SRC-AMY H.B. 1887 78(R)   BILL ANALYSIS


Senate Research Center   H.B. 1887
By: Morrison (Ratliff)
Education
5/13/2003
Engrossed


DIGEST AND PURPOSE 

Currently, Texas law permits 50% of a university's indirect cost
reimbursements to be deducted from the institution's state general revenue
appropriations.  By losing half the value of these "overhead" payments on
research grants, Texas universities are placed at a disadvantage when
competing with institutions in other states.  Allowing institutions to
retain 100% of the indirect costs, as is the case in many large states
with which Texas competes for grants, the money could be reinvested in the
research enterprise which may help to attract even more external funding. 

The principle costs of most university research projects are for salaries
and benefits for research assistants, graduate students, and other
investigators.  Other costs often include items such as laboratory
supplies, computer time, and travel directly associated with a research
project.  These are the "direct" costs associated with research.  The
indirect costs include the costs of accounting and auditing for a grant,
providing clerical and administrative support, providing laboratory and
office space, centralized computing facilities and other capital
equipment, utilities, and other campus infrastructure.  (Indirect costs
are also referred to as "overhead".)  Indirect costs are generally
associated with centralized functions that serve multiple research
projects, if not all of an institution's research enterprise. 

Many research grants, particularly from federal agencies, recognize the
need to pay for both the direct and the indirect costs of research.  In
addition to the grant itself, which is designed to pay for the direct
costs, grantors provide funds known as "indirect cost reimbursements."
These payments are intended for just that: reimbursement to an institution
for the costs of providing the underlying support facilities and services
that make research possible.   

H.B. 1887 prohibits the funds retained by a general academic teaching
institution, a medical and dental unit, and other agency of higher
education from being accounted for in an appropriations act in such a way
as to reduce the general revenue funds to be appropriated to a general
academic teaching institution or a medical or dental unit.  Sets forth the
requirements to which the retained funds are subject. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to
a state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 145.001(c), Education Code, to prohibit the
funds retained by a defined institution under Subsection (b) from being
accounted for in an appropriations act in such a way as to reduce the
general revenue funds to be appropriated to a general academic teaching
institution or a medical or dental unit.  Sets forth the requirements to
which the retained funds are subject.  Deletes text referring to the
General Appropriations Act and a method of providing for the application
of locally generated funds and reducing the general revenue to be
appropriated. Deletes text referring to funds received  by a general
academic teaching institution or a medical or dental unity for paying
overhead costs, and text referring to funds retained but not applied to
reduce general revenue appropriations. 

SECTION 2.  Effective date:  upon passage or September 1, 2003.