Measure No. 55

Explanatory Statement

Legislative Argument

Arguments in Favor

Arguments in Opposition

Measure Contents Page

House Joint Resolution 72--Referred to the Electorate of Oregon by the 1997 Legislature to be voted on at the General Election, November 3, 1998.

BALLOT TITLE

55

AMENDS CONSTITUTION: PERMITS STATE TO GUARANTEE EARNINGS ON PREPAID TUITION TRUST FUND

RESULT OF "YES" VOTE: Vote "Yes" to authorize state to guarantee earnings under tuition trust fund program.
RESULT OF "NO" VOTE: Vote "No" to refuse authorization to guarantee earnings under tuition trust fund program.
SUMMARY: Amends Constitution. Measure approval makes effective the Post-secondary Education Expense Program adopted by 1997 Legislature. Program allows payment of undergraduate tuition before enrollment at lower than highest prevailing rate at time of enrollment; establishes trust fund. Measure permits state to exceed constitutional debt limit to authorize indebtedness at 1/2 of one percent of true cash value of all property in state to guarantee minimum benefits on contributions to prepaid tuition trust fund. State may issue bonds; may borrow from Common School Fund, if necessary.
ESTIMATE OF FINANCIAL IMPACT: It is estimated that this measure will require approximately $1,200,000 in total start up costs, in state funds, over the first four years of its operation.

TEXT OF MEASURE

Be It Resolved by the Legislative Assembly of the State of Oregon:

PARAGRAPH 1. The Constitution of the State of Oregon is amended by creating a new Article to be known as Article XI-K and to read:

ARTICLE XI-K

SECTION 1. In the manner provided by law and notwithstanding the limitations contained in sections 7 and 8, Article XI of this Constitution, the credit of the State of Oregon may be loaned and indebtedness incurred in an amount not to exceed, at any one time, one-half of one percent of the true cash value of all taxable property in this state to provide funds as necessary to satisfy state guarantees of minimum benefits or earnings derived from the contributions made to a prepaid tuition trust fund, which shall be created by law. The interests, as defined by law, regulation or contract, of contributors to, or beneficiaries designated by contributors to, the prepaid tuition trust fund shall be guaranteed by the full faith and credit of this state.

SECTION 2. The State of Oregon may issue bonds as necessary to provide funding to satisfy this state's guaranty obligations undertaken pursuant to this Article. In addition, notwithstanding anything to the contrary in Article VIII of this Constitution, this state may borrow available moneys of the Common School Fund if such borrowing is reasonably necessary to satisfy this state's guaranty obligations undertaken pursuant to this Article. The State of Oregon also may issue bonds as necessary to provide funding to repay the borrowed moneys, and any interest thereon, to the Common School Fund. The bonds shall be payable from any funds available for these purposes and, if necessary, from state ad valorem taxes.

SECTION 3. Bonds of this state issued pursuant to this Article shall be the direct obligations of this state and shall be in such form, run for such periods of time and bear such rates of interest as shall be provided by law. The bonds may be refunded with bonds of like obligation.

SECTION 4. The Legislative Assembly shall enact legislation to carry out the provisions of this Article. This Article shall supersede all conflicting constitutional provisions.

PARAGRAPH 2. The amendment proposed by this resolution shall be submitted to the people for their approval or rejection at the next regular general election held throughout this state.

NOTE: Boldfaced type indicates new language; [brackets and italic] type indicates deletions or comments.

EXPLANATORY STATEMENT

This measure amends the Oregon Constitution by creating Article XI-K related to higher education prepaid tuition plans. A higher education prepaid tuition plan allows a contributor to pay for a beneficiary the cost of enrollment in a community college or higher education institution in advance at a rate that is lower than the projected highest prevailing cost at an Oregon public community college or university at the time of enrollment. If the contributor pays the contracted amount, the state guarantees payment of the tuition of the beneficiary at the time of enrollment.

The contract between the contributor and the state creates liabilities and debt for the state. The Oregon Constitution generally prohibits the state from creating debt or liabilities that exceed $50,000. The measure creates an exception to this prohibition. The measure allows the state to lend credit and incur debt to satisfy guarantees made in connection with higher education prepaid tuition trust funds.

The measure allows the state to satisfy the state's obligations to contributors and beneficiaries under prepaid tuition plans by issuing bonds and borrowing from the Common School Fund. The measure allows the state to issue bonds to repay borrowed moneys and interest to the Common School Fund. The measure limits the state bonds to one-half of one percent of the true cash value of all taxable property in the state.

The measure allows the Legislative Assembly to provide for repayment of any state bonds issued from any funds available and, if necessary, from a potential state property tax. The state, in its history, has never defaulted on a general obligation bond nor exercised its authority to collect a statewide property tax to pay off bonds.

The measure directs the Legislative Assembly to enact legislation to carry out provisions of the Article.
Committee Members:Appointed By:
Senator Tom HartungPresident of the Senate
Representative Peter CourtneySpeaker of the House
Tom Dennehy*Secretary of State
Senator Lenn HannonSecretary of State
Craig GabrielMembers of the Committee

*Member dissents (does not concur with explanatory statement)

(This committee was appointed to provide an impartial explanation of the ballot measure pursuant to ORS 251.215.)

LEGISLATIVE ARGUMENT IN SUPPORT

A "Yes" vote on Ballot Measure 55 will:

Provide Oregonians and their children with a safe, simple savings plan for education guaranteed by the State of Oregon to protect against the rising cost of tuition

Tuition at Oregon's public universities has risen more than 80% since 1990 while personal incomes have risen only 49% and grant and scholarship spending has decreased. The Legislative Assembly has created a prepaid tuition plan program that is effective upon approval of BM 55. No matter how fast tuition costs rise, the State of Oregon guarantees that the plan, which you purchase based on today's tuition rates, will pay the full tuition costs of any Oregon public community college or university when your student enrolls.

The program works because the prepaid tuition plans are guaranteed by the full faith and credit of the State of Oregon and because the plan's earnings receive favorable tax treatment. All earnings of the plan are state tax exempt and federal tax deferred, with federal taxes assessed at the student's tax rate.

The program is safe. If a purchaser cancels the plan or the student uses only a portion of the benefits, the original investment for any remaining unused benefits can be reclaimed. In some circumstances, the original investment with interest may be reclaimed.

Create a prepaid tuition plan purchased with monthly or lump sum contributions for use at any public or private community college or university in Oregon or out-of-state

The program offers flexible contribution options that work for a purchaser who wants to invest a lump sum or make small payments each month, even through payroll deduction.

The program is designed to cover the full tuition costs of an Oregon public community college or university. The tuition benefits can be applied to enrollment at any accredited public or private educational institution in Oregon or out-of-state.
Committee Members:Appointed By:
Senator Tom HartungPresident of the Senate
Representative Peter CourtneySpeaker of the House
Representative Mark SimmonsSpeaker of the House

(This Joint Legislative Committee was appointed to provide the legislative argument in support of the ballot measure pursuant to ORS 251.245.)

ARGUMENT IN FAVOR

Oregon Needs More than Hope, Dreams and Good Intentions

As an instrumental partner in crafting the prepaid college tuition program for Oregon, I urge your support of Measure 55. Sending a child to college takes more than hopes, dreams and good intentions. It takes planning.

Measure 55 will allow Oregon residents ­ parents, students, relatives and other individuals ­ to pay in advance for tuition at any accredited community college or not-for-profit institution of higher learning. Under the program, individuals can purchase a future college education at today's prices.

Tuition at Oregon's public universities has increased by 80% since 1990. Income has risen only 49%. In the last six years, students have borrowed as much money as they did in the past three decades combined. The average Oregon student graduates $24,000 in debt. The actual cost of $24,000 borrowed at 8% is $36,000. The actual cost of $24,000 saved at 7% is $16,000. This example demonstrates the power of saving versus borrowing, which is the premise of a prepaid tuition plan. Under the prepaid plan, payment options will vary. You can purchase tuition in one lump sum, based on today's tuition rates, or purchase it over a specified period of time, possibly as a monthly payroll deduction.

Measure 55 was crafted so the full-faith-and-credit backing of the state will provide parents the peace of mind that escalating tuition costs or a bad investment will not jeopardize their child's education. This is similar to the guarantee provided to the state's general obligation bonds, which finance critical state projects such as schools and road construction. The state has never defaulted on a general obligation bond nor has it had to collect statewide property taxes to pay off bonds. The state's guarantee is solid.

The earnings from the prepaid tuition plans are state tax-exempt and federally tax deferred and payable at the students' rate.

As we move closer to the 21st century, there is no greater asset to Oregon than that of our children. That's why I am supporting Measure 55. It will give our children a head start on achieving their dreams.

(This information furnished by Jim Hill, Oregon State Treasurer.)

(This space purchased for $300 in accordance with ORS 251.255.)
The printing of this argument does not constitute an endorsement by the State of Oregon, nor does the state warrant the accuracy or truth of any statement made in the argument.

ARGUMENT IN FAVOR

VOTE YES ON BALLOT MEASURE 55

Measure 55 Helps Make College More Affordable

Skyrocketing tuition costs are making it more and more difficult for Oregonians to send their children to college. Since 1990, tuition at Oregon's public universities has nearly doubled. Oregon families must find new ways to save for college costs.

Ballot Measure 55 will help make college more affordable by allowing families to safely invest in a new college savings plan.

Under the pre-paid tuition plan set up by Measure 55, Oregonians will be able to buy college tuition at today's prices. The plan allows families to invest their money in a college fund that guarantees future tuition payments to any state university or community college. The money saved can also be used to pay private college tuition.

Ballot Measure 55 ensures Oregonians can lock-in college tuition at today's rates and avoid staggering increases in tuition costs.

Measure 55 Reduces Your Taxes

Under the new college savings program established by Measure 55, Oregonians will be able to defer state and federal taxes owed on income earned in the program. And, when the tuition is paid, the income is taxed at the student's rate.

Measure 55 Guarantees a Safe Investment

Ballot Measure 55 protects any individual's investment in the pre-paid tuition program by guaranteeing it fully by the State. Families will not have to worry about losing their money when investing to save for college.

Dear Voter:

Ballot Measure 55 is a chance to help many Oregon parents fulfill their dream of having their children go to college. Passing Measure 55 is a critical part of a new college savings program that passed overwhelmingly during the 1997 legislative session.

As a father of three young children, I know how important it is to start saving early for a college education. Please join me in supporting Measure 55.

Sincerely,

Randall Edwards

State Representative

(This information furnished by Randall Edwards.)

(This space purchased for $300 in accordance with ORS 251.255.)
The printing of this argument does not constitute an endorsement by the State of Oregon, nor does the state warrant the accuracy or truth of any statement made in the argument.

ARGUMENT IN FAVOR

PARENTS SAY YES TO TUITION SAVINGS PLAN

All parents want a better life for their children--a good job, a nice home, a safe community. These are the things at the heart of the American Dream, and a college education is what makes that dream come true for most people today.

But as parents, we are worried about what will happen when our children are ready to go to college. The average student loan debt for Oregon public university students is more than $17,000 at graduation. What will it be tomorrow?

That is why we urge every parent and every person to vote "Yes" on Measure 55. The children and grandchildren of this state deserve their chance at success, and this measure provides a way for Oregon families to see that they do.

Measure 55, the Pre-Paid Tuition Plan, lets Oregon families put small amounts of money in an account for their children for use when they go to a community college, public university, or independent college. The money grows on a tax-deferred basis, and is there when the students are ready for college.

The most important feature of the Pre-Paid Tuition Plan is that Oregon families can pay for tuition at the rates changed today, for use years later. Small amounts of money that grows over the years, with today's tuition rates "locked in"--that's a graduation gift every Oregon family can start saving for right away, if we just vote "Yes" on Measure 55.
Connie RushLiz Becker

(This information furnished by Grattan Kerans, Committee to Make College Affordable.)

(This space purchased for $300 in accordance with ORS 251.255.)
The printing of this argument does not constitute an endorsement by the State of Oregon, nor does the state warrant the accuracy or truth of any statement made in the argument.

ARGUMENT IN FAVOR

Ballot Measure 55 creates Oregon's Pre-Paid Tuition Program

Measure 55 will create a safe, simple college savings plan for Oregon's families. Oregon' pre-paid tuition program allows Oregon residents to pay in advance for college tuition at any accredited community college or not-for-profit institution of higher learning. Oregon families will be able to purchase a future college education at today's prices.

In 1997 the Oregon Legislative Assembly created Oregon's Pre-Paid tuition program. Ballot measure 55 will guarantee the plan with the "full faith and credit" of the state of Oregon. By offering the full faith and credit of the State, Oregon's Pre-Paid Tuition Program will be able to unequivocally guarantee that anyone who participates in the program will receive the benefit they paid for.

A College Savings Plan for ALL Oregonians!!!

Oregon's Pre-Paid Tuition Program provides students and their parents protection against the rising cost of tuition by locking in today's tuition rates. Oregon's plan will let families buy up to four years' worth of tuition at today's prices, either in monthly installments or as a lump sum. Oregon's plan guarantees that your investment will cover tuition, no matter how much it has risen!

Oregon's Pre-Paid Tuition Program is State Tax Exempt!

All earnings on Oregon's Pre-Paid Tuition Program are tax exempt from the State of Oregon. Federal taxes on the earnings are deferred until the year of use and the tax rate is at the student's level of income.

To keep Oregon's economy growing and to prepare all our children for the next century, there is nothing more important than education. Ballot Measure 55 will make college more affordable for Oregon's working families!

VOTE YES on Ballot Measure 55

State Representative

Peter Courtney

(This information furnished by State Representative Peter Courtney.)

(This space purchased for $300 in accordance with ORS 251.255.)
The printing of this argument does not constitute an endorsement by the State of Oregon, nor does the state warrant the accuracy or truth of any statement made in the argument.

ARGUMENT IN FAVOR

MAKE COLLEGE AFFORDABLE AGAIN FOR THE NEXT GENERATION OF OREGON STUDENTS

When college students went off to campus 20 years ago, they could work all summer at the minimum wage and have enough to pay for tuition with some left over. Today, Oregon students have to work seven or eight months full time at the minimum wage to save enough to pay tuition, with none left over.

So most students work part-time---and borrow the difference. Students like us are caught in this trap--take years longer to get your degree and delay you career, or graduate on time with big student loans to repay. Neither choice is a good one.

There's a better way to have the next generation of Oregon students graduate from one of Oregon's community colleges, public universities, or private colleges, and Measure 55 makes it possible. If it had been available when we were growing up, we could have pre-paid tuition at a much lower rate, and it would have been there when we arrived as freshman.

By voting yes on Measure 55, we will give Oregonians that opportunity in the future: buy tuition at today's price, for use years later when their children are ready to go to college. It's a simple process: Buy all or part of one year's tuition in a calendar year at the price charged today, and it pre-pays all or part of the tuition 15 or 18 years from now.

Today's children can avoid delayed graduation or big student loan payments. Your vote can make a difference--vote yes on measure 55!

MAKE COLLEGE AFFORDABLE AGAIN--VOTE YES ON MEASURE 55

Kelly Koski, OSU*

Eric Van Haggen, Student Body President Willamette University*

Mike Caudle

Ed Dennis

*Titles used for identification purposes only, and do not constitute an endorsement of the measure by the institutions

(This information furnished by Grattan Kerans, Committee to Make College Affordable.)

(This space purchased for $300 in accordance with ORS 251.255.)
The printing of this argument does not constitute an endorsement by the State of Oregon, nor does the state warrant the accuracy or truth of any statement made in the argument.

ARGUMENT IN FAVOR

OREGON HIGHER EDUCATION LEADERS URGE A "YES" VOTE ON MEASURE 55

Dear Fellow Oregonians:

The future of Oregon depends upon a well-educated society, with workers able to succeed in the knowledge-based industries that will dominate our economy in the next century, or applying the latest research in our natural resource businesses.

But Oregonians have to prepare financially for the cost of acquiring higher education for their children and grandchildren. That is why we are urging your yes vote for Measure 55, the Pre-Paid Tuition Program. This simple but valuable tuition pre-payment plan will allow Oregonians to set aside some or all of the cost of tuition at the rate charged now, a substantial savings over what the price may be 15 years or more in the future.

Every Oregon student can gain from this tuition pre-payment plan:

-Community college students

-Public university students

-Independent college and university students

Oregon will gain by approving this forward-looking plan. The future is coming at us at an accelerated rate, and we're banking on our children to be prepared to succeed in that complex world. So let's help Oregon families bank the funds needed to pay tuition when their children are ready to go to college, by voting yes on Measure 55.

David Frohnmayer President, University of Oregon*

Paul Risser President, Oregon State University*

Joseph Cox, Chancellor Oregon University System*

*Titles used for identification purposes only, and do not constitute an endorsement of the measure by the institutions.

(This information furnished by Grattan Kerans, Committee to Make College Affordable.)

(This space purchased for $300 in accordance with ORS 251.255.)
The printing of this argument does not constitute an endorsement by the State of Oregon, nor does the state warrant the accuracy or truth of any statement made in the argument.

ARGUMENT IN OPPOSITION

If you're in the habit of co-signing notes for strangers, guaranteeing payment on the notes by putting up your property as collateral, then you'd probably have no problem voting for Ballot Measure 55.

On the other hand, if you think only suckers would guarantee the payments for a product someone else purchases, no matter what the product costs, then you'll certainly vote against Ballot Measure 55.

Don't be a sucker. Measure 55 creates more than a billion dollars in new potential property tax liability.

Read Measure 55 carefully, then you'll vote No.

(This information furnished by Don McIntire.)

(This space purchased for $300 in accordance with ORS 251.255.)
The printing of this argument does not constitute an endorsement by the State of Oregon, nor does the state warrant the accuracy or truth of any statement made in the argument.