BILL ANALYSIS


                                                        S.B. 1019
                                                       By: Rosson
                                                          Finance
                                                         04-04-95
                                     Committee Report (Unamended)
BACKGROUND

Federal law and Internal Revenue Service regulations allow for
student employees of state institutions of higher education to be
exempt from social security coverage and the accompanying FICA tax. 
However, during the 1950's, the State of Texas elected to include
all state employees under social security coverage, including
student employees of institutions of higher education.  As a result
of this choice, the state and student employees must pay the FICA
payroll tax, at considerable cost.

PURPOSE

As proposed, S.B. 1019 exempts student employees of an institution
of higher education from social security coverage and requires the
state to pay all contributions on wages for social security
coverage.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 606.064(a), Government Code, to require
the state to pay all contributions on wages for social security
coverage of a state employee except as provided by Section 606.065
or 606.073.

SECTION 2. Amends Chapter 606C, Government Code, by adding Section
606.073, as follows:

     Sec.  606.073.  STUDENT EMPLOYEES OF INSTITUTIONS OF HIGHER
     EDUCATION.  (a)  Provides that a student of an institution of
     higher education is exempt from social security coverage.
     
     (b)  Defines "institution of higher education" and "student
       employee."
     SECTION 3.     Provides that the changes in law made by this Act take
effect only upon implementation of an agreement between the State
of Texas and the Social Security Administration.

SECTION 4. Requires the comptroller to reduce any remaining general
revenue fund transfers to be made to an institution of higher
education for the biennium beginning September 1, 1995, by a
certain amount.  Requires this reduction to only apply to
contributions for those student employees paid entirely from
general revenue.

SECTION 5. Emergency clause.
           Effective date: upon passage.