MMA S.B. 537 75(R)BILL ANALYSIS HIGHER EDUCATION S.B. 537 By: Ogden (Junell) 3-29-97 Committee Report (Unamended) BACKGROUND Currently, the Texas Constitution prohibits the granting of extra compensation to a state employee after service has been rendered. However, institutions of higher education are not prohibited from awarding contracts permitting settlements to an employee when he or she leaves. This bill establishes certain restrictions on contracts with and compensation of administrators of public institutions of higher education. PURPOSE S.B. 537 establishes certain restrictions on contracts with and compensation of administrators of public institutions of higher education. 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. Amends Subchapter Z, Chapter 51, Education Code, by adding Section 51.945, as follows: Sec. 51.945. RESTRICTIONS ON CONTRACTS WITH ADMINISTRATORS. (a) Authorizes the governing board (board) of an institution of higher education (institution) to enter into an employment contract with an administrator that is to be paid in whole or in part from appropriated funds only if, before the date the contract is executed, the board determines that the contract is in the best interest of the institution. (b) Prohibits a contract that is entered into by a board from: (1) providing employment for more than three years; (2) allowing severance or other payments to exceed an amount equal to the discounted net present cash value of the contract upon termination at a market interest rate agreed upon in the contract; (3) allowing development leave, unless the leave is according to the same conditions that apply to faculty leave under Subchapter C; or (4) awarding tenure in any way that varies from the institution's general policy on the award of tenure. (c) Prohibits an institution from paying a salary to a person who is reassigned from an administrative position to a faculty or other position at the institution that exceeds the salary of other persons with similar qualifications performing similar duties. (d) Sets forth the following requirements for an administrator receiving development leave: (1) Must return to work for the same amount of time for which they received leave; or (2) Must pay back to the institution all costs of the leave, including their salary. (e) Provides that a record relating to a contract between an institution and an administrator, including certain terms, is public information and may not be withheld from public disclosure. (f) Defines "administrator," "governing board," "institution of higher education," and "contract." (g) Allows the board to grant development leave at the faculty member's full regular salary for one year if they have held an administrative position for more than five years. SECTION 2. (a) Effective date: September 1, 1997. (b) Makes application of this Act for contracts on or after September 1, 1997. SECTION 3. Emergency clause.