77R12078 KSD-D                           
         By Junell, Coleman, Thompson,                         H.B. No. 1839
            Jones of Lubbock, Crownover, et al.
         Substitute the following for H.B. No. 1839:
         By Junell                                         C.S.H.B. No. 1839
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to research and excellence funding at certain institutions
 1-3     of higher education.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Chapter 62, Education Code, is amended by adding
 1-6     Subchapter C to read as follows:
 1-7                     SUBCHAPTER C. TEXAS EXCELLENCE FUND
 1-8           Sec. 62.051.  PURPOSE.  The Texas excellence fund is
 1-9     established to provide funding to promote increased research
1-10     capacity and to develop institutional excellence at eligible
1-11     general academic teaching institutions in order to ensure that
1-12     Texas and its workforce remain at the forefront of scientific and
1-13     technological innovation.
1-14           Sec. 62.052.  DEFINITIONS.  In this subchapter:
1-15                 (1)  "Eligible comprehensive research university" means
1-16     an eligible general academic teaching institution that in each of
1-17     the two most recent state fiscal years, as verified by the
1-18     coordinating board:
1-19                       (A)  offered a full range of baccalaureate
1-20     programs and a wide variety of graduate programs;
1-21                       (B)  awarded 45 or more doctor of philosophy
1-22     degrees in the fields of science, agricultural science,
1-23     engineering, and clinical and experimental psychology; and
1-24                       (C)  expended at least $15 million in restricted
 2-1     research funds and related indirect costs as reported in the
 2-2     institution's annual financial report for the applicable year.
 2-3                 (2)  "Eligible general academic teaching institution"
 2-4     means a general academic teaching institution, as defined by
 2-5     Section 61.003, that is eligible to participate in the funding
 2-6     provided by Section 17, Article VII, Texas Constitution.
 2-7           Sec. 62.053.  ADMINISTRATION.  (a)  The Texas excellence fund
 2-8     is a fund outside the state treasury in the custody of the
 2-9     comptroller.
2-10           (b)  The comptroller shall administer and invest the Texas
2-11     excellence fund.
2-12           Sec. 62.054.  FUNDING.  (a)  The legislature may appropriate
2-13     or provide for the transfer of any available money to the credit of
2-14     the Texas excellence fund.
2-15           (b)  The comptroller shall deposit all interest, dividends,
2-16     and other income earned from investment of the Texas excellence
2-17     fund to the credit of the fund.
2-18           (c)  The comptroller may accept gifts or grants from any
2-19     public or private source for the Texas excellence fund.
2-20           (d)  An institution may use money appropriated from the Texas
2-21     excellence fund only for the support and maintenance of educational
2-22     and general activities, including research and student services,
2-23     that promote increased research capacity and develop institutional
2-24     excellence at the institution.
2-25           Sec. 62.055.  APPROPRIATION AND ALLOCATION OF FUND TO
2-26     ELIGIBLE INSTITUTIONS. (a)  In each state fiscal year, the
2-27     legislature may appropriate all or part of the money in the Texas
 3-1     excellence fund to eligible comprehensive research universities and
 3-2     other eligible general academic teaching institutions as follows:
 3-3                 (1)  80 percent of the amount appropriated from the
 3-4     fund must be appropriated to the eligible comprehensive research
 3-5     universities and be allocated among those institutions in
 3-6     accordance with an equitable allocation formula based on the amount
 3-7     of restricted research funds expended by each institution as
 3-8     reported in each institution's annual financial report; and
 3-9                 (2)  the remaining amount appropriated from the fund
3-10     must be appropriated to the eligible general academic teaching
3-11     institutions, other than the eligible comprehensive research
3-12     universities, and be allocated among those institutions in
3-13     accordance with an equitable allocation formula based on the amount
3-14     of restricted research funds expended by each institution as
3-15     reported in each institution's annual financial report.
3-16           (b)  Subsection (a)  does not apply to the allocation of
3-17     money appropriated from the Texas excellence fund for the state
3-18     fiscal biennium ending August 31, 2003. For each fiscal year in the
3-19     state fiscal biennium ending August 31, 2003, the money
3-20     appropriated from the fund is allocated among the eligible general
3-21     academic teaching institutions, including eligible comprehensive
3-22     research universities, as provided by the General Appropriations
3-23     Act.  This subsection expires January 1, 2004.
3-24           SECTION 2. Section 62.025, Education Code, is amended by
3-25     amending Subsections (a) and (c) and adding Subsection (d) to read
3-26     as follows:
3-27           (a)  Not later than November 1 of each state fiscal year, the
 4-1     comptroller shall deposit the first $50 million that comes to the
 4-2     state at the beginning of each state fiscal year and that is not
 4-3     dedicated by other law as follows:
 4-4                 (1)  except as provided by Subsection (d), an amount
 4-5     equal to the income earned from investment of the higher education
 4-6     fund in the preceding state fiscal year as certified by the
 4-7     comptroller must be deposited to the credit of the Texas excellence
 4-8     fund established under Subchapter C; and
 4-9                 (2)  the remaining amount must be deposited to the
4-10     credit of the higher education fund.
4-11           (c)  The deposit required by this section to the higher
4-12     education fund expires on September 1 after the date the
4-13     comptroller certifies that the value of the higher education fund
4-14     is $2 billion.  In each state fiscal year that begins on or after
4-15     that date, the comptroller shall deposit to the credit of the Texas
4-16     excellence fund established under Subchapter C from the first money
4-17     that comes to the state at the beginning of that fiscal year an
4-18     amount equal to the income earned from investment of the higher
4-19     education fund in the preceding state fiscal year as certified by
4-20     the comptroller, not to exceed $50 million.
4-21           (d)  In any state fiscal year for which the legislature has
4-22     made an appropriation specifically for the purposes of the Texas
4-23     excellence fund in an amount equal to or greater than the income
4-24     earned from investment of the higher education fund in the
4-25     preceding state fiscal year as certified by the comptroller, the
4-26     deposit to the Texas excellence fund under Subsection (a)(1) or
4-27     Subsection (c) may not be made.
 5-1           SECTION 3.  Sections 62.026(b) and (d), Education Code, are
 5-2     amended to read as follows:
 5-3           (b)  The fund consists of the amount [$50 million] deposited
 5-4     in the fund each state fiscal year under Section 62.025 [of this
 5-5     code] and interest, dividends, and other income earned from the
 5-6     investment of the fund.
 5-7           (d)  The comptroller shall administer and invest the fund.
 5-8     In investing the fund, the comptroller has the same investment
 5-9     authority as that provided under Sections 11a and 11b, Article VII,
5-10     Texas Constitution, or other law to the board of regents of The
5-11     University of Texas System with respect to the investment of the
5-12     permanent university fund.  The investment authority granted to the
5-13     comptroller under this subsection is in addition to that provided
5-14     by Section 404.024, Government Code, or other law.  The
5-15     comptroller, in consultation with the presiding officers of the
5-16     governing boards of the institutions eligible to benefit from the
5-17     income from the investment of the fund under Section 17, Article
5-18     VII, Texas Constitution, shall invest the fund in a manner that
5-19     maximizes the amount of income earned and gains realized from the
5-20     investment of the fund.
5-21           SECTION 4. Chapter 62, Education Code, is amended by adding
5-22     Subchapter D to read as follows:
5-23                SUBCHAPTER D.  EXCELLENCE FUNDING FOR CERTAIN
5-24                   PERMANENT UNIVERSITY FUND INSTITUTIONS
5-25           Sec. 62.071.  DEFINITIONS. In this subchapter:
5-26                 (1)  "Eligible institution" means a general academic
5-27     teaching institution that is a component institution of The
 6-1     University of Texas System or The Texas A&M University System,
 6-2     other than The University of Texas at Austin, Texas A&M University,
 6-3     or Prairie View A&M University, eligible to participate in the
 6-4     funding provided by Section 18, Article VII, Texas Constitution.
 6-5                 (2)  "General academic teaching institution" has the
 6-6     meaning assigned by Section 61.003.
 6-7           Sec. 62.072.  FUNDING. (a)  In each state fiscal biennium, an
 6-8     amount equal to the amount deposited to the credit of the Texas
 6-9     excellence fund under Section 62.025 in that biennium shall be
6-10     distributed to eligible institutions in accordance with this
6-11     section.
6-12           (b)  The amount distributed under this section shall be
6-13     allocated among eligible institutions in accordance with a formula
6-14     determined by the legislature.
6-15           (c)  Money received by an institution under this section may
6-16     be used only for the support and maintenance of educational and
6-17     general activities, including research and student services, that
6-18     promote increased research capacity and develop institutional
6-19     excellence at that institution.
6-20           SECTION 5. This Act takes effect September 1, 2001.