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.