(1)(a) The Florida Prepaid College Board is authorized to create, establish, and administer the Florida College Savings Program to promote and enhance the affordability of higher education in the state and to enable persons to contribute funds that are combined and invested to pay the subsequent higher education expenses of a designated beneficiary. The board may not implement the savings program until it has obtained:
1. A written opinion from counsel specializing in federal tax matters indicating that the savings program constitutes a qualified tuition program under s. 529 of the Internal Revenue Code;
2. A written opinion from a qualified member of the United States Patent Bar indicating that the implementation of the savings program or the operation of the savings program will not knowingly infringe upon any patent or copyright specifically related to the financing of higher education expenses;
3. A written opinion of qualified counsel specializing in federal securities law that the savings program and the offering of participation in the savings program does not violate federal securities law; and
4. A written opinion from the board’s litigation counsel indicating that the implementation or operation of the savings program will not adversely impact any pending litigation against the board.
(b) The benefactor retains ownership of all amounts on deposit in his or her account with the savings program up to the date of distribution on behalf of a designated beneficiary. Earnings derived from investment of the contributions shall be considered to be held in trust in the same manner as contributions, except as applied for purposes of the designated beneficiary and for purposes of maintaining and administering the program as provided in this section.
(c) All amounts attributable to penalties shall be used for purposes of the savings program or as required by the Internal Revenue Code, and other amounts received other than contributions shall be properties of the savings program. Proceeds from penalties shall remain with the program and may be used for any costs or purposes of the savings program or used as required by the Internal Revenue Code.
(d) Deposits and contributions to the program, the property of the board, and the earnings on the college savings accounts are exempt from taxation.
(e) The assets of the savings program shall be continuously invested and reinvested in a manner consistent with the purposes of the program, expended on expenses incurred by the operation and management of the savings program, or refunded to the benefactor or designated beneficiary under the conditions provided in the participation agreement. The board is not required to invest directly in obligations of the state or any political subdivision of the state or in any investment or other fund administered by the state.
(2) PARTICIPATION AGREEMENTS.—
(a) The board may establish plans to permit benefactors to prepay the qualified higher education expenses associated with enrollment in an eligible educational institution and may permit benefactors to select from among alternative investment plans designed to provide funds to pay qualified education expenses of a designated beneficiary. The board shall not accept contributions in excess of the amount allowed pursuant to s. 529 of the Internal Revenue Code and shall prescribe by rule the methodology and information sources that shall be used to determine the projected costs of qualified higher education expenses for designated beneficiaries of prescribed ages.
(b) The board shall develop a participation agreement which shall be the agreement between the board and each benefactor, which may include, but is not limited to:
1. The name, date of birth, and social security number of the designated beneficiary.
2. The amount of the contribution or contributions and number of contributions required from a benefactor on behalf of a designated beneficiary.
3. The terms and conditions under which benefactors shall remit contributions, including, but not limited to, the date or dates upon which each contribution is due. Deposits to the savings program by benefactors may only be in cash. Benefactors may contribute in a lump sum, periodically, in installments, or through electronic funds transfer or employer payroll deductions.
4. Provisions for late contribution charges and for default.
5. Provisions for penalty fees for withdrawals from the program.
6. The name of the person who may terminate participation in the program. The participation agreement must specify whether the account may be terminated by the benefactor, the designated beneficiary, a specific designated person, or any combination of these persons.
7. The terms and conditions under which an account may be terminated, modified, or converted, the name of the person entitled to any refund due as a result of termination of the account pursuant to such terms and conditions, and the amount of refund, if any, due to the person so named.
8. Penalties for distributions not used or made in accordance with s. 529 of the Internal Revenue Code.
9. Any charges or fees in connection with the administration of the savings fund.
10. The period of time after which each participation agreement shall be considered to be terminated. Time expended by a designated beneficiary as an active duty member of any of the armed services of the United States shall be added to the period specified pursuant to this subparagraph. Should a participation agreement be terminated, the balance of the account, after notice to the benefactor, shall be declared unclaimed and abandoned property. The board shall retain any moneys paid by the benefactor for a participation agreement that has been terminated in accordance with this subparagraph. Such moneys may be transferred to the Florida Prepaid Tuition Scholarship Program to provide matching funds for prepaid tuition scholarships for economically disadvantaged youths who remain drug free and crime free.
11. Other terms and conditions deemed by the board to be necessary or proper.
(c) The participation agreement shall clearly state that:
1. The contract is only a debt or obligation of the savings program and the savings fund, and is not otherwise a debt or obligation of the state.
2. Participation in the program does not guarantee that sufficient funds will be available to cover all qualified higher education expenses for any designated beneficiary and does not guarantee admission to or continued enrollment at an eligible educational institution of any designated beneficiary.
(d) The participation agreement may be freely amended throughout its term for purposes including, but not limited to, allowing to enable the benefactor to increase or decrease the level of participation, change designated beneficiaries, and carry out similar matters permitted by this section and the Internal Revenue Code.
(3) DISTRIBUTIONS FOR QUALIFIED HIGHER EDUCATION EXPENSES.—The board shall establish requirements and procedures for beneficiaries to realize the benefits of participation agreements. In establishing such requirements and procedures, the board shall make distributions in as efficient and expeditious manner as is prudent and possible, consistent with the Internal Revenue Code.
(a) A benefactor may request a refund of the principal amount of his or her contributions, plus actual investment earnings or minus actual investment losses on the contributions, less any applicable penalty, and less any amounts used to provide benefits to the designated beneficiary.
(b) Notwithstanding paragraph (a), a penalty may not be levied if a benefactor requests a refund from the program due to:
1. Death of the beneficiary.
2. Total disability of the beneficiary.
3. Scholarship, allowance, or payment received by the beneficiary to the extent that the amount of the refund does not exceed the amount of the scholarship, allowance, or payment in accordance with federal law.
(c) If a benefactor requests a refund of funds contributed to the program for any cause other than those listed in paragraph (b), there shall be imposed a penalty of 10 percent of the earnings of the account and any applicable taxes, or the amount required by the Internal Revenue Code. Earnings shall be calculated as the total value of the participation agreement, less the aggregate contributions, or in the manner prescribed in the Internal Revenue Code.
(5) MATERIAL MISREPRESENTATION; PENALTY.—If the benefactor or the designated beneficiary makes any material misrepresentation in the application for a participation agreement or in any communication with the board regarding the program, especially regarding the withdrawal or distribution of funds therefrom, the account may be involuntarily liquidated by the board. If the account is so liquidated, the benefactor is entitled to a refund, subject to a 10-percent penalty or the amount required by the Internal Revenue Code.
(6) CONFIDENTIALITY OF ACCOUNT INFORMATION.—Information that identifies the benefactors or the designated beneficiary of any account initiated under this section is confidential and exempt from s. 119.07(1) and s. 24(a), Art. I of the State Constitution. However, the board may authorize the release of such information to a 1community college, college, or university in which a designated beneficiary may enroll or is enrolled. 1Community colleges, colleges, and universities shall maintain the confidentiality of such information.
(7) OBLIGATIONS OF BOARD.—Any contract or participation agreement entered into by or any obligation of the board on behalf of and for the benefit of the savings program does not constitute a debt or obligation of the state but is an obligation of the savings program. The state has no obligation to any designated beneficiary or any other person as a result of the savings program. The obligation of the savings program is limited solely to those amounts deposited in the savings fund. All amounts obligated to be paid from the savings fund are limited to amounts available for such obligation. The amounts on deposit in the savings program may only be disbursed in accordance with the provisions of this section.
(8) PROGRAM TERMINATION.—The savings program shall continue in existence until its existence is terminated by law. If the state determines that the savings program is financially infeasible, the state may discontinue the savings program. Upon termination of the savings program, all deposits shall be returned to benefactors, to the extent possible, and any unclaimed assets in the savings program may be transferred to the Florida Prepaid Tuition Scholarship Program to provide matching funds for prepaid tuition scholarships for economically disadvantaged youths who remain drug free and crime free.
(9) STATE PLEDGE.—The state pledges to benefactors and designated beneficiaries of the savings program that the state will not limit or alter the rights under this section which are vested in the program until such obligations are met and discharged. However, this subsection does not preclude such limitation if adequate provision is made by law for the protection of the benefactors and designated beneficiaries pursuant to the obligations of the board, and, if the state or the board determines that the savings program is not financially feasible, the state or the board may discontinue the program. If the program is discontinued, the board shall refund to benefactors their contributions to the program, plus any investment earnings or minus any investment losses. The board, on behalf of the state, may include this pledge and undertaking by the state in participation agreements.