HBA-NMO, NLM H.B. 1945 76(R)BILL ANALYSIS


Office of House Bill AnalysisH.B. 1945
By: Junell
Appropriations
10/29/1999
Enrolled



BACKGROUND AND PURPOSE 

On March 28, 1996, the attorney general filed suit against the tobacco
industry on behalf of the State of Texas which resulted in a settlement
agreement in which the industry agreed to pay the state $15 billion over
the next 25 years.  Subsequent to the settlement, several legal challenges
were filed, including one to ensure the deposit of the settlement proceeds
into the state treasury and to preserve the authority of the legislature to
appropriate the funds, and one to ensure the allocation of some of the
proceeds to counties and hospital districts with indigent care
responsibilities. 

On February 3, 1998, an agreement was reached between the attorney general
and Representative Robert Junell, chairman of the House Appropriations
Committee, and Senator Bill Ratliff, chairman of the Senate Finance
Committee, to deposit the proceeds into the treasury for appropriation by
the legislature. On July 24, 1998, an agreement was reached between the
attorney general and certain counties and hospital districts to preserve
the entire amount of the original $15 billion for the benefit of the State
of Texas.  Under this agreement, the parties also agreed that the
additional payments of $2.275 billion received under the "Most Favored
Nation" provision of the settlement agreement would be used for the benefit
of counties and hospital districts.  The purpose of H.B. 1945 is to provide
for the implementation of these two agreements. 

H.B. 1945 creates a permanent health fund for higher education and sets
forth a formula for distributing the funds to certain health-related
institutions of higher education.  In addition, separate permanent funds
are created for these institutions. This bill also provides for a permanent
fund for higher education nursing, allied health, and other health-related
programs, and a permanent fund for minority health research and education. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Texas Higher Education Coordinating
Board in SECTION 1 (Sections 63.202 and 63.302, Education Code) in this
bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subtitle B, Title 3, Education Code, by adding Chapter
63, as follows: 

CHAPTER 63.  PERMANENT FUNDS FOR HEALTH-RELATED INSTITUTIONS
OF HIGHER EDUCATION

SUBCHAPTER A.  PERMANENT HEALTH FUND FOR HIGHER EDUCATION

Sec. 63.001. PERMANENT HEALTH FUND FOR HIGHER EDUCATION.  Provides that the
permanent health fund for higher education is a special fund in the
treasury outside the general revenue fund.  Provides that the fund is
composed of  money transferred to the fund at the direction of the
legislature,  gifts and grants contributed to the fund, and returns
received from investment of money in the fund. 

Sec. 63.002. ADMINISTRATION AND USE OF FUND. (a) Requires the board of
regents of the University of Texas System (board) to administer the fund.
Authorizes the board to  manage and invest the money in the fund in the
same manner as investments of permanent endowments.  Requires the board to
invest funds in a manner that preserves the purchasing power of the fund's
assets and the fund's annual distribution.  Requires the board to determine
the amount available for distribution from the fund in a manner consistent
with the board's procedures for making distributions to other endowment
beneficiaries.  Requires that the amount available for distribution be
determined by the investment and distribution policy for the fund's assets
adopted by the board.  Requires that expenses of managing the fund's assets
be paid from the fund. 

(b)  Prohibits the use of the money in the fund for any purpose except as
provided by Subsections (c), (d), and (f).   

(c) Authorizes appropriation of the amount available for distribution from
the fund only for programs that benefit medical research, health education,
or treatment programs at certain public health-related institutions of
higher education described by this subsection. 

(d)  Authorizes the governing board of a health-related institution of
higher education entitled to receive money under this subchapter to solicit
and accept gifts and grants to the fund.  Requires a gift or grant to the
fund to be distributed and be used in the same manner as the earnings of
the fund, subject to the discretion of the donor or granting entity. 

(e)   Provides that Sections 403.095 (Use of Dedicated Revenue) and 404.071
(Disposition of Interest on Investments), Government Code, do not apply to
the fund.  Provides that Section 404.094(d) (relating to funds to be
deposited in the treasury), Government Code, applies to the code. 

(f) Authorizes an institution of higher education that has accepted a gift
under Subchapter I (Texas Eminent Scholars Program), Chapter 51 (Provisions
Generally Applicable to Higher Education), that was conditioned on the
receipt by the institution of state matching funds from the eminent
scholars fund to use money the institution receives under this subchapter
to provide the state matching funds, treating that amount as if it were a
distribution to the institution from the eminent scholars fund for purposes
of Subchapter I, Chapter 51. 

Sec. 63.003.  ALLOCATION OF DISTRIBUTION.  Requires the legislature to
appropriate the amount available for distribution from the fund to certain
health-related institutions of higher education.  Requires the amount
appropriated to be distributed as follows: 

(1) requires that 70 percent be distributed in equal amounts to each
institution; and 

(2)  requires the remaining amount to be distributed in equal amounts
according to the conditions set forth in this section for each of the
following categories: 

_instructional expenditures
_research expenditures; and 
_unsponsored charity care.

Requires the amount appropriated under this section to be distributed
quarterly by the comptroller to each health-related institution of higher
education.  Requires the Legislative Budget Board to determine each
institutions's portion of investment returns and provide that information
to the legislature and the comptroller. Authorizes  Baylor College of
Medicine to receive certain funds under specified conditions.  

Sec. 63.004.  REPORTING REQUIREMENT.  Requires an institution receiving a
distribution from the permanent fund established under this subchapter to
provide a report to the Legislative Budget Board no later than November 1
of each year.  Requires that the report include the total amount of money
the institution  received from the fund, the purpose for which the money
was used, and any additional information that may be requested by the
Legislative Budget Board. 
 
SUBCHAPTER B.  PERMANENT FUNDS FOR HEALTH-RELATED INSTITUTIONS

Sec. 63.101.  CREATION OF FUNDS.  Establishes a separate permanent
endowment for the benefit of certain institutions of higher education
described by this section. Provides that each permanent endowment fund is a
special fund in the treasury outside the general revenue fund. Provides
that the fund is composed of  money transferred to the fund at the
direction of the legislature, gifts and grants contributed to the fund, and
the returns received from investment of money in the fund. 

Sec. 63.102.  ADMINISTRATION AND USE OF FUNDS.   (a) Authorizes the
governing board of an institution or component for which a fund is
established under this subchapter to administer the  fund of that
institution.  Requires the comptroller, if a governing board elects not to
administer the fund, to administer the fund.  Sets forth additional
procedures for the administration and use of funds. 

(b) Prohibits the use of the money in the fund for any purpose except as
provided by Subsections (c), (d), and (f).  

(c) Authorizes that the amount available for distribution from each fund be
appropriated only for research and other programs that are conducted by the
institution or components for which the fund is established and that
benefit the public health. Requires the comptroller or governing board to
report to the legislature the amount of funds that are eligible for
appropriation. Authorizes that the amount appropriated from the fund
established for certain universities be used according to the provisions
set forth in this section.  

(d) Authorizes the comptroller or the governing board of each institution
or component to solicit and accept gifts and grants to the institution or
component's fund.  Authorizes that a gift or grant to the fund be expended
and used  according to the provisions of this section and subject to the
discretion of the donor or granting entity.  

(e) Provides that Sections 403.095 and 404.071, Government Code, do not
apply to a fund established under this subchapter.  Provides that Section
404.094(d), Government Code, applies to the fund. 

(f) Authorizes an institution of higher education that has accepted a gift
under Subchapter I, Chapter 51, that was conditioned on the receipt by the
institution of state matching funds from the eminent scholars fund to use
money the institution receives under this subchapter to provide the state
matching funds, treating that amount as if it were a distribution to the
institution from the eminent scholars fund for the purposes of Subchapter
I, Chapter 51. 

Sec. 63.103.  REPORTING REQUIREMENT.  Requires each institution listed in
Section 63.101 to provide a report on the permanent fund established under
this subchapter for the benefit of the institution to the Legislative
Budget Board no later than November 1 of each year.  Requires the report to
include the total amount of money the institution received from the fund,
the purpose for which the money was used, and any additional information
that may be requested by the Legislative Budget Board. 
 
SUBCHAPTER C.  PERMANENT FUND FOR HIGHER EDUCATION NURSING,
ALLIED HEALTH, AND OTHER HEALTH-RELATED PROGRAMS

Sec.  63.201.  PERMANENT FUND FOR HIGHER EDUCATION NURSING, ALLIED HEALTH,
AND OTHER HEALTH RELATED PROGRAMS.  (a)  Provides that the permanent fund
for higher education nursing and allied health programs is a special fund
in the treasury outside the general revenue fund.  Provides that the fund
is composed of  money transferred to the fund at the direction of the
legislature,  gifts and grants contributed to the fund, and returns
received from investment of money in the fund. 
 
Sec. 63.202.  ADMINISTRATION AND USE OF FUND.  (a) Authorizes the
comptroller to contract with the governing board of any institution or
component for which a fund is established under this section to administer
any fund.  Authorizes the governing board to manage and invest the money in
the fund,  if the governing board administers a fund, in the same manner as
the board manages and invests other permanent endowments. Requires the
administrator of the fund to invest any fund in the specified manner. 

(b) Prohibits the use of the money in the fund for any purpose except as
provided by Subsections (c) and (d).  

(c) Authorizes the investment returns of each fund to be appropriated to
the Texas Higher Education Coordinating Board for the purpose of providing
grants to public institutions of higher education that offer upper-level
academic instruction and training in the field of nursing or allied health
education. Requires the coordinating board to adopt rules relating to the
award of grants under this subchapter. Provides that an institution or
component receiving funds under Subchapter A or B is not eligible to
receive a grant under this subchapter.  Requires the comptroller or
governing board to report to the legislature the amount of funds that are
available for appropriation. 

(d) Authorizes the comptroller or the governing board of the fund to
solicit and accept gifts and grants for the benefit of the fund.
Authorizes a gift or grant to the fund to be expended  and to be used
according to the provisions of this section and subject to the discretion
of the donor or granting entity.  

(e) Provides that Sections 403.095 and 404.071, Government Code, do not
apply to a fund established under this subchapter. 

Sec. 63.203.  REPORTING REQUIREMENT.  Requires the Texas Higher Education
Coordinating Board to provide a report on the permanent fund established
under this subchapter to the Legislative Budget Board no later than
November 1 of each year.  Requires that the report include the total amount
of money distributed from the fund, names of institutions receiving grants,
the purpose for which the grants were used, and any additional information
that may be requested by the Legislative Budget Board. 

SUBCHAPTER D.  PERMANENT FUND FOR MINORITY HEALTH
RESEARCH AND EDUCATION

Sec. 63.301.  PERMANENT FUND FOR MINORITY HEALTH RESEARCH AND EDUCATION.
Provides that the permanent fund for minority health research and education
is a special fund in the treasury outside the general revenue fund.  Sets
forth the composition of the fund. 

Sec. 63.302.  ADMINISTRATION AND USE OF FUND.  (a) Authorizes the
comptroller to contract with the governing board of any institution or
component that is eligible to receive a grant under Subsection (c) to
administer the fund.  Authorizes the governing board, if it manages the
fund, to manage and invest the money in the same manner as the board
manages and invests other permanent funds.  Requires the administrator of
the fund to invest any fund in a manner that preserves the purchasing power
of the fund's assets and the fund's annual distributions. 

(b) Prohibits money in the fund established under this subchapter, except
as provided by Subsections (c) and (e), from being used for any purpose. 

(c) Authorizes the appropriation of the investment returns of the fund to
the Texas Higher Education Coordinating Board for the purpose of providing
grants to institutions of higher education that conduct research or
educational programs that address minority health issues or form
partnerships with minority organizations, colleges, or universities to
conduct research and educational programs that address minority health
issues. 
 
(d) Requires the Texas Higher Education Coordinating Board to adopt rules
relating to the award of grants under this subchapter. 

(e) Authorizes the comptroller or governing board that administers the fund
to solicit and accept gifts and grants for the benefit of the fund.
Authorizes that a gift or grant to the fund be expended and used in the
same manner as investment returns of the fund under Subsection (c), subject
to any limitation or requirement placed on the gift or grant by the donor
or granting entity. 

(f) Requires the Texas Higher Education Coordinating Board to report to the
legislature annually the total amount of funds awarded and a brief
description of each grant, including the name of the institution  receiving
the grant, the amount and purpose of the grant, and the partnership formed
to conduct the research or educational programs authorized under Subsection
(c). 

(g) Provides that Sections 403.095 and 404.071, Government Code, do not
apply to a fund established under this subchapter. 

SECTION 2.  Amends Section 61.092, Education Code, as follows:

Sec. 61.092.  CONTRACTS WITH BAYLOR COLLEGE OF MEDICINE.  Authorizes that
funds received by Baylor College of Medicine under Subchapter A or B,
Chapter 63,  be used only to support programs of the college used for the
purposes described by this section. Provides that Baylor College of
Medicine and the board, if Baylor College of Medicine elects to administer
the fund established for it under Subchapter B, Chapter 63, must enter into
a contract that requires Baylor College of Medicine to administer the fund
in the same manner and subject to the same regulations as would apply to
the comptroller if the comptroller were administering a fund under
Subchapter B, Chapter 63.   Makes nonsubstantive changes. 

SECTION 3. (a)  Requires the comptroller, on the effective date of this
Act, to transfer $350  million from the general revenue fund to the
permanent health fund for higher education established by Subchapter A,
Chapter 63, Education Code, as added by this Act. 

(b)  Requires the comptroller, on the effective date of this Act, to
transfer from the general revenue fund certain amounts to the separate
endowment fund established by Subchapter B, Chapter 63, Education Code, as
added by this Act, to certain institutions of higher education or
components of an institution of higher education as described by this
subsection. 

(c)  Requires the comptroller to transfer $45 million from the general
revenue fund to the permanent fund for higher education nursing, allied
health, and other health related programs established by Subchapter C,
Chapter 63, Education Code, as added by this Act. 

(d) Requires the comptroller, on the effective date of this Act, to
transfer $25 million from the general revenue fund to the permanent fund
for minority health research and education established by Subchapter D,
Chapter 63, Education Code, as added by this Act. 

(e) Requires the comptroller, on the effective date of this Act, to
transfer $1 million from the general revenue fund to the Texas Higher
Education Coordinating Board to fund a contract with the Baylor University
Medical Center in Dallas for the Institute of Metabolic Disease to study
the relationship of maternal smoking and metabolic derangements to the
impaired growth rate in low-weight infants, and for the Division of
Prevention and Wellness to support an antitobacco task force.  Requires the
Texas Higher Education Coordinating Board, if it enters into a contract
under this subsection, to enter into the contract in the same manner as a
contract entered into under Section 67.092, Education Code, as amended by
this Act.  

(f) Authorizes appropriation of money in the fund to pay any amount of
money that the federal government determines that the state should repay or
that it should recoup from the state in the event of national legislation
regarding the case styled The State of Texas v. The  American Tobacco Co.,
et al., No. 5-96CV-91, in the United States District Court, Eastern
District of Texas. 

SECTION 4.  Emergency clause.