C.S.H.B. 3015 78(R)    BILL ANALYSIS


C.S.H.B. 3015
By: Morrison
Higher Education
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

The current system used to set tuition in Texas does not provide
sufficient pricing options for the array of services an institution may
offer nor does it lend itself to providing incentives for students to make
efficient use of their time and state resources.  It mandates the same
basic rate across the state regardless of the circumstances of the
individual student and unique needs of university campuses. With tuition
flexibility, universities would be able to use flexible rates as a means
to achieve strategic goals, such as improved graduation rates, better use
of facilities, and improvement of academic programs.  

The Need 

_ In times of economic difficulty, the challenge is to make the highest
and best use of existing assets and resources.  Flexibility would permit
maintenance of current services during times such as these. 
_ The current tuition structure does not allow universities to use tuition
policy to improve enrollment management. For example, universities cannot
provide incentives for students to take higher course loads by using flat
rates for full-time students, or lower summer rates to encourage students
to take courses at that time. 
_ The current tuition structure while too rigid in part can also be
confusing.  
_ Under current budget constraints, flexibility is necessary to meet
growing demands and shrinking resources. 

The Advantages

_ Allows tuition to be set according to local conditions and needs.
_ Allows the simplification and consolidation of tuition and fees.
_ Provides a source of revenue to maintain the quality of services
provided to students. 

Key Elements of Tuition Flexibility

Community and Campus Responsiveness - Responds to student characteristics
and needs at various campuses, rather than having one statewide rate. 

Affordability - CSHB 3015 provides that a minimum of 15% of the designated
tuition increases be set aside for non-loan tuition assistance to resident
undergraduate students.  The financial assistance provided under this
section will be in the form of grants, scholarships and work-study
programs.   

Recipients for assistance under CSHB 3015 will be prioritized according to
needs not currently being met by other programs.  The TEXAS Grant Program
currently provides financial assistance to most students coming from lower
income families.  Resident undergraduate students whose tuition and fees
are not already met by other non-loan assistance programs will receive
priority for the assistance provided under CSHB 3015.    Students coming
from middle income families whose tuition and fees are not already covered
by other non-loan financial assistance will receive this additional
assistance to help offset the costs of tuition increases. 
 
CSHB 3015 also provides a minimum of 3% of the designated tuition
increases be set aside for non-loan assistance to non-resident
undergraduate students.  The financial assistance provided under this
section will be in the form of grant, scholarship and work-study programs. 

Enrollment Management - Allows a mechanism for enrollment management,
encouraging students to take greater course loads and complete degrees
more quickly. Because more students can be educated each year, this would
result in a more efficient use of facilities and other resources. Earlier
graduation reduces a student's overall cost of education. 

Potential Student Discounts - Allows the flexibility to set tuition rates
(including selected discounted rates) that vary among campuses; among
academic programs; among classes offered at different times; and among
various types of courses (traditional, inter-session, or online). This
flexibility would enable a better reflection of the costs of various
services. 

Market Driven - Allows flexibility with respect to institutional charges
for nonresident, graduate and professional students. 

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly
granted to the Texas Higher Education Coordinating Board in SECTION  3
(Section 56.011 and 56.012, Education Code ) of this bill. 

ANALYSIS

CSHB 3015 amends Section 54.0513, Education Code, to eliminate the
provision that redesignates the building use fee previously authorized by
Section 55.16, Education Code, as tuition.  The bill provides that this
section is retitled Designated Tuition.  The bill provides that in
addition to amounts that a governing board of an institution of higher
education is authorized to charge, the governing board is authorized to
charge an amount designated as tuition, rather than just tuion, in an
academic year an amount not to exceed the amount charged under Sections
54.051 or 54.0512, as applicable, in that academic year. 

CSHB 3015 provides that in addition to the amounts authorized by
Subsection (a), the governing board of an institution of higher education
may charge a resident undergraduate student an additional amount
designated as tuition for the 2003-2004 academic year, an amount not to
exceed $23 per semester credit hour, for the 2004-2005 academic year, an
amount not to exceed $46 per semester credit hour; and unless otherwise
expressly provided by this code, for the 2005-2006 academic year and
thereafter, an amount the governing board considers necessary, and charged
under the terms the governing board considers appropriate, for the
effective operation of the institution. 

CSHB 3015 provides that for a nonresident student or a student enrolled in
a graduate or professional degree program, the governing board of an
institution of higher education may charge amounts designated as tuition
in the amounts and under the terms the governing board considers necessary
for the effective operation of the institution. 

CSHB 3015 provides that a governing board may set a different tuition rate
for each program and course level offered by each institution of higher
education.  A governing board may set a different tuition rate as the
governing board considers appropriate to increase graduation rates,
encourage efficient use of facilities, or enhance employee performance. 

CSHB 3015 amends Section 54.051, Education Code, to provide that tuition
may not be charged under this section or under Section 54.0512 for any
academic period after the 2004-2005 academic year. 

CSHB 3015 amends Chapter 56, Education Code, by adding Subchapter B to
provide that the governing board of each institution of higher education
shall cause to be set aside not less than 15 percent of any amount of
tuition charged to a resident undergraduate student under Section  54.0513
in excess of $46 per semester credit hour.  The funds set aside under this
section by an institution shall be used to provide financial assistance
for resident undergraduate students enrolled in the institution. 
 
CSHB 3015 provides that to be eligible for assistance under this section,
a resident undergraduate student must establish financial need in
accordance with rules and procedures established by the Texas Higher
Education Coordinating Board. Priority shall be given to resident
undergraduate students who meet the coordinating board definition of
financial need, and whose cost for tuition and required fees is not met
through other non-loan financial assistance programs.  The bill provides
that the financial assistance provided under this section may include
grants, scholarships, and work-study programs. 
 
CSHB 3015 provides that the governing board of each institution of higher
education shall cause to be set aside not less than three percent of any
amount of tuition charged under Section 54.0513 to a nonresident
undergraduate student in excess of $46 per semester credit hour.  The
funds set aside under this section by an institution shall be used to
provide financial assistance for nonresident undergraduate students
enrolled in the institution. 
 
CSHB provides that to be eligible for assistance under this section, a
nonresident undergraduate student must establish financial need in
accordance with rules and procedures prescrbed by the Texas Higher
Education Coordinating Board. Priority shall be given to nonresident
undergraduate students who meet the coordinating board definition of
financial need, and whose cost for tuition and required fees is not met
through other non-loan financial assistance programs. 
 
CSHB 3015 provides that if the funds set aside under this section exceed
the amount required to provide financial assistance to each eligible
nonresident undergraduate students eligible, the institution may use the
excess funds to provide the same type of financial need for students who
qualify for financial assistance under Section 56.011. 

CSHB 3015 amends Subchapter H, Chapter 51, Education Code, to provide that
not later than November 30, 2004, the chief executive officer of each
institution of higher education, as defined by Section 61.003, shall
provide to the governing board of the institution a report for the
preceding fall, spring, and summer semesters that examines the
affordability and access of the institution. The bill provides that the
report must include statistical information on the percentage of gross
family income required for a student who is a resident of this state to
pay tuition and required fees charged by the institution, the criteria
used by the institution to admit students to the institution, an analysis
of the criteria used to admit students and to award financial assistance
to students, considering the mission of the institution and the purposes
of higher education in this state, and comparisons of the institution with
peer institutions in this state and in other states with respect to
affordability and access.  The bill provides that for purposes of the
report, a student who applies for admission to or enrolls in an
institution and applies for financial aid from the institution may be
required to provide documentation necessary for the institution to
complete the report.  The bill provides that an institution's report must
be in the form prescribed by the Texas Higher Education Coordinating Board
in consultation with the institution.  

CSHB 3015 amends Section 54.619, Education Code, to provide he board may
suspend new enrollment in the program as the Prepaid Higher Education
Tuition Board considers necessary to ensure the actuarial soundness of the
Texas Tomorrow constitutional trust fund. 

CSHB 3015 amends Section 54.622, Education Code, to provide that the board
may, in its sole discretion, rather than shall, make prepaid tuition
contracts available for the junior college plan, senior college
plan,junior-senior college plan, and private college plan. 

CSHB 3015 amends Section 54.624, Education Code, to provide that when the
beneficiary of a senior college plan prepaid tuition contract enrolls in a
public senior college or university, the university shall accept as
payment in full of the beneficiary's tuition and required fees the lesser
of the amount of tuition and required fees charged by the institution, or
an amount paid by the board under the contract equal to the weighted
average amount of tuition and required fees of all public  senior colleges
and universities for that semester or other academic period as determined
by the board. 

CSHB 3015 provides that each public senior college or university shall
provide the information requested by the board on or before June 1 each
year to assist the board in determining the weighted average amount of
tuition and required fees of all public senior colleges and universities
for each semester or other academic term of the following academic year
for purposes of this section. 
  
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 3015 modifies the original by reinstating Sec. 54.0513, Education
Code, and amending it to eliminate the provision that the building use fee
previously authorized in Sec. 55.16 is redesignated as tuition, and to
retitle the section as Designated Tuition.  The substitute provides
graduated tuition setting guidelines for the 2003-2004 and 2004-2005
academic year and authorizes institutions to set tuition for the 2005-2006
academic year, and there after at a rate the governing board considers
necessary for the effective operation of the institution.  The substitute
provides that an institution can set non-resident and graduate or
professional degree program tuition at a rate the board considers
necessary for the effective operation of the institution.  The substitute
provides that a governing board of an institution may set a different
tuition rate for each program and course level offered by that institution
of higher education.  The substitute adds provisions for financial
assistance funded from set-aside amounts of tuition in excess of $46 per
semester credit hour charged to resident undergraduate and non-resident
undergraduate students. The substitute provides eligibility criteria for
financial assistance under Section 56.011 and Section 56.012, Education
Code.  The substitute reinstates Interim Tuition Rates, Sec. 54.0512,
Education Code.  The substitute reinstates Special Summer Tuition Rates at
Certain Institutions: Pilot Program, Sec. 54.0514, Education Code.  The
substitute eliminates Sec. 54.0031, Education Code, which provided an
expiration date for the authority of institutions of higher education to
impose tuition and student fees authorized by the introduced Act.  The
substitute reinstates existing provisions for tuition limits in cases of
concurrent enrollment under Section 54.062, Education Code. The substitute
reinstates the minimum and maximum resident tuition set-aside provided
under Section 56.033, Education Code, for Texas Public Education Grants.
The substitute provides additional reporting requirements for
affordability and access under Section 51.4031, Education Code, and that
the report be submitted by November 30, 2004, rather than within 30 days
of the end of each academic year.  The substitute reinstates provisions
regarding tuition rates set by governing boards under Section 54.008,
Education Code. The substitute reinstates provisions for tuition rates
under Section 54.051, Education Code, and eliminates the provisions added
by the original to allow an institution to set tuition under this section.
The substitute eliminates the requirement that tuition charged to resident
undergraduate student may not exceed 5 percent of their gross family
income, and that the institution is required to bare the cost of any
additional tuition expense above the 5 percent cap.  The substitute adds
Section 54.051(o) to prohibit tuition from being charged under this
section or under Section 54.0512, Education Code, for any academic period
after the 2004-2005 academic year.  The substitute amends Sections 54.619,
54.622, and 54.624, Education Code, to provide hold-harmless language for
the state's college savings plans.