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.