C.S.H.B. 1824 78(R)    BILL ANALYSIS


C.S.H.B. 1824
By: Hamric
Higher Education
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Currently, higher education institutions must estimate their local funding
for each upcoming biennium.  General revenue appropriations for each
institution are calculated by subtracting this estimate from the
appropriations indicated under state funding formulas.  If the
institutions overestimate receipts, they must live with the shortfall; if
they underestimate receipts, they may keep the difference. 

! The Legislative Budget Board (LBB), as part of the state's budget
process, requires colleges and universities to estimate their educational
and general (E&G) income for each upcoming biennium.  E&G funds include
tuition, lab fees, student teaching fees, organized activity fees,
proceeds from the sale of educational and general equipment, and other
student fees. 

! The LBB relies primarily on the institutions' own estimate.  General
revenue appropriations for each institution are calculated by subtracting
the E&G income each institution estimates that it will collect during the
biennium from the appropriations to which it is entitled under the
prescribed formulas.  Institutions' E&G estimates, therefore, are
important in determining their general revenue appropriations. 

! If the institutions obtain more E&G revenue than their estimates, they
can spend it; by the same token, they must live with their state funding
even if actual E&G income falls below their estimate. 

General revenue appropriations to higher education institutions should be
adjusted based on the difference between the institution's estimated and
actual income.  CSHB 1824 requires general revenue appropriations to
higher education institutions to be adjusted based on the difference
between estimated and actual receipts. 

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. 

ANALYSIS

CSHB 1824 amends Section 61.059(c), Education Code, to provide that
formulas for basic funding shall include a positive or negative
adjustment, as appropriate, of the estimated amount of educational and
general funds to be received by an institution of higher education so as
to account for the institution's reconciliation of those funds for the
preceding biennium as computed and reported under Section 61.065.  The
bill provides that the board may not adjust the estimated amount of the
education and general funds to be received by an institution to the extent
that any discrepancy in the institution's reconciliation results from
unanticipated enrollment growth. 

CSHB 1824 amends Section 61.065, Education Code, by adding Subsections
(c), (d) and (e) to require the coordinating board to adopt a system of
financial accounting of all educational and general funds received for
each institution of higher education including tuition, laboratory fees,
student teaching fees, organized activity fees, proceeds from the sale of
educational and general  equipment, and indirect cost recovery fees
received by an institution.  The provides that a system must require each
institution to reconcile the estimated amount of educational and general
funds used to determine state appropriations for the institution for the
most recently completed state fiscal biennium to the actual amount of
educational and general funds that the institution received during that
biennium. 

CSHB 1824 provides that each institution of higher education shall report
its reconciliation under Subsection (c) to the coordinating board, the
Comptroller, and the LBB at the time prescribed by the coordinating board.
The bill provides that Subsection (c) and (d) do not apply to medical or
dental units. 

EFFECTIVE DATE

This Act takes effect immediately if it receives a vote of two-thirds of
all the members elected to each house, as provided by Section 39, Article
III, Texas Constitution.  If this Act does not receive the vote necessary
for immediate effect, this Act takes effect September 1, 2003. 


COMPARISON OF ORIGINAL TO SUBSTITUTE

CSHB 1824 modifies the original by prohibiting the coordinating board from
adjusting the estimated amount of educational and general funds to be
received by an institution if the discrepancy results from unanticipated
enrollment growth.  The substitute excludes medical and dental
institutions from the application of this Act.