By Gallego                                              H.B. No. 81
         76R550 JRD-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the conservatorship of state agencies and public junior
 1-3     colleges as a result of fiscal mismanagement.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Chapter 2104, Government Code, is amended to read
 1-6     as follows:
 1-7            CHAPTER 2104.  CONSERVATORSHIP AS A RESULT OF FISCAL
 1-8                                MISMANAGEMENT
 1-9                      SUBCHAPTER A.  GENERAL PROVISIONS
1-10           Sec. 2104.001.  DEFINITIONS.  In this chapter:
1-11                 (1)  "Conservator" ["Board"] means a person appointed
1-12     by the governor to act as the conservator of a state agency or
1-13     public junior college in accordance with this chapter [the State
1-14     Conservatorship Board].
1-15                 (2)  "Gross fiscal mismanagement" includes:
1-16                       (A)  failure to keep adequate fiscal records;
1-17                       (B)  failure to maintain proper control over
1-18     assets;
1-19                       (C)  failure to discharge fiscal obligations in a
1-20     timely manner; and
1-21                       (D)  misuse of state funds.
1-22                 (3)  "State agency" means a department, commission,
1-23     board, office, or other agency, including a university system or an
1-24     institution of higher education other than a public junior college,
 2-1     that:
 2-2                       (A)  is in the executive branch of state
 2-3     government;
 2-4                       (B)  is created by statute; and
 2-5                       (C)  does not have statutory geographical
 2-6     boundaries limited to a part of the state.
 2-7                 (4)  "State fiscal management policies" means laws or
 2-8     rules relating to:
 2-9                       (A)  fiscal recordkeeping and reporting;
2-10                       (B)  use or control of state property;
2-11                       (C)  timely discharge of fiscal obligations; or
2-12                       (D)  use of state funds.
2-13           Sec. 2104.002.  APPLICABILITY OF CHAPTER.  This chapter does
2-14     not apply to an agency that is under the direction of an elected
2-15     officer, board, or commission.
2-16             (Sections 2104.003-2104.010 reserved for expansion)
2-17          SUBCHAPTER B.  CONSERVATORS [STATE CONSERVATORSHIP BOARD]
2-18           Sec. 2104.011.  APPOINTMENT OF CONSERVATOR [BOARD
2-19     COMPOSITION]; TERMS.  (a)  A conservator [The board] is [composed
2-20     of three members] appointed by the governor with the advice and
2-21     consent of the senate.
2-22           (b)  To be eligible for appointment as a conservator [to the
2-23     board], a person must be qualified, by experience or education, in
2-24     administration or fiscal management.
2-25           (c)  A public officer is eligible to serve as a conservator
2-26     [on the board].
2-27           (d)  A conservator's term expires on the earlier of the date
 3-1     the conservatorship for which the conservator is appointed
 3-2     dissolves or  the second anniversary of the date of the
 3-3     conservator's appointment. A conservator whose term expires before
 3-4     the conservatorship is dissolved may be reappointed to continue the
 3-5     conservatorship.  [Members serve staggered six-year terms with the
 3-6     term of one member expiring on January 31 of each odd-numbered
 3-7     year.]
 3-8           Sec. 2104.012.  COMPENSATION OF CONSERVATOR [PRESIDING
 3-9     OFFICER; MEETINGS].  (a)  A conservator appointed to act as the
3-10     conservator of a state agency or public junior college under this
3-11     chapter is entitled to receive a salary for performing those duties
3-12     that is equal to the salary of the chief administrative officer of
3-13     the state agency or public junior college under conservatorship.
3-14     [The governor shall designate a board member to serve as presiding
3-15     officer for a two-year period expiring on January 31 of
3-16     odd-numbered years.]
3-17           (b)  The state agency or public junior college under
3-18     conservatorship shall pay the salary of the conservator from money
3-19     appropriated or otherwise available to the state agency or public
3-20     junior college, except to the extent that money to pay the salary
3-21     is specifically appropriated or made available through the budget
3-22     execution process for that purpose.  [The board shall meet at the
3-23     call of the presiding officer or as provided by board rule.]
3-24           Sec. 2104.013.  [COMPENSATION;] EXPENSES OF CONSERVATOR.  (a)
3-25     [A board member may not receive compensation but is  entitled to
3-26     reimbursement for actual and necessary expenses incurred in the
3-27     performance of official duties.]  A limit provided by appropriation
 4-1     on the amount of reimbursement that state officers or members of
 4-2     state boards and commissions may generally receive does not apply
 4-3     to reimbursement of the reasonable and necessary expenses incurred
 4-4     by a conservator in the course of performing duties under this
 4-5     chapter [members of the State  Conservatorship Board].
 4-6           (b)  The reasonable and necessary expenses incurred by a
 4-7     conservator in the course of performing duties under this chapter
 4-8     [If funds for the purpose of this chapter are not appropriated to
 4-9     the board, the expenses of the board] shall be paid from funds
4-10     appropriated or otherwise available to the agency or public junior
4-11     college under conservatorship, except to the extent that money to
4-12     pay those expenses is specifically appropriated or made available
4-13     through the budget execution process for that purpose.
4-14           Sec. 2104.014.  RULES.  A conservator [The board] may adopt
4-15     and enforce rules necessary to administer the conservatorship for
4-16     which the conservator is appointed under this chapter.  A
4-17     conservator may adopt initial rules on an  emergency basis for the
4-18     period prescribed by Section 2001.034 if the conservator determines
4-19     that rules with immediate effect are necessary to ameliorate the
4-20     effect of the gross fiscal mismanagement.
4-21           Sec. 2104.015.  ADMINISTRATIVE SERVICES.  (a)  The governor
4-22     shall provide a conservator [the board] with administrative
4-23     services.
4-24           (b)  If necessary, the governor may use appropriations made
4-25     under Section 403.075 to provide the administrative services.
4-26             (Sections 2104.016-2104.020 reserved for expansion)
4-27                   SUBCHAPTER C.  CONSERVATORSHIP OF STATE
 5-1                                  AGENCIES
 5-2           Sec. 2104.021.  MISMANAGEMENT FINDING; RECOMMENDATION;
 5-3     CONSERVATORSHIP ORDER.  (a)  The legislative audit committee, on
 5-4     [shall notify the governor of the committee's] finding that a
 5-5     condition of gross fiscal mismanagement exists in a state agency,
 5-6     may:
 5-7                 (1)  notify the governor of the finding and recommend
 5-8     that the governor appoint a conservator for the agency; or
 5-9                 (2)  recommend to the agency that it agree within a
5-10     specified time to enter into a rehabilitation plan in accordance
5-11     with Section 2104.0215.
5-12           (b)  After receipt of a [the] notice under Subsection (a),
5-13     the governor by proclamation may appoint a conservator, in
5-14     accordance with the recommendation, [order the board] to act as
5-15     conservator of the agency.
5-16           Sec. 2104.0215.  REHABILITATION PLAN IN LIEU OF
5-17     CONSERVATORSHIP.  (a)  A state agency that agrees to enter into a
5-18     rehabilitation plan shall engage the services of an independent
5-19     management consulting team approved by the governor and by the
5-20     presiding officer and assistant presiding officer of the
5-21     legislative audit committee.  The independent management consulting
5-22     team may include the state auditor, one or more appropriate state
5-23     agencies, and private consultants.
5-24           (b)  The state agency entering into the rehabilitation plan
5-25     shall pay the costs of the independent management consulting team's
5-26     services from money appropriated or otherwise available to the
5-27     agency, except to the extent that money to pay the costs is
 6-1     specifically appropriated or made available through the budget
 6-2     execution process for that purpose.
 6-3           (c)  The independent management consulting team shall assist
 6-4     the state agency in developing its rehabilitation plan. The
 6-5     rehabilitation plan must include specific performance goals and the
 6-6     period in which the goals must be achieved.  The plan must be
 6-7     approved by the governing body of the agency and by the governor
 6-8     and the legislative audit committee.
 6-9           (d)  If the state agency does not adopt the rehabilitation
6-10     plan within a reasonable time or if the state auditor determines
6-11     and informs the governor that the state agency is not making
6-12     sufficient progress in implementing its rehabilitation plan, the
6-13     governor may appoint a conservator for the agency under Section
6-14     2104.021.
6-15           Sec. 2104.022.  ASSUMPTION OF POLICY FUNCTIONS.  The
6-16     conservator appointed by [board, acting on an order of] the
6-17     governor under Section 2104.021[,] shall assume all the powers and
6-18     duties of the officers responsible for policy direction of the
6-19     state agency that is the subject of [to] the proclamation [order],
6-20     and those officers may not act unless authorized by the conservator
6-21     [board].
6-22           Sec. 2104.023.  [BOARD] CONSERVATORSHIP POWERS AND DUTIES.
6-23     (a)  The [board, acting as] conservator of a state agency under
6-24     this subchapter[,] shall ensure that the agency complies with state
6-25     fiscal management policies.
6-26           (b)  The [board, acting as] conservator of a state agency
6-27     under this subchapter, may:
 7-1                 (1)  terminate the employment of any employee whose
 7-2     conduct the conservator [board] determines contributed to the
 7-3     condition that caused the conservatorship;
 7-4                 (2)  employ personnel for the agency;
 7-5                 (3)  change the agency's organization or structure as
 7-6     necessary to alleviate the conditions that caused the
 7-7     conservatorship; and
 7-8                 (4)  contract with persons for management or
 7-9     administrative services necessary to effect the conservatorship.
7-10           (c)  The conservator [board] may delegate any part of the
7-11     conservator's [its] powers or duties as conservator other than
7-12     [its] rulemaking authority to a person with whom the conservator
7-13     [it] contracts under Subsection (b)(4).
7-14           Sec. 2104.024.  REPORT.  (a)  The conservator [board] shall
7-15     report on a conservatorship under this subchapter to the governor
7-16     and the legislative audit committee not later than the 60th day
7-17     after the date the governor orders the conservatorship and at the
7-18     end of each subsequent 60-day period until the conservatorship is
7-19     dissolved.
7-20           (b)  The report must include a description of the measures
7-21     taken to ensure that the state agency complies with state fiscal
7-22     management policies and an estimate of the progress the conservator
7-23     [board] has made in attaining that goal.
7-24           Sec. 2104.025.  DURATION OF CONSERVATORSHIP.  A
7-25     conservatorship under this subchapter continues until the earlier
7-26     of:
7-27                 (1)  the governor's issuing of a proclamation declaring
 8-1     that the condition of gross fiscal mismanagement in the state
 8-2     agency no longer exists and that the conservatorship is dissolved;
 8-3     or
 8-4                 (2)  the legislative audit committee's finding and
 8-5     certifying to the governor that the condition of gross fiscal
 8-6     mismanagement in the agency no longer exists, in which case the
 8-7     conservatorship is dissolved.
 8-8             (Sections 2104.026-2104.030 reserved for expansion)
 8-9          SUBCHAPTER D.  CONSERVATORSHIP OF PUBLIC JUNIOR COLLEGES
8-10           Sec. 2104.031.  MISMANAGEMENT FINDING; CONSERVATORSHIP ORDER.
8-11     (a)  On the governor's request, the Texas Higher Education
8-12     Coordinating Board with the advice and assistance of the state
8-13     auditor shall determine if a condition of gross fiscal
8-14     mismanagement exists at a public junior college.
8-15           (b)  If the coordinating board finds a condition of gross
8-16     fiscal mismanagement of a public junior college, the governor by
8-17     proclamation may appoint a [order the board to act as] conservator
8-18     for [of] the college.
8-19           (c)  Except as otherwise provided by this subchapter, a
8-20     conservator  [the board] shall act as conservator of a public
8-21     junior college in the manner provided by this chapter for
8-22     conservatorship of state agencies by a conservator [the board].
8-23           Sec. 2104.032.  REPORTS.  A conservator [The board] shall
8-24     file the reports relating to public junior colleges required  by
8-25     Section 2104.024 with the Texas Higher Education Coordinating
8-26     Board.
8-27           Sec. 2104.033.  DURATION OF CONSERVATORSHIP.  A
 9-1     conservatorship of a public junior college under this subchapter
 9-2     continues until the earlier of:
 9-3                 (1)  the governor's issuing of a proclamation declaring
 9-4     that the condition of gross fiscal mismanagement no longer exists
 9-5     and that the conservatorship is dissolved; or
 9-6                 (2)  the Texas Higher Education Coordinating Board's
 9-7     finding and certifying to the governor that the condition of gross
 9-8     fiscal mismanagement no longer exists, in which case the
 9-9     conservatorship is dissolved.
9-10           SECTION 2.  (a)  The State Conservatorship Board as
9-11     constituted on the effective date of this Act is abolished on the
9-12     effective date of this Act unless on that date a state agency or
9-13     public junior college is under the conservatorship of the board. If
9-14     on the effective date of this Act a state agency or public junior
9-15     college is under the conservatorship of the board, the board
9-16     continues in existence under the law in effect immediately before
9-17     the effective date of this Act, and the prior law is continued in
9-18     effect for that purpose.  The board is abolished on the date the
9-19     conservatorship is dissolved.
9-20           (b)  The changes in law made by this Act do not apply to an
9-21     ongoing conservatorship of a state agency or public junior college
9-22     on the effective date of this Act. A conservatorship that is
9-23     ongoing on the effective date of this Act is governed by the law in
9-24     effect immediately before the effective date of this Act until the
9-25     conservatorship is dissolved, and the prior law is continued in
9-26     effect for that purpose.
9-27           SECTION 3.  The importance of this legislation and the
 10-1    crowded condition of the calendars in both houses create an
 10-2    emergency and an imperative public necessity that the
 10-3    constitutional rule requiring bills to be read on three several
 10-4    days in each house be suspended, and this rule is hereby suspended,
 10-5    and that this Act take effect and be in force from and after its
 10-6    passage, and it is so enacted.