JLC H.B. 538 75(R)BILL ANALYSIS

APPROPRIATIONS
H.B. 538
4-8-97
Committee Report (Amended)



BACKGROUND 

Texas universities receive their appropriations in one lump-sum.  In
fiscal year 1995, Texas public higher-education institutions spent almost
sixty percent of their general appropriations in the first six months of
the year.  As a matter of good financial management, many states no longer
provide lump-sum appropriations for colleges and universities and are
scheduling the cash made available to their institutions.  At present, 23
states distribute appropriations to their universities on a monthly basis. 

HB 538 would amend state law to require that annual general revenue
appropriations to postsecondary institutions, other than junior and
community colleges, be made available in 12 equal monthly installments on
the first business day of each month.  In cases in which universities face
unusual needs for general revenue, the Comptroller should be authorized to
provide access to these funds earlier. 

The Higher Education Assistance Fund would not be affected by this
recommendation. 

This recommendation is a Texas Performance Review: Disturbing the Peace
recommendation, ED 20, and has been costed by the comptroller to generate
$3.5 million in additional interest income each year. 

PURPOSE

To amend state law to require that annual general revenue appropriations
to post-secondary institutions, other than junior and community colleges,
be made available in 12 equal monthly installments on the first business
day of each month. 
 
RULEMAKING AUTHORITY

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

SECTION BY SECTION ANALYSIS

SECTION 1. Subchapter A, Chapter 51, Education Code, is amended by adding
Section 51.010, 
Distribution of General Revenue Appropriations.
 (a) Delineates that appropriations to an institution of higher education
shall be made in  equal monthly installments on the first business day of
each month, providing exceptions  for money credited to a separate account
as under 51.008(b) and Subsections (b) and (c)  of this section. 

 (b) Allows the comptroller to make exceptions and distribute all or part
of a monthly  installment early. 

 (c) Exempts a public junior or community college from this section.

 (d) Clarifies terms:  (1) "Institution of higher education," and (2)
"public junior college". 

SECTION 2. Effective date: September 1, 1997.

 SECTION 3. Emergency clause.

EXPLANATION OF AMENDMENTS

Changes the funding method for institutions of higher education from 12
equal monthly installments (approximately 8.3 percent per month) to allow
for up to 24 percent total being available in two payments not to exceed
12 percent in September and October.  Provides for any balances from the
first 24 percent and the remaining 76 percent are to be paid in 8
installments of up to 9.5 percent.