Nationwide, 18 states offer prepaid college tuition and more than 2.1 million accounts have been opened, said Chris Hunter of the National Association of State Treasurers. AB 152 is meant to be self-sustaining, with the state reinvesting money contributed by families and earning returns adequate to meet commitments regardless of tuition increases. The concern over the bill is that if California experiences another economic downtrend or there are actuarial miscalculations that destabilize the program, the state could be left holding the bag, subsidizing a college education for prepaid students. Colorado has been forced to kill its prepaid tuition program, and four states -- Texas, West Virginia, Ohio and Kentucky -- have suspended sales of new units for various reasons, Hunter said. "The only concern I have is whether the state of California can afford it," said Sen. Jack Scott, an Altadena Democrat who chairs the Senate Education Committee. "We'd need some very careful accounting." State Treasurer Bill Lockyer applauds the intent but is not sold on AB 152. "The goal is worthy, but we should take care not to achieve it at risk to our general fund," said Tom Dresslar, Lockyer's spokesman. California already sponsors a program, called ScholarShare, that offers tax benefits for setting aside money for college. A key difference between ScholarShare and Beall's bill, however, is that the former makes no promises about investment returns while the latter would force the state to accept some liability. Beall says that any risk posed by AB 152 must be weighed against consequences for failing to act at a time when highly skilled workers are needed. "People from all over the world come here for our education system," Beall said. "Let's help the kids who are living here, from our state, go to college."

At best, the proposed program would pay for a UC student's tuition and fees but not book or housing expenses that can add more than $12,000 to the annual cost of attending college. The bill works by breaking up UC tuition into 100 pieces, or "units," on a yearly basis. These units would be priced based on existing tuition plus an additional amount for fund administration and stability.

 In Washington, each unit currently costs $70 -- $11 more than if it were based solely on tuition. Parents or grandparents would be the likeliest adults to register a child -- of any age -- for the California program by buying one unit. Subsequent contributions of any amount could be made by anyone.Participants would be required to hold their units for at least two years, after which they could be used if the student were accepted into a public or private college in California or outside the state.Students attending a campus charging less than UC could use any surplus funds for other college-related expenses, while students attending the nation's highest-priced campuses must bankroll any difference.Donors would not receive a tax write-off, but money invested could appreciate, and gains would not be subject to state or federal income taxes if used for college attendance.

T uition invested for one sibling could be transferred to another, but units could not be bartered or sold as property. Families opting to close their child's account prematurely would be subject to tax and program penalties -- unless the student had died, become disabled or earned a scholarship. Numerous details of AB 152 have yet to be worked out, including whether to impose a residency requirement or require redemption within a specified time after the child turns 18. AB 152 makes no guarantee that investments in prepaid tuition will appreciate faster than stocks, bonds or other investments. If the prepaid tuition program ever became insolvent, the state would honor units purchased for students in high school or college at that time -- and provide refunds for other participants. Beall's bill has not yet been heard by a legislative committee.