1-1     By:  Junell, Cuellar (Senate Sponsor - Ratliff)       H.B. No. 1945
 1-2           (In the Senate - Received from the House April 23, 1999;
 1-3     April 26, 1999, read first time and referred to Committee on
 1-4     Finance; May 7, 1999, reported adversely, with favorable Committee
 1-5     Substitute by the following vote:  Yeas 8, Nays 0; May 7, 1999,
 1-6     sent to printer.)
 1-7     COMMITTEE SUBSTITUTE FOR H.B. No. 1945                 By:  Ratliff
 1-8                            A BILL TO BE ENTITLED
 1-9                                   AN ACT
1-10     relating to the creation of permanent funds for certain public
1-11     health purposes conducted by institutions of higher education.
1-12           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13           SECTION 1.  Subtitle B, Title 3, Education Code, is amended
1-14     by adding Chapter 63 to read as follows:
1-15        CHAPTER 63.  PERMANENT FUNDS FOR HEALTH-RELATED INSTITUTIONS
1-16                            OF HIGHER EDUCATION 
1-17          SUBCHAPTER A.  PERMANENT HEALTH FUND FOR HIGHER EDUCATION
1-18           Sec. 63.001.  PERMANENT HEALTH FUND FOR HIGHER EDUCATION.
1-19     (a)  The permanent health fund for higher education is a special
1-20     fund in the treasury outside the general revenue fund.
1-21           (b)  The fund is composed of:
1-22                 (1)  money transferred to the fund at the direction of
1-23     the legislature;
1-24                 (2)  gifts and grants contributed to the fund; and
1-25                 (3)  the returns received from investment of money in
1-26     the fund.
1-27           Sec. 63.002.  ADMINISTRATION AND USE OF FUND.  (a)  The board
1-28     of regents of The University of Texas System shall administer the
1-29     fund.  The board may manage and invest the fund in the same manner
1-30     as the board manages and invests other permanent endowments.  In
1-31     administering the fund, the board shall invest any funds in a
1-32     manner that preserves the purchasing power of the fund's assets and
1-33     the fund's annual distributions.  The board shall determine the
1-34     amount available for distribution from the fund in a manner
1-35     consistent with the board's procedures for making distributions to
1-36     other endowment beneficiaries.  The amount available for
1-37     distribution shall be determined by the investment and distribution
1-38     policy for the fund's assets adopted by the board.  Expenses of
1-39     managing the fund's assets shall be paid from the fund.
1-40           (b)  Except as provided by Subsections (c), (d), and (f),
1-41     money in the fund may not be used for any purpose.
1-42           (c)  The amount available for distribution from the fund may
1-43     be appropriated only for programs that benefit medical research,
1-44     health education, or treatment programs at the following
1-45     health-related institutions of higher education:
1-46                 (1)  The University of Texas Health Science Center at
1-47     San Antonio;
1-48                 (2)  The University of Texas M. D. Anderson Cancer
1-49     Center;
1-50                 (3)  The University of Texas Southwestern Medical
1-51     Center at Dallas;
1-52                 (4)  The University of Texas Medical Branch at
1-53     Galveston;
1-54                 (5)  The University of Texas Health Science Center at
1-55     Houston;
1-56                 (6)  The University of Texas Health Science Center at
1-57     Tyler;
1-58                 (7)  The Texas A&M University Health Science Center;
1-59                 (8)  the University of North Texas Health Science
1-60     Center at Fort Worth;
1-61                 (9)  the Texas Tech University Health Sciences Center;
1-62     and
1-63                 (10)  Baylor College of Medicine, if a contract between
1-64     Baylor College of Medicine and the Texas Higher Education
 2-1     Coordinating Board is in effect under Section 61.092.
 2-2           (d)  The governing board of a health-related institution of
 2-3     higher education entitled to receive money under this subchapter
 2-4     may solicit and accept gifts and grants to the fund.  A gift or
 2-5     grant to the fund shall be appropriated and distributed and may be
 2-6     used in the same manner as an amount appropriated under Section
 2-7     63.003, subject to any limitation or requirement placed on the gift
 2-8     or grant by the donor or granting entity.
 2-9           (e)  Sections 403.095 and 404.071, Government Code, do not
2-10     apply to the fund.  Section 404.094(d), Government Code, applies to
2-11     the fund.
2-12           (f)  An institution of higher education that has accepted a
2-13     gift under Subchapter I, Chapter 51, that was conditioned on the
2-14     receipt by the institution of state matching funds from the eminent
2-15     scholars fund shall use money the institution receives under this
2-16     subchapter to provide the state matching funds, treating that
2-17     amount as if it were a distribution to the institution from the
2-18     eminent scholars fund for purposes of Subchapter I, Chapter 51.
2-19           Sec. 63.003.  ALLOCATION OF DISTRIBUTION.  (a)  The
2-20     legislature shall appropriate the amount available for distribution
2-21     from the fund to the health-related institutions of higher
2-22     education listed in Section 63.002(c).  The amount appropriated
2-23     shall be distributed as follows:
2-24                 (1)  60 percent shall be distributed in equal amounts
2-25     to each institution; and
2-26                 (2)  the remaining amount shall be distributed in equal
2-27     amounts for each of the following categories, with each institution
2-28     receiving a share in each category proportionate to the amount that
2-29     the institution spent in that category in the preceding fiscal
2-30     biennium as determined by the institution's annual financial
2-31     report, compared to the total spending of every institution listed
2-32     in Section 63.002(c) in that category in the preceding biennium:
2-33                       (A)  instructional expenditures;
2-34                       (B)  research expenditures; and
2-35                       (C)  unsponsored charity care.
2-36           (b)  The amount appropriated under Subsection (a) shall be
2-37     distributed quarterly by the comptroller to each health-related
2-38     institution of higher education.
2-39           (c)  The Legislative Budget Board shall make any necessary
2-40     determination of each institution's portion of an amount
2-41     appropriated under Subsection (a)(2) and shall provide that
2-42     information to the legislature and the comptroller.
2-43           (d)  For the purposes of this section, Baylor College of
2-44     Medicine may receive funds under Subsection (a)(2) only if the
2-45     institution provides the comptroller with an independently audited
2-46     schedule of information that substantially complies with the
2-47     reporting requirements issued by the comptroller for other eligible
2-48     institutions under Subsection (a)(2).  Information under this
2-49     subsection must be supplied not later than the time other eligible
2-50     institutions are required to submit similar information.
2-51               (Sections 63.004-63.100 reserved for expansion
2-52       SUBCHAPTER B.  PERMANENT FUNDS FOR HEALTH-RELATED INSTITUTIONS
2-53           Sec. 63.101.  CREATION OF FUNDS.  (a)  A separate permanent
2-54     endowment fund is established for the benefit of each of the
2-55     following institutions of higher education:
2-56                 (1)  The University of Texas Health Science Center at
2-57     San Antonio;
2-58                 (2)  The University of Texas M. D. Anderson Cancer
2-59     Center;
2-60                 (3)  The University of Texas Southwestern Medical
2-61     Center at Dallas;
2-62                 (4)  The University of Texas Medical Branch at
2-63     Galveston;
2-64                 (5)  The University of Texas Health Science Center at
2-65     Houston;
2-66                 (6)  The University of Texas Health Science Center at
2-67     Tyler;
2-68                 (7)  The University of Texas at El Paso;
2-69                 (8)  The Texas A&M University Health Science Center;
 3-1                 (9)  the University of North Texas Health Science
 3-2     Center at Fort Worth;
 3-3                 (10)  the components of the Texas Tech University
 3-4     Health Sciences Center located in El Paso;
 3-5                 (11)  the components of the Texas Tech University
 3-6     Health Sciences Center at locations other than El Paso;
 3-7                 (12)  the regional academic health center established
 3-8     under Section 74.611; and
 3-9                 (13)  Baylor College of Medicine, if a contract between
3-10     Baylor College of Medicine and the Texas Higher Education
3-11     Coordinating Board is in effect under Section 61.092.
3-12           (b)  Each separate permanent endowment fund is a special fund
3-13     in the treasury outside the general revenue fund.
3-14           (c)  Each separate permanent endowment fund is composed of:
3-15                 (1)  money transferred to the fund at the direction of
3-16     the legislature;
3-17                 (2)  gifts and grants contributed to the fund; and
3-18                 (3)  the returns received from investment of money in
3-19     the fund.
3-20           Sec. 63.102.  ADMINISTRATION AND USE OF FUNDS.  (a)  The
3-21     governing board of an institution or component for which a fund is
3-22     established under this subchapter may administer the fund of that
3-23     institution.  If a governing board elects not to administer the
3-24     fund, the comptroller shall administer the fund.  The administrator
3-25     of a fund established under this subchapter shall invest the fund
3-26     in a manner intended to preserve the purchasing power of the fund's
3-27     assets and the fund's annual distributions.  Annual distributions
3-28     for any fund shall be determined by the investment and distribution
3-29     policy adopted by the administrator of the fund for the fund's
3-30     assets.  Expenses of managing the assets of a fund shall be paid
3-31     from the fund.  If a governing board administers a fund, the
3-32     governing board may manage and invest the fund in the same manner
3-33     as the board manages and invests other permanent endowments, and
3-34     the board shall make distributions from the fund in a manner
3-35     consistent with the board's procedures for making distributions to
3-36     other endowment beneficiaries.  If the comptroller administers a
3-37     fund, the comptroller may acquire, exchange, sell, supervise,
3-38     manage, or retain, through procedures and subject to restrictions
3-39     the comptroller considers appropriate, any kind of investment of
3-40     the fund's assets that prudent investors, exercising reasonable
3-41     care, skill, and caution, would acquire or retain in light of the
3-42     purposes, terms, distribution requirements, and other circumstances
3-43     of the fund then prevailing, taking into consideration the
3-44     investment of all the assets of the fund rather than a single
3-45     investment.
3-46           (b)  Except as provided by Subsections (c), (d), and (f),
3-47     money in a fund established under this subchapter may not be used
3-48     for any purpose.
3-49           (c)  The amount available for distribution from each fund may
3-50     be appropriated only for research and other programs that are
3-51     conducted by the institution or components for which the fund is
3-52     established and that benefit the public health.  The comptroller or
3-53     the governing board shall report to the legislature the amount of
3-54     funds that are eligible for appropriation.  An amount appropriated
3-55     from the fund established for The University of Texas Health
3-56     Science Center at San Antonio may be used to establish, maintain,
3-57     and operate a children's cancer center.  An amount appropriated
3-58     from the funds established for the components of the Texas Tech
3-59     University Health Sciences Center located in El Paso and for The
3-60     University of Texas at El Paso may be used for the establishment
3-61     and operation of an institute of public health in El Paso.  An
3-62     amount appropriated from the fund established for the components of
3-63     the Texas Tech University Health Sciences Center at locations other
3-64     than El Paso may be used for research and other programs that
3-65     benefit the public health in areas outside El Paso.  An amount
3-66     appropriated from the fund established for The Texas A&M University
3-67     Health Science Center may be used for the establishment and
3-68     operation of the Coastal Bend Health Education Center in Corpus
3-69     Christi.
 4-1           (d)  The comptroller or the governing board of an institution
 4-2     or component may solicit and accept gifts and grants to the
 4-3     institution's or component's fund.  A gift or grant to the fund may
 4-4     be expended and used in the same manner as an amount distributed
 4-5     from the fund under Subsection (c), subject to any limitation or
 4-6     requirement placed on the gift or grant by the donor or granting
 4-7     entity.
 4-8           (e)  Sections 403.095 and 404.071, Government Code, do not
 4-9     apply to a fund established under this subchapter.  Section
4-10     404.094(d), Government Code, applies to the fund.
4-11           (f)  An institution of higher education that has accepted a
4-12     gift under Subchapter I, Chapter 51, that was conditioned on the
4-13     receipt by the institution of state matching funds from the eminent
4-14     scholars fund shall use money the institution receives under this
4-15     subchapter to provide the state matching funds, treating that
4-16     amount as if it were a distribution to the institution from the
4-17     eminent scholars fund for purposes of Subchapter I, Chapter 51.
4-18           SECTION 2.  Section 61.092, Education Code, is amended to
4-19     read as follows:
4-20           Sec. 61.092.  CONTRACTS WITH BAYLOR COLLEGE OF MEDICINE.
4-21     (a)  The board may contract with Baylor College of Medicine for the
4-22     administration, direction, and performance of all services and the
4-23     provision, maintenance, operation, and repair of all buildings,
4-24     facilities, structures, equipment, and materials necessary or
4-25     proper to the education, training, preparation, or instruction of
4-26     bona fide Texas resident undergraduate medical students.
4-27           (b)  Funds received by Baylor College of Medicine under
4-28     Subchapter A or B, Chapter 63, may be used only to support programs
4-29     that benefit medical research, health education, or treatment
4-30     programs at the institution.
4-31           (c)  If Baylor College of Medicine elects to administer the
4-32     fund established for the institution under Subchapter B, Chapter
4-33     63, Baylor College of Medicine and the board must enter into a
4-34     contract that requires Baylor College of Medicine to administer the
4-35     fund in the same manner and subject to the same regulations,
4-36     including disclosure requirements, as would apply to the
4-37     comptroller if the comptroller were administering a fund under
4-38     Subchapter B, Chapter 63.
4-39           (d)  This [However, nothing in this] subchapter may not be
4-40     construed to empower the board to limit, alter, modify, or in any
4-41     other manner change or approve, or negotiate for changes in or
4-42     approval of, the administration, direction, and performance of
4-43     these services or the provision, maintenance, operation, and repair
4-44     of buildings, facilities, structures, equipment, or materials.
4-45           SECTION 3.  (a)  On the effective date of this Act, the
4-46     comptroller shall transfer from the general revenue fund to the
4-47     permanent health fund for higher education established by
4-48     Subchapter A, Chapter 63, Education Code, as added by this Act, the
4-49     amount appropriated in the General Appropriations Act for the
4-50     permanent health fund for higher education.
4-51           (b)  On the effective date of this Act, the comptroller shall
4-52     transfer from the general revenue fund to the separate permanent
4-53     endowment trust fund established by Subchapter B, Chapter 63,
4-54     Education Code, as added by this Act, for each of the following
4-55     institutions of higher education or components of an institution of
4-56     higher education the following amounts:
4-57                 (1)  The University of Texas Health Science Center at
4-58     San Antonio - $150 million;
4-59                 (2)  The University of Texas M. D. Anderson Cancer
4-60     Center - $150 million;
4-61                 (3)  The University of Texas Southwestern Medical
4-62     Center at Dallas - $50 million;
4-63                 (4)  The University of Texas Medical Branch at
4-64     Galveston - $25 million;
4-65                 (5)  The University of Texas Health Science Center at
4-66     Houston - $25 million;
4-67                 (6)  The University of Texas Health Science Center at
4-68     Tyler - $25 million;
4-69                 (7)  The University of Texas at El Paso - $25 million;
 5-1                 (8)  The Texas A&M University Health Science
 5-2     Center - $25 million;
 5-3                 (9)  the University of North Texas Health Science
 5-4     Center at Fort Worth - $25 million;
 5-5                 (10)  the components of the Texas Tech University
 5-6     Health Sciences Center located in El Paso - $25 million;
 5-7                 (11)  the components of the Texas Tech University
 5-8     Health Sciences Center at locations other than El Paso - $25
 5-9     million;
5-10                 (12)  the regional academic health center established
5-11     under Section 74.611, Education Code - $5 million; and
5-12                 (13)  Baylor College of Medicine - $25 million.
5-13           (c)  In addition to the permissible appropriations and uses
5-14     of the funds transferred to the permanent funds for health-related
5-15     institutions established under Chapter 63, Education Code, as added
5-16     by this Act, the funds may also be appropriated by the legislature
5-17     to pay any amount of money that the federal government determines
5-18     that the state should repay to the federal government or that the
5-19     federal government should recoup from the state in the event of
5-20     national legislation regarding the subject matter of the case
5-21     styled The State of Texas v.  The American Tobacco Co., et al., No.
5-22     5-96CV-91, in the United States District Court, Eastern District of
5-23     Texas.
5-24           SECTION 4.  The importance of this legislation and the
5-25     crowded condition of the calendars in both houses create an
5-26     emergency and an imperative public necessity that the
5-27     constitutional rule requiring bills to be read on three several
5-28     days in each house be suspended, and this rule is hereby suspended,
5-29     and that this Act take effect and be in force from and after its
5-30     passage, and it is so enacted.
5-31                                  * * * * *