

  5         (6)  The corporation shall comply with the requirements

  6  of the Higher Education Act of 1965, 20 U.S.C. Sec. 1001 et

  7  seq., as amended, and other appropriate laws, regulations, or

  8  practices as required or permitted by law.

  9         240.817  Annual report.--

10         (1)  The corporation shall annually produce a written

11  report on the financial and program operations of the

12  corporation. The report must include the audited financial

13  statement for the year, the number and dollar value of loans

14  guaranteed during the year, state awards disbursed, and the

15  total dollar value of outstanding guaranteed loans.

16         (2)  The corporation shall submit the annual report to

17  the Governor, the Commissioner of Education, the President of

18  the Senate, and the Speaker of the House of Representatives no

19  later than January 1 of each year.

20         240.818  State Grants/Scholarship/Loans and Federal

21  Family Educational Loan Program.--

22         (1)  The corporation shall operate under a contract

23  with the Florida Department of Education for the operation and

24  administration of the state-funded programs. The

25  administrative and operational cost of the state programs, as

26  well as the funds to be awarded to students, must be paid

27  directly to the corporation no later than July 1 of each year.

28  The corporation shall assume all existing assets, liabilities,

29  and contracts necessary and appropriate to the operation of

30  the state student assistance programs currently administered

31  by the Office of Student Financial Assistance.

                                  8

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 1998                                  SB 1852
    5-1004-98




  1         (2)  The corporation shall operate under a contract

  2  with the Florida Department of Education for the operational

  3  and administrative services necessary for the state's

  4  participation in the Federal Family Education Loan Program.

  5  The corporation shall administer the Federal Family Education

  6  Loan Program in accordance with the Higher Education Act of

  7  1965, 20 U.S.C. Sec. 1001 et seq., as amended, and in

  8  accordance with applicable federal regulations. The

  9  corporation shall assume all existing assets, liabilities, and

10  contracts for the operation of the Federal Family Education

11  Loan Program currently administered by the Office of Student

12  Financial Assistance. Except as otherwise provided by law, all

13  expenses of the Federal Family Education Loan Program must be

14  paid from income generated by the program.

15         240.819  Guaranteed student loans.--

16         (1)  The corporation shall guarantee loans made to

17  eligible borrowers by eligible lenders as provided by the

18  Federal Family Education Loan Program under the Higher

19  Education Act of 1965, 20 U.S.C. Sec. 1001 et seq., as

20  amended, and in accordance with applicable federal

21  regulations.

22         (2)  The corporation may designate a lender of last

23  resort.

24         240.820  Reinsurance.--The corporation may enter into

25  an agreement with the United States Department of Education

26  for reinsurance against loss under the loan program due to

27  death, disability, or default of the borrower.

28         240.821  Postsecondary educational institutions and

29  lender advisory committees.--

30         (1)  The board may establish advisory committees as the

31  board considers necessary.

                                  9

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 1998                                  SB 1852
    5-1004-98




  1         (2)  The board shall specify each advisory committee's

  2  purpose and duties and require each committee to report to the

  3  board in a manner specified by the board relating to each

  4  committee's activities and work results.

  5         240.822  Suits on default.--

  6         (1)  If a student borrower defaults on a loan and the

  7  corporation is required to honor the guarantee, the

  8  corporation may bring suit against the defaulting party in

  9  accordance with the requirements of the Higher Education Act

10  of 1965, 20 U.S.C. Sec. 1001 et seq., as amended.

11         (2)  A suit against a defaulting party under this

12  section may be brought in the county in which the defaulting

13  person resides, in which the lender is located, or in Leon

14  County.

15         (3)  It is not a defense to a suit under this section

16  that the defaulting party was a minor at the time the

17  promissory note was executed or that the statute of

18  limitations has expired.

19         240.823  Cooperation of state agencies and

20  subdivisions.--To the extent allowed by law, each agency and

21  political subdivision of the state must cooperate with the

22  corporation in attempts to collect on defaulted loans.

23         240.824  Loan default ground for nonrenewal of

24  professional or occupational license.--

25         (1)  For purposes of administering this program, the

26  term:

27         (a)  "License" means a certificate or similar form of

28  permission issued or renewed by a licensing agency and

29  required by law before a person may engage in a profession or

30  occupation.

31

                                  10

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 1998                                  SB 1852
    5-1004-98




  1         (b)  "Licensee" means a person to whom a licensing

  2  agency issues a license.

  3         (c)  "Licensing agency" means a board, commission,

  4  department, or other agency in the executive or judicial

  5  branch of state government which issues or renews a license.

  6         (2)  The corporation shall identify the licensing

  7  agencies subject to this section and provide written notice to

  8  those agencies of the requirements prescribed by this section.

  9  Only those licensing agencies that the corporation identifies

10  and that receive the notice are required to carry out this

11  section.

12         (3)  The corporation shall periodically identify the

13  persons who are in default on loans guaranteed by the

14  corporation and provide a list of the names of those persons

15  to the licensing agencies.

16         (4)  A person who is in default on a loan may enter

17  into an agreement with the corporation for repayment of a

18  defaulted loan as required under this section. The corporation

19  shall provide the person with a certificate certifying that

20  the person has entered a repayment agreement on the defaulted

21  loan.

22         (5)  A licensing agency may not renew the license of a

23  licensee whose name is on the list provided by the corporation

24  under subsection (3) unless:

25         (a)  The renewal is the first renewal following the

26  agency's receipt of the list including the licensee's name

27  among those in default; or

28         (b)  The licensee presents to the agency a certificate

29  issued by the corporation certifying that:

30         1.  The licensee has entered a repayment agreement on

31  the defaulted loan; or

                                  11

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 1998                                  SB 1852
    5-1004-98




  1         2.  The licensee is not in default on a loan guaranteed

  2  by the corporation.

  3         (6)  A licensing agency may issue an initial license to

  4  a person whose name is on the list provided by the corporation

  5  under subsection (3) and who meets all other qualifications

  6  for licensure, but shall not renew the license unless the

  7  person presents to the agency a certificate issued by the

  8  corporation certifying that the licensee has entered a

  9  repayment agreement on the defaulted loan or that the licensee

10  is not in default on a loan guaranteed by the corporation.

11         (7)  A licensing agency may not renew the license of a

12  licensee who defaults on a repayment agreement unless the

13  person presents to the agency a certificate issued by the

14  corporation certifying that the licensee has entered another

15  repayment agreement on the defaulted loan or that the licensee

16  is not in default on a loan guaranteed by the corporation or

17  on a repayment agreement.

18         (8)  A licensing agency shall provide written notice of

19  the nonrenewal policies established under subsections (5),

20  (6), and (7) to each applicant for a license or for renewal of

21  a license. The corporation shall provide written notice of

22  those same policies on each loan application form provided by

23  the corporation and on each promissory note signed by a

24  borrower. Failure to provide the notice required by this

25  subsection does not affect the default status of a borrower or

26  the prohibitions on renewal of a license held by a person in

27  default.

28         (9)  A licensing agency shall provide an opportunity

29  for a hearing to a licensee before the agency takes action

30  concerning the nonrenewal of a license under this section.

31

                                  12

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 1998                                  SB 1852
    5-1004-98




  1         (10)  Each licensing agency shall adopt any rules

  2  necessary to carry out the licensing agency's duties under

  3  this section.

  4         (11)  The board shall establish procedures to carry out

  5  the corporation's duties under this section.

  6         (12)  This section does not apply to the State Board of

  7  Administration.

  8         240.840  Nondiscrimination.--Neither the corporation

  9  nor an eligible lender may discriminate against an eligible

10  student in making a loan or loan guarantee on the basis of

11  race, age, religion, sex, or national origin.

12         Section 2.  This act shall take effect upon becoming a

13  law.

14

15            *****************************************

16                          SENATE SUMMARY

17    Creates the Florida Student Financial Aid Corporation to
      administer state and federal financial aid and
18    scholarship programs for students attending public and
      nonpublic postsecondary education institutions.
19

20

21

22

23

24

25

26

27

28

29

30

31

                                  13