House Bill 1059
The House Judiciary Committee will reconsider a bill mandating transfers from parents to public colleges and universities for their child’s education cannot be voided in the event of bankruptcy.
Guilherme Costa is general counsel for the South Dakota Board of Regents. He says House Bill 1059 ensures bankruptcy trustees are unable to get funds back from public colleges and universities.
“Generally speaking, when an individual files for bankruptcy, the bankruptcy trustee is tasked with increasing the pool of assets available to pay off any creditors. Both nationally and within South Dakota, bankruptcy trustees have attempted to force institutions of higher education to transfer to the trustee any payments made by parents on behalf of their children for higher education expenses by arguing these payments were fraudulent transfers. Federal law on this topic is still developing in the courts, but some states have passed state laws similar to House Bill 1059 that make it clear that these payments by parents of higher education expenses of their children are not fraudulent transfers and cannot be undone as such,” Costa says.
Representative Kevin Jensen of Canton says bills of this nature have come in front of lawmakers before. He says there needs to be further consideration before moving the measure to the full House.
"I’m at this point not comfortable [with voting on the bill]. Last year, we heard a bill moving funeral homes up to the front of the list of creditors. [You’re] now taking education to the front of the list. Every year we’ll we’ll hear somebody [who] wants to be at the front of the list. I really feel like I need more information on what we would do on this,” Jensen says.
Committee members decided on a voice vote to bring the issue up again at a later date, when an expert in bankruptcy law is able to testify.
House Bill 1017
Meanwhile, the panel advances a bill designed to put laws passed by last year’s State Legislature into South Dakota Code.
Senator Art Rusch of Vermillion sits on the South Dakota Code Commission. Rusch says the commission is charged with publishing the State Code and making sure laws are correctly inserted into state statute. He says House Bill 1017 prevents any future confusion when it comes to decisions made by lawmakers.
“We ask the legislature to approve that codification each year – so that, as a matter of law, those placements are approved by the legislature and we don’t face the arguments that ‘that isn’t what the legislature intended to do,’ so I urge you to support this bill,” Rusch says.
Committee members passed House Bill 10-17 on a 12-nothing vote. House Judiciary is set to review three bills on Friday.